- What is Human Capital Management (HCM)?
- What is Human Resource Management (HRM)?
- What is the Difference Between HCM and HRM?
- Core Elements of a Modern Approach to Human Capital Management
- Key Features to Look for in an HCM Solution
- Impact of Integrated HCM Technology on Employers with an Hourly Workforce
- Human Capital Management System Features
- How to Choose a Human Capital Management Software Vendor
What is Human Capital Management (HCM)?
Human Capital Management (HCM) describes functions that are part of the global, strategic management of human capital in an organization from talent and applicant tracking to salary planning and analytics. It includes budgeting, performance management and onboarding. Managing the implications of a global workforce includes country specific, jurisdictional and legal requirements as well as language and currency. HCM relies on human expertise to construct, plan and execute on strategies that will build and manage effective workforce productivity. Each critical area of the business is analyzed along with core HR data that is collected and provided to management to sustain effective decision making.
What is Human Resource Management (HRM)?
Human Resource Management (HRM) systems encompass the elements known historically in human resources information systems focusing on the core payroll, time and labor (originally and oftentimes called HRIS or Human Resources Information Systems.) Additional technology systems used to manage HR functions are included under this umbrella such as benefits administration, employee self-service and management reporting. These systems often are limited to having one or two core strength services but link together additional HR functionality through workarounds and partnerships with third party vendors or through company acquisition.
What is the Difference Between HCM and HRM?
HRM can be seen as a term to describe HR technology services where HCM ties into the broader, more strategic HR planning disciplines.
HCM strategy is critical for organizations that want to maximize the impact of their human capital to help realize their overall goals and objectives. Choosing a vendor that supports your HCM strategy both philosophically and technically is key to an organizations success. Integrated HCM provides all-encompassing tools over single function HRM solutions.
Core Elements of a Modern Approach to Human Capital Management
What came first: our current expectations of human capital management or the recent explosion of HR technology? Like the chicken and the egg, they’re two sides of the same coin.
Classic human capital management philosophy is simple: a company’s employees are its single greatest asset. By systematically developing employees, companies improve their likelihood of success. Nurture your employees, and your employees will nurture your business.
So, instead of spending the bulk of their time on administrative tasks, modern HR professionals are infinitely more interested in managing people than paperwork.
How can we be sure we’re hiring the most talented applicants? How can we best develop our in-house talent? How can we build a collaborative culture? Answering these types of questions help companies shine, even in competitive markets.
This is exactly where modern human capital management technology fits in. Recent technological advances—cloud-based software, mobile accessibility, social sharing—has made it easier to treat HR work processes as a means to an end. Which is why modern human capital management technology is increasingly focused on three core elements: simplicity, agility and employee engagement.
1. Achieving Simplicity in HR Administration
What’s the best way to streamline HR work processes so you can focus on your workforce?
To date, unified human capital management software offers the most effective solution. All of a company’s essential HR software applications—recruitment and applicant tracking, time and attendance tracking, HR administration, benefits administration, payroll processing and performance management—reside together within one holistic platform. There are many benefits.
Previously, HR staff labored to reenter data across separate software applications time and again, wasting time and creating errors. With unified human capital management systems, an employee’s data is captured in as single master record that is easily accessed and updated from every application. Fewer errors, less time spent.
In addition, when the human capital management system is cloud-based, there’s no worrying about maintaining the software itself. Onsite servers and time-consuming updates become a thing of the past.
Furthermore, modern human capital management technology provides access to comprehensive reporting and analytics, the basis of informed management decisions. Whether you need to know how long it takes to hire a new employee or where you’re incurring overtime costs, the data is at your fingertips—so you can take action accordingly.
2. Maintaining Agility in the Face of Shifting Labor Compliance
Rarely does a day go by without the release of some compliance-related news from Washington. We are on the brink of major legislative changes. While those changes may ultimately benefit employers, companies will need to be able to quickly change course.
With so much in flux, agility is a must. Employers need responsive human capital management providers that have not only built extensive compliance safeguards into their systems, but can update them rapidly (cloud-based systems have the edge here) to keep employers ahead of whatever comes next.
3. Engaging and Empowering Employees via Technology
The importance of creating a positive employee experience has become a priority for progressive employers. Happy employees are productive employees. People like to feel that they are part of something. Leveraging technology to facilitate employee engagement is a key element of modern human capital management solutions.
Specifically, employers seek new ways to connect with digitally-driven employees, particularly as millennials and post-millennials make up an ever-growing segment of the workforce.
An HR self-service portal is no longer a nice-to-have, it’s a must. Employees want access to their personal information at any time, from any device, whether requesting time off, checking pay history or reviewing their benefits.
In addition, modern human capital management systems promote better communication between managers and employees via performance management tools like 360 degree assessments that keep everyone on the same page. They promote talent development by providing integrated learning content, encouraging employees to advance their skills.
Modern human capital management solutions provide a single, consistent HR experience for all employees, regardless of where they are located or how they access the system. All these things set the stage for a more engaged and empowered workforce.
Now that you understand the purpose and goals for modern human capital management systems, it’s time to determine which features are ideal for your business.
Key Features to Look for in an HCM Solution
The evolution of organizations treating the employment relationship as administrative to a relationship that is strategic has been reflected in rapidly evolving human capital management solutions. Human capital management solutions now comprise of technology that supports overarching company strategies and the optimization of people resources. Successful human capital management solutions embody a myriad of complexities that come together to manage the employee investment.
Today, employers demand their HR systems provide a single employment record for all functions in a cloud-based environment. They are looking for their human capital management providers to bring HR expertise to the table as well as exceptional customer service and technical support.
Key features to look for in modern human capital management solutions include:
Talent Management and Onboarding
Strategic human capital planning is critical to improve an organization’s business value. Talent acquisition solutions that simplify and mobilize recruiting efforts as well as aid in streamlining employee onboarding are an integral part of today’s HR technologies.
Time and Attendance / Payroll and Tax
Efficiency and accuracy is the hallmark of workforce management. Part of human capital management, time and attendance tracking has become mobile with data available anytime and anywhere via the Cloud. Payroll relies on this information to ensure timeliness of employee pay checks, tax filings and tax payments. Organizations are looking to realize a low cost of ownership by partnering with vendors that can host and secure their time and attendance, payroll, and tax compliance functions.
Benefits not only attract top talent to your organization, they keep your organization competitive to retain your human capital investment. Organizations require human capital management solutions that will help them analyze their benefits spend and make strategic decisions that align with company growth and success. Human capital management software automates the benefits enrollment process, benefits plans, carrier tracking, premium tracking, and real-time eligibility tracking. Ideally, it is one cloud-based solution that integrates the benefits function with payroll and other areas that require benefits information to be shared.
HR Management (Self-service, HR Reporting and Analytics)
Modern human capital management systems are self-service ready, allowing employees to update data anytime from anywhere. Managers and HR Administrators must have the ability to approve and update changes as well as report on this information through standard and easy-to-use ad-hoc reporting tools.
Managing compliance issues from ACA to COBRA to I-9 reporting continues to be a challenge for organizations across the board. HR professionals want to feel confident that the right systems are in place to keep up with the complexities of regulations that change and shift on a regular basis. Anything less puts the organization at risk for accruing financial penalties or facing legal consequences. Today, all human capital management systems should have compliance at the top of the requirements list.
Impact of Integrated Human Capital Management Technology on Employers with an Hourly Workforce
To help organizations make the right technology decisions, EPAY Systems and HR.com surveyed large organizations with a significant portion of hourly employees, to examine the impact of integrated HCM technology. The study shows that, when these processes are automated and integrated, the cost savings are significant and highly visible.
■ The most common benefits for employees were better access to information and that an integrated HCM system was more convenient to use.
■ Time and Attendance, Onboarding and Learning Management to date are the least integrated HCM modules. Recruitment and Learning were the HCM modules companies most often wish they had integrated. (Note that these modules are particularly relevant to hourly workforces given the need to recruit candidates often, track their hours and acclimate a steady flow of new employees).
■ 85% of organizations report an integrated HCM system led to easier access to employee data and 75% benefit from increased employee data accuracy.
■ 38% of organizations identified reduced administrative cost as the main source of greater ROI. (Note that administrative cost is typically a bigger issue for the hourly workforce than the salaried workforce due to higher turnover.)
This report draws out the lessons for ensuring that organizations reap the benefits and avoid the pitfalls of choosing and implementing an integrated HCM system.
“It is easy to underestimate the challenges of recruiting and onboarding blue collar roles, as attracting the right talent even for simple service jobs is challenging due to high demand and competitive wages,” said Michelle Lanter Smith, Chief Marketing Officer at EPAY Systems. “As the quantitative data from the study show, organizations which invest in integrated HCM can expect to achieve more efficient HR processes throughout the entire employee lifecycle, especially during hiring and onboarding for companies that experience high turnover.”
In this study, integrated HCM refers to a single system from one vendor that handles a wide range of HR processes (e.g. HR, payroll, talent management, workforce management, and so on). This stands in contrast to having separate software from several vendors for different HR processes. The advantage of using an integrated HCM system is that, ideally, information flows seamlessly between the different modules and data only needs to be entered once. In fact, the need for information flow is so important that companies that buy a number of separate systems for different parts of HR usually invest in integrating them.
HCM and Employee Job Satisfaction
Less than half of U.S. workers are happy at work, according to The Conference Board’s latest job satisfaction survey.
Yet studies show that when employees are satisfied, they’re more productive and creative. When morale rises, sales and profits do, too.
No wonder so many employers are seeking new ways to improve job satisfaction—such as leveraging human-centric HR technology that provides employees with a more positive, personalized work experience. Yes, the most thoughtfully-designed human capital management technology does more than simplify life for management and the HR team: it makes the workday easier and happier for mainstream employees, too.
How? On one level, by alleviating common employee frustrations with HR forms, rules and “red tape” via streamlined workflows and processes. On another, human-centric HR technology can actually keep employees engaged and connected in a number of ways you may never have considered. Let’s take a look at how some of these work.
How an Applicant Tracking System Can Lead to Happier Hires
As you know, a cutting-edge applicant tracking system can save employers time and money by automating job postings and facilitating an efficient process for reviewing and classifying resumes. This allows employers to identify better matches more easily. And the better the match between employer, employee and company culture, the more likely employees will thrive.
And an effective applicant tracking system can also provide an improved experience to all candidates. For jobseekers, few things are more discouraging than not hearing back from a prospective employer one way or the other. Because an automated applicant tracking system can generate prompt, automated (but personalized) communications, applicants are treated with greater consideration.
Furthermore, once a candidate is chosen, seamless human capital management technology will convert his or her applicant data into a new hire record, jumpstarting the entire onboarding process. New employees can be brought into the fold more quickly, which not only benefits the employees, but their departments and organization.
HR Technology Can Standardize Onboarding Best Practices
Employers don’t get a second chance to make a first impression with new employees. That’s why it’s smart to implement onboarding best practices that make all new hires feel welcome and valued, while preparing them for work as effectively as possible.
For new employees, the onboarding process can be overwhelming, but well-designed HR technology can guides new hires step-by-step through a thorough, digital onboarding process, helping them feel grounded from day one.
With human capital management technology, orientation schedules, handbooks, benefit forms (more about that below), and even training materials can be hosted online for employees to easily access, along with checklists to ensure they’re meeting all their onboarding requirements.
An integrated human capital management system creates a single employee record, shrinking the mountains of forms and fill-ins new employees must complete. And thanks to electronic signature functionality, employers can ensure accurate tax reporting and I-9 compliance right from the get-go.
Getting off on the right foot helps employees feel great about their new employer, while ensuring onboarding best practices are followed.
How Benefits Administration Software Can Ease Open Enrollment
There are few things employees (and HR staff) dread more than open enrollments—largely due to the deluge of paperwork that’s part of the manual enrollment process. Benefits administration software eliminates that overwhelming mountain of paper and the frustrations that come with it.
When benefit enrollment takes place online, it’s easier for employers to provide employees with targeted educational materials and decision-support tools, resulting in a more positive, less confusing experience. Because HR staff is spared the task of distributing and collecting forms, they can also have more face-time with employees to answer questions.
In addition, benefits administration software provides employees with a self-service portal that allows them to view their confirmation statements and access plan summaries whenever they’d like.
Consider this: according to an Aflac survey of large employers, 80% of employees believe that having quality benefits are very important to job satisfaction. That’s not surprising. However, this might be: 79% of them also said that a well-communicated benefits program would make them less likely to leave their jobs. It matters.
Human Capital Management System Features
A reliable human capital management system will offer several great features that can maximize the efficiency of your human capital management, including:
- Applicant tracking – Keep track of all your applicants from initial contact to the onboarding stage to make the hiring process more efficient and effective.
- Employee onboarding – Get new hires up and running faster than ever with onboarding software that helps improve accuracy and eliminates data entry hassles.
- HR management solutions – Eliminate manual human resources processes using a unified HR management solution, with a more direct focus on your employees.
- Benefits administration – Provide employees with some of the best benefit programs available while maintaining compliance and minimizing workloads.
- Time and attendance tracking – Stay in control of your workforce and in compliance with labor laws while lowering labor costs with accurate time and attendance tracking.
- Payroll and tax filing – Reduce administrative work while increasing payroll data accuracy, following up-to-date tax rules, and further maintaining compliance.
- Performance management – Coach and provide feedback to employees, and set goals while nurturing employee development and forming an overall reliable workforce.
- ACA compliance – Manage all ACA requirements with little effort.
- COBRA benefits administration – Ensure seamless implementation along with ongoing compliance.
- Pay cards – Use free pay cards to gain access to benefits that might otherwise be unavailable to your business.
- Employee verification – Simplify secure employment verification with Equifax-powered services.
With all of these features available in a single solution, you can easily cover every aspect of HCM to give your business the efficiency it needs on a consistent basis, while also significantly reducing compliance risks.
How to Choose a Human Capital Management Software Vendor
If you want the best HCM software and platforms to work with, you need to find a reliable vendor that can work closely with you to give you exactly what your business needs. Many vendors may provide you with a “one size fits all” solution, but others offer complete customizability with multiple options depending on what you require.
Whether you need time tracking and attendance or benefits administration software, certain companies have some of the most reliable systems you’ll find anywhere. You’ll be able to see a difference in the performance of employees and your business overall, making customized HCM software a worthwhile investment in many ways.
You’ll want to make sure that when you compare and contrast HCM vendors that you can find the one that can truly help your business thrive. Ask yourself:
- What are the weakest components of your current HR strategy?
- How many employees do you need to onboard?
- What is the status of your HR staffand resources?
- What features does your business absolutely need?
- What is the overall cost of implementing an HCM system?
If you don’t do your homework, you may find yourself stuck with an inefficient HCM system that impairs rather than helps your business.