As the way we work continues to evolve, so too does the way we need to manage our workforce. Human capital management (HCM) refers to the process of workforce management. HCM software has been used to help businesses get the most out of their workforce. This guide will answer the question of what human capital management is while also discussing the benefits HCM can have for your business.
Human capital management (HCM) is a term that refers to the process of managing an organization's workforce. This includes activities such as recruiting new employees, onboarding them, training them, and managing their performance. To manage an organization's human capital effectively, businesses can implement a human capital management software solution.
In the 1950s, the concept of human capital management first began to emerge. As the nature of work began to evolve, so too did the way we thought about employees. Thanks to advancements in computing and automation, employees were no longer viewed as cogs in a machine or steps in an assembly line.
These advancements gave way to the rise of a new class of workers: the knowledge worker. Unlike their predecessors, these employees would provide a whole new level of value to a business as they were able to create, innovate, and think critically.
It was this change in the workforce that led to the development of human capital management to manage and motivate these new employees. In its simplest form, HCM can be defined as a process that helps businesses to get the most out of their employees
Fast forward to today, and there are many different careers that come out of human capital management. Whether it's in human capital management consulting or in HCM strategy, there are many opportunities to have a long career in this field.
There are many human capital management jobs out there due to how many elements there are within human capital management. Several of these elements include:
While many make the mistake of using these terms as synonyms, the reality is that there are distinctions between the two.
Human resource management, or HRM, primarily focuses on managing the administrative functions of an organization’s workforce. This includes recruitment, onboarding, employee relations, payroll, benefits administration, compliance with labor laws, and performance management. HRM is centered on the operational aspects of managing people within an organization.
Human capital management, on the other hand, takes a broader, more strategic approach. It encompasses all HRM functions but also includes talent management, workforce planning, learning and development, and succession planning. HCM emphasizes optimizing the value of employees as assets (or “capital”) to drive organizational success, viewing employees not just as resources but as key contributors to the company’s long-term growth and competitive advantage.
HCM provides an all-encompassing approach that can benefit your business in several ways. Firstly, it helps businesses to attract and retain the best people. By implementing an HCM solution, businesses can identify and hire the most talented individuals who fit with their organizational culture.
Secondly, HCM can help businesses improve employee productivity. By providing employees with the necessary training and tools, businesses can ensure they are able to perform to their full potential.
Finally, HCM can help businesses reduce costs associated with employee turnover.
As a strategy, HCM brings all these ideas together in a highly integrated manner. A human capital management strategy will keep things organized and efficient and ultimately save time and money.
The workplace has never been as dynamic or fast-paced as it is today, and organizations are under increasing pressure to do more with less. Human capital management software helps businesses manage their workforce more effectively and efficiently.
HCM software solutions are designed to automate and streamline the process of managing an organization's human capital. This includes activities such as recruiting, onboarding, training, and performance management. By automating these processes, businesses can save time and resources that can be better spent on other areas of the business.
The best human capital management software has a plethora of benefits. Here are just some of the benefits your business could reap by implementing HCM software:
While there are many benefits to implementing an HCM solution, there are also some challenges that businesses need to be aware of.
There has been a wholesale shift towards cloud-based software, and HCM solutions are no exception. Cloud-based HCM solutions offer a number of benefits compared to traditional on-premise solutions. Some of the main benefits of cloud-based HCM solutions include:
Human capital management has evolved a great deal since its 20th-century roots. As the workplace changes, so too does the need to evolve the way this new workforce is managed. Here are some of the ways we can expect HCM to evolve in the future:
Human capital management is all about getting the most out of your employees. Businesses that implement a clear HCM strategy can expect to see several benefits, such as improved employee engagement, increased productivity, and reduced turnover. Just remember that, like the workforce itself, HCM always needs to evolve to ensure that it's relevant and effective.
To learn more about implementing an HCM solution for your business, schedule a demo of Workstream's HR, Hiring, and Payroll platform built for the hourly workforce.