Human Capital Management or HCM refers to the effective acquisition, employment, and development of a company’s employees using strategic and tactical practices, applications, and processes with the aim of maximizing their economic value. It’s a cumulation of all HR practices, processes & tools to help employees optimize their potential.
One of the most effective ways to integrate all of an organization’s human capital management applications into a single user-friendly platform is HCM software. Using HCM software is an excellent way for companies to maximize their overall HR efficiency and streamline the processes of recruitment, management, and development of employees.
Among the features and functions performed by an HCM software are –
A Human Capital Management software, or HCM, is an enterprise-grade application that enables HR teams to organize, manage, and maintain their human capital.
HCM integrates several workforce management components, such as onboarding and training or personnel tracking, etc., and makes all the functions available over a centralized platform. Apart from addressing immediate needs, Human Capital Management solutions also help organizations prepare for long-term activities, such as succession planning or any future staffing requirements.
As such, HCM aids in the acquisition, tracking, and development of the workforce through technology and automation.
Some of the common challenges that come in the way of efficient Human Capital Management include:
High performing organizations are 2.5 times more efficient at employee performance management than their low performing counterparts. Apart from incentivizing high-performing employees, companies must also focus on addressing the weaker segments requiring additional training.
Apart from the regular operational workforce planning, businesses must also engage in strategic workforce planning. HCM must account for and anticipate short and long-term business requirements.
Even if companies have a wealth of employee information readily available at their fingertips, interpreting and extracting crucial data, as well as analyzing, measuring, and drawing insights from it, proves to be rather tricky.
Presently, businesses are lacking when it comes to the proactive front, where they can anticipate any changes or disruptions. As a result, the unpreparedness contributes to their inability to react swiftly to the change or prepare to take them head-on.
HCM is a critical Human Resource software that can make any HR professional’s job easy. At the same time, it also gives employee performance a boost, thereby benefiting the business in more than one way. Here are a few other applications that highlight the importance of HCM:
With an HCM, you can do away with bulky files for each employee and get all their service history and employment status in a digital format. It acts as a single source of data truth. In most HCM systems, this is done through HRIS (Human Resource Information System)
HCM allows employees to update and edit their personal information without the involvement of the HR personnel. This could be done through various modules of HRMS software or through AI powered chatbots
Since all the employee data is available in a centralized database, and individuals can update their information, there is a lesser probability of inaccuracies or data silo formation. Additionally, documentation related to SOPs, handbooks, safety guidelines, etc., may also be accessible over this centralized repository.
Whether you use HCM for leave management for human capital management, HCM finds use in multiple operations. Plus, these systems can easily integrate with existing legacy software/hardware that already exists within the organization.
With HCM, real-time monitoring of employee data and producing reports from these inputs can be carried out at the click of a button. As such, managers can quantify and measure employee performance.
Power up your HR with Conversational AI chatbots which help in automating repetitive HR activities especially manage payroll, leave, time, and attendance, and other modules for employees.
As one can see from above, HCM finds multiple uses in the organizational structure and workflows. It enhances the efficacy of your business through the elimination of redundancies and streamlining all operations. Additionally, it offloads some work from the HR and automates processes so that the HR teams can focus on the trickier requests.
Following is a list of top features that HCM must possess:
Employee database/information management (HRIS)
Employee performance administration.
Employee Benefits Management
Payroll and Compliance Management
Employee Leave and Attendance Management
Employee Onboarding
Recruitment and Applicant Tracking
Learning Management System
Talent Retention and Management
24/7 Customer Support
HCM is a comprehensive workforce management tool. Here is a list of some common functions and features that a highly effective Human Capital Management software must possess:
Unfortunately, there is no standard definition of Human Resource Management System (HRMS), Human Capital Management (HCM), and Human Resource Information System (HRIS), which may set these apart from each other. Additionally, these possess overlapping functions, which makes the differentiation even more difficult.
Typically, the difference between HRMS, HCM, and HRIS may be summarized as below:
HRMS | HCM | HRIS |
Compensation Management |
Compensation Management |
Compensation Management |
Personnel Tracking |
Personnel Tracking |
Personnel Tracking |
Workflows |
Workflows |
Workflows |
Benefits Administration or Open Enrollment |
Benefits Administration or Open Enrollment |
Benefits Administration or Open Enrollment |
Training and Development |
Training and Development |
Training and Development |
Recruiting or Applicant Tracking Systems |
Recruiting or Applicant Tracking Systems |
Recruiting or Applicant Tracking Systems |
Employee Self-Service |
Employee Self-Service |
Employee Self-Service |
Absence Management |
Absence Management |
Absence Management |
Reporting and Analytics |
Reporting and Analytics |
Reporting and Analytics |
Onboarding and Training |
Onboarding and Training |
Onboarding and Training |
Performance Management |
Performance Management |
Performance Management |
Position Control |
Position Control |
|
Succession Planning |
Succession Planning |
|
Salary Planning |
Salary Planning |
|
Global Support |
Global Support |
|
Payroll Processing |
|
|
Time and Labor Management |
|
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Different businesses have varying requirements. Hence, choosing between HRMS, HCM, and HRIS is purely based on your company’s needs. These Human Capital Management solutions also possess varying degrees of flexibility, customization, and scalability.
You can make a choice through the following steps:
Human Capital Management software simplifies most HR processes, right from recruitment to retirement. HCM acts as a centralized, transparent platform that captures all the employee information and integrates with existing infrastructure. It quantifies the value and contribution of every employee and boosts business growth.
In conclusion, HCM aids HR activities to improve employee engagement and improves business productivity. Thus, it is a win-win solution for all!