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Human Capital Management or HCM Software

What is Human Capital Management?

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 –

Employee Onboarding – Employee onboarding is the process of integrating a new employee with a company and its culture, as well as getting a new hire the tools and information needed to become a productive member of the team.

Recruitment and Applicant Tracking– Applicant tracking system is a process to track, manage, and communicate with a large number of candidates to automate the recruiting process.

Employee Self-Services – Employee self-service, or ESS, is an available feature with most modern HRIS. ESS allows employees to take care of many different human resources-related and job-related tasks that would otherwise need to be completed by human resources personnel or management.

Managing Employee Performance – Employee performance is defined as how an employee fulfills their job duties and executes their required tasks. It refers to the effectiveness, quality, and efficiency of their output.

Payroll and Compliance – Payroll compliance refers to the legal framework to which companies or organizations must adhere with regard to the treatment of their workers or employees.

Collaboration Software – A collaboration platform is a software that includes every possible tool that a team needs to work together on a project.

What Is HCM Software?

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.

Challenges in Efficient Human Capital Management?

Some of the common challenges that come in the way of efficient Human Capital Management include:

Performance Management Issues

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.

Poor Workforce Planning

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.

Lack of Human Capital Analytics

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.

Adaptability to Organizational Changes

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.

Why Organizations Need HCM Software?

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:

Better Employee Data Management

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)

Employee Self Service

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

Centrally Located Data

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.

Integrated Systems for Multiple Operations

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.

On-demand and Real-time Reporting

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.

Put HR on Auto-Pilot with Conversational AI Chatbots

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.

Features of HCM Software

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

Functions of Human Capital Management

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:

Select and hire talent

Employee training and development

Performance appraisal and feedback

Collecting actionable business insights

Orientation and onboarding

Talent management and optimization

Building a conducive work culture

Payroll and benefits processing

What’s the Difference Between HRMS, HCM, and HRIS?

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

How to Find the Right HCM for Your Company

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:

Outline your HR strategy and define the basic features that your HR software must possess.
Decide on the pricing structure (subscription service, on-demand, one-time purchase, etc.) and set aside a reasonable budget.
Shortlist 4-5 vendors and collect quotes from them.
Research the company, read customer reviews, and contact customer support.
Participate in a demo or access a free trial.
Decide on the vendor that ticks the most boxes and finalize the purchase.

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!