What is Human Capital Management (HCM)?

By hrlineup | 30.11.2020

It’s common knowledge that employees are the biggest asset of a company. Therefore, keeping this valuable possession should be at the apex of any organization’s agenda. If employees feel that they are not valued, they will become unmotivated and unproductive. Well, that’s where the human capital management (HCM) comes in.

The purpose of human capital management is to enable a company to have a strategic approach to manage staff effectively. It can help identify talents for future promotions and make succession planning more straightforward.

So, let’s have a quick overview of the functions of human capital management and why it’s vital to a company’s success.

What is Human Capital Management (HCM?

HCM meaning in HR point of view is a collection of set practices or actions that govern people resource management. In simple terms, it’s the act of recruiting, managing and eventually developing a competent workforce.

Using software applications is the most effective way of implementing HCM practices. Also, you can merge all features into a single platform called the human capital management system. The effectiveness of this system, however, relies on how well you execute the practices.

Below are some of the primary components of an HCM:

  • Recruitment
  • Onboarding
  • Employee self-service
  • Payroll integration/administration
  • Employee information management
  • Workforce planning
  • Reporting and analytics
  • Performance management

Combining these essential components into one HCM system can improve accuracy and create efficiency for the HR team. Key stakeholders, like managers and employees, can easily view and update their data as well as timely complete vital HR-related assignments.

How HCM Works

Because HCM systems are becoming more innovative, companies are now able to solve problems more efficiently than before. But of all the HCM features and benefits, only three stand out as the core objectives. They include:

  • Workforce acquisition – Hiring, orienting and training new employees.
  • Workforce management – Scheduling, gauging performance, and managing payroll.
  • Workforce optimization – Provide resources, performance data, engage employees.

Benefits of the Human Capital Management System

Employees are essentially the engine that runs an organization. They are the ones who spend lots of time every day working and contributing to an organization’s eventual success. With a human capital management system, you can acquire, manage, and retain high-performing employees with ease.

The human capital management team is responsible for innovating and implementing methods of hiring, orienting, training, motivating, and engaging employees. Thus, the employees’ overall happiness and productivity are tremendously improved. Besides, a well-managed HCM system can make tasks around the entire company seamless.

The Bottom Line

Embracing human capital management (HCM) is a sure way to maximizing your company’s HR efficiency by streamlining recruitment, management, and engagement of employees. And with many organizations grappling with a long list of HR processes, the human capital management system has never been more critical.