Human capital management (HCM) transforms the traditional administrative functions of human resources (HR) departments—recruiting, training, payroll, compensation, and performance management—into opportunities to drive engagement, productivity, and business value. HCM considers the workforce as more than just a cost of doing business; it is a core business asset whose value can be maximized through strategic investment and management—just like any other asset.
The term HCM can refer both to a business strategy and a set of modern IT applications and other technologies that are used to implement that strategy. Though sometimes used interchangeably, the terms related HR, HRMS, and HRIS do have subtle distinctions:
Refers to a set of traditional employee management functions that includes hiring, job and position management, HR compliance, and reporting.
Encompasses the same processes, but also includes workforce rewards and talent and workforce management
Looks at the strategic management of talent throughout the talent lifecycle. It includes sourcing and recruiting candidates, goal and performance management, learning and career development, talent review, and succession management.
Refers to all HR functions that manage any monetary or nonmonetary rewards including compensation, benefits, or payroll.
Involves all HR functions that are related to positive and negative time management including time and labor and absence management.
Refers to the set of applications and other technologies that support and automate HR processes throughout the employee lifecycle. While the terms HCM and HRMS are often used synonymously, HCM puts particular emphasis on the strategic approach to managing employees.
Originally referred to keeping administrative employee records. It has been largely replaced by the term HRMS. In practice, HRMS and HRIS are virtually interchangeable terms.
A complete HCM solution connects all HR processes, including recruiting, global HR, compensation, benefits, talent management, learning, workforce planning, work-life solutions, time tracking, and payroll.
With HCM solutions, businesses can make smarter and faster decisions, deliver a best-in-class employee experience, and leverage embedded cutting-edge technologies, such as artificial intelligence (AI) and chatbots to automate workflows, improve efficiency, and engage quickly.
Simplify your HRIS systems and manage your entire workforce with a single, global system of record.
Enable organizations to manage the entire talent lifecycle—from effectively sourcing and recruiting to onboarding new hires, managing goals and performance, rewarding for performance, providing continuous learning, developing careers and conducting talent reviews and planning for best-fit successors—all while keeping employees engaged.
Control labor costs, reduce manual processes, and simplify compliance for all of your employees, globally.
Attract and retain the right talent and drive value through a differentiated workforce rewards strategy. Maximize the accuracy of payroll and compensation data using modern and innovative technology.
HCM (human capital management) software is an integrated suite of technologies that can help businesses manage their employees, from hire to retire. HR software applications are referred to as:
HCM software supports a range of HR functions, including recruiting and talent management, payroll, and benefits administration. These integrated modules include your organization's capabilities to manage the complete employee experience.
HCM software can be run and accessed in the cloud or on-premises at your company’s location. By leveraging cloud-based HCM software, businesses can significantly reduce maintenance costs, increase access, improve employee experience, and bolster the security of employee records.
Additionally, HCM software manages employee data in a database. Leading HCM cloud software providers offer advanced analytics, helping employers gain insights into the best way to manage their employees.
The term “human capital” was first used in the 1950s and 60s as computing began to accelerate the automation that had begun in the industrial age. Economists and business people began to see employees not as replaceable units completing routine tasks, but as knowledge workers with specific skills and talents that could fuel business growth.
Not surprisingly, the term returned to prominence with the rise of the internet in the late 1990s. New technologies were rapidly automating a whole new set of business processes. While the internet changed the how employers and managers worked and collaborated. All of this change meant that workforce leaders had to transform how they went about attracting, retaining, and engaging talent in an evolving set of job roles.
This decade could be called The Golden Age of HCM. New digital technologies are enabling HR leaders to provide a more engaging and personalized employee experience at scale. At the same time, emerging technologies, such as data automation, predictive analytics, and artificial intelligence (AI), have added new innovations for understanding, managing, incenting, and engaging the workforce. And HR leaders have a whole new set of tools that can maximize the value of their workforce, from intelligent, social-driven recruiting and personalized retention practices to highly optimized compensation.
The cloud and software-as-a-service (SaaS) delivery models are quickly becoming the new normal for HCM technologies. The cloud approach accelerates deployment, turns variable capital expenses into fixed and transparent operating expenses, lowers IT costs, and drives agility by speeding and simplify upgrade paths.
Although there are many SaaS HCM providers, they are not all alike. In evaluating vendors and solutions, businesses need to ask key questions as they consider not just the HCM capabilities they want today, but the ones they will need in the future.
Clearly, technology is disrupting the world of work as we know it. New technologies are changing business strategies, eliminating job roles, and creating new work opportunities. But while traditional hierarchical structures are changing, the workforce is transforming as well—into flatter, more agile networks of teams, becoming more mobile, global, and diverse. HCM too, is evolving rapidly. Expect to see accelerating adoption of already-familiar technologies, such as SaaS and mobile, as well as leading-edge technologies, from machine learning to AI.