01.11.2021
ENTREPRENEURSHIP: WHAT IS HUMAN CAPITAL MANAGEMENT AND HOW CAN YOUR BUSINESS BENEFIT FROM IT?
Human capital management covers all the processes that businesses undertake during the search, hiring and training of people to optimize productivity.
To get the most out of their teams and retain the best talent, managers and leaders need to invest in the right practices and resources, writes the online edition business.com.
One way to achieve this is through human capital management (HCM). A set of practices related to human resource management (HR), human capital management refers to any part of the recruitment, hiring, maintenance and optimization of talent in an organization.
It is essential to understand what HCM is, how to implement it in your own business and the benefits of adopting HCM software.
What is Human Capital Management (HCM)?
HCM is a process of hiring the right employees and optimizing productivity so that the workforce is managed efficiently. What was once seen as a major administrative process for an organization is now an essential part of the value of the business. These are some important HCM strategies: recruitment; turn on; training; payroll; retirement services; talent management; reports and analyzes.
How is HCM different from HR?
While the terms "HCM" and "HR" are often used interchangeably, they have different meanings.
Human resources focus on the traditional core employee management functions for the entire organization. These include hiring, managing jobs and positions and administrative support. HR creates and manages the way a company acquires and trains talent.
Human capital management can cover the above processes, while supporting the management of talent and workforce. HCM systems tend to maximize the value and return on investment of each employee.
What are the administrative elements of HCM?
Human capital management involves many elements that move into different areas of the organization. Divided by life cycle, here are each:
Recruitment of potential talents
HCM facilitates the hiring process by increasing the speed with which it recruits future candidates and the quality of its future employees. For example, this can increase commitment to work-life balance solutions that motivate applicants and show them that the organization cares about its employees. Companies entice candidates not just by sharing their list of benefits and work-life balance, but by informing them how the company invests in the professional development of employees.
Detention of current employees
HCM practices also offer administrative support to current employees. This may include workflow, benefits, salaries, IT and other types of management. Unlike standard practices, the company's HCM is unique to the organization and the employees who work there. HCM has also streamlined these operations to make them more efficient. In addition, analyzes are applied to make data-driven decisions about work culture and employee behavior.
Optimization and development of talents
Managers usually meet regularly with their employees to discuss career development goals and how they would like to advance in the company. From these conversations, managers work with the employee to create realistic goals and career paths. HCM can help by offering training and educational resources for further staff development.
What is HCM software?
Organizations can use HCM software to implement talent management and optimization systems within a company. It differs from human resource management system (HRMS) and human resource information system (HRIS) in that it takes care of efficiency and workplace development compared to collecting demographic information. While HCM, HRMS, and HRIS differ, the systems may support a similar set of features, such as payroll, employee self-service, and benefit administration, depending on the provider.
HCM software can customize and automate the features your organization needs to maximize employee efficiency. The app can record, organize and store employee data to help you make data-based decisions about each employee's performance. Software managers can add and monitor specific goals and record employee performance to show their progress. Other functions include talent management, candidate tracking, inclusion, in-house training and attendance monitoring.
What to look for in HCM software
Choosing the best HCM software for an organization comes down to the needs of the team. Make a checklist of requirements to know what exactly you want from such a system. There are several factors to consider when researching which HCM software is best for your business: cost, compatibility, performance, adaptability, practical data information, ecosystem connectivity, maintenance, and more.
Most companies do not build their internal systems from scratch, so they will need to integrate their HCM software with their existing system. Pay attention to the technological requirements of the software and whether it can be customized according to your unique needs.
On the other hand, you also have a certain budget in which you need to fit. Some smaller companies may find that they cannot afford more stable agency software packages, but they may also not need all the features included in those packages.
What are the advantages of HCM software
HCM software allows you to make data-based decisions. This can save you money in the long run.
These systems also help increase employee satisfaction, which will become more productive and happy if business decisions are made based on their development. With software that supports development goals and promotes professional development, employees will feel that the company values them and invests in their work.
This will also improve the retention rate of employees. This will reduce the cost and time spent hiring and training new employees.
As a result, you also improve the company culture. Employees will be more engaged with the company, increasing their efficiency and ability to cooperate. Internal communication throughout the company can be improved as a result of both positive thinking and better processes.
What are the potential disadvantages of HCM software
The most important thing is the cost of implementing this software. You need to make sure you have the funds within your budget to afford these systems in the long run.
Also consider the risk of data leaks. As with any computer system or application that collects employee data, there is a risk that this information will be hacked. There are strict security measures that your company can take to keep your HCM data safe.
Adopting HCM technology could have a higher cost before you see a return. Discuss with your IT and internal team how long it will take to implement the software, what the financial burden will be with a long start-up, and how the problems that HCM software solves will be affected by future repayments.
