Employees are the heart and soul of your organization. It’s important to hire the right people and manage your workforce effectively, which is where human capital management comes in.
In this guide, we will be exploring the key components that make up the HCM system and help you find the perfect HCM software to optimize employee productivity and growth.
What is Human Capital Management?
Human capital management (HCM) is a set of business practices used to recruit, manage, and empower an organization’s workers. It streamlines operations in HR workflows and adopts strategies that enhance productivity, support team goals, and optimize the value of a company’s human resources.
HCM goes beyond the traditional administrative tasks of HR teams, such as recruiting, onboarding, payroll, and others. It also includes other strategic activities like employee engagement, talent development, performance management, and wellbeing programs.
When done right, human capital management brings about high quality hires, skilled workforce, engaged employees, and increased productivity.
Furthermore, human capital management software helps organize and sift through data. This is necessary as today’s workforce has become dynamic, featuring HRIS and Artificial Intelligence (AI) that automates HR workflows and routine tasks. This opens up new opportunities for team collaboration and allows you to gain real-time insights into your staff.
Read next: The Difference Between HRIS vs HRMS
What are the key components of HCM systems?
As mentioned, HCM systems revolve around the wellbeing of employees and helping them achieve their maximum potential. Hence, the key components of human capital management are centered around various activities across the employee lifecycle.
Talent acquisition
HCM software addresses challenges encountered while recruiting, hiring, and onboarding new employees while monitoring recruitment KPIs. By adopting HCM systems, you easily identify the skills and qualifications needed for specific roles and attract qualified candidates to your organization.
Onboarding
Managing human capital also involves introducing new hires to your company’s culture and processes. This works by enlightening them about their job expectations and building a healthy environment where new hires can transition smoothly and thrive.
Additional resources: The Comprehensive 30-60-90 Day Plan Template
Performance management
This component of HCM systems aims to ensure that each employee’s performance aligns with business objectives. It involves goal-setting, regularly evaluating performance, providing continuous feedback, and adopting improvement strategies. Its goal is to optimize performance so the company yields returns from its recruitment efforts.
By aligning your employee’s activities with organizational goals, performance management can propel workers to success.
Relevant reading: The Role of AI Tools for Performance Management
Training and development
HCM software also nurtures workers to develop new skills that improve their performance and help them meet job expectations. This is done through regular training, such as financial education, professional workshops, 1-on-1 meetings with industry experts, seminars, webinars, coaching, career planning, and other employee development programs.
Compensation and benefits
This HCM software component offers in-depth insight into the compensation and benefits employees gain from working with your organization. It covers salaries, bonuses, health benefits, retirement plans, and other non-financial rewards like fringe benefits. Its goal is to ensure your company’s compensation stays competitive per industry standards and adapts to your business needs.
By using HCM software, you simplify managing your workforce benefits and make necessary deductions without any hassle.
Employee relations
Human capital management software also supports building positive relationships among employers and employees. It involves initiatives such as employee engagement and recognition, work-life balance, financial wellness and more. This helps to define a positive workplace culture that fosters a sense of community within an organization and promotes employee satisfaction and retention.
HR analytics
HCM systems also involve collecting, analyzing, and interpreting human capital data in your organization. The goal is to ensure HR teams make data-driven decisions that improve results and highlight the impact of human resource practices.
As a component of HCM software, HR analytics also helps track progress and forecast trends. It covers all employee and company data, including recruitment, retention, skill development, productivity, and more.
Read next: Intro to HR Analytics and Leveraging HR Data
How can human capital management benefit your team?
Let’s face it—managing HR tasks and keeping up with industry trends while complying with labor laws can be overwhelming.
But it’s not all doom and gloom. After all, human capital management software offers many perks that outweigh the stress involved. So, if you’re wondering why you should invest in one, here are some benefits of using HCM systems:
Increase productivity
McKinsey revealed that more than 50% of employees report being unproductive at work. Per the survey, workers’ level of productivity is linked to employee satisfaction. That is, the higher the satisfaction and commitment employees experience, the higher their self-reported performance and well-being.
HCM systems can increase productivity by enhancing employee performance towards your company’s goals. For example, through performance management, HCM allows you to assess employees, address their concerns, acknowledge their efforts, and offer solutions to their work problems. In return, you get productive employees that advance your organization’s objectives.
Boost employee morale
Employees need that extra push to go the extra mile, and this can be done through the use of human capital management software. For instance, insights from HCM systems can help you offer quality feedback for employees, competitive salaries, and recognizing high-performing employees. With these initiatives, employees will feel motivated and engaged to perform better.
To prove this, Nectar reports that 84% of employees believe recognition boosts their motivation to succeed. The reason isn’t far-fetched—HCM systems ensure employees feel appreciated and are encouraged to reach their full potential.
Lower employee turnover
Because HCM systems enhance employee engagement, boost job satisfaction, and increase productivity, businesses can grow while lowering employee turnover and reducing attrition rates. Ultimately, HCM software increases worker retention. And consequently, it gives potential hires the impression that your company must be doing something right for employees to stay longer with you.
Additional reading: How to Use Data to Better Understand Attrition and Retention
Gain competitive advantage
By adopting HCM software, it signals to employees that you value not just their work performance, but also their overall wellbeing and career development. In return, employees satisfied and engaged with their work become brand ambassadors, eager to contribute to your company’s success, and promote your organization to others.
Top 3 HCM Systems
Now that you understand what human capital management entails, here are three HCM softwares that can help you build a high performing workforce:
Omni
Omni is an all-in-one HCM software that helps you leverage automation and streamline your human resource processes. As a human capital management software, Omni offers actionable insights for continuous improvement and team effectiveness. With Omni, you need not work with multiple HR tools as it seamlessly integrates with other platforms you often use, plugging into your team’s favorite tools so you don’t miss a crucial moment.
Omni’s performance management lets you monitor review cycles, deliver tailored performance appraisals, and automate reminders to complete the review process smoothly. It also has customizable goal-tracking templates that help managers oversee performance evaluations, track employee submissions, and get data-driven insights that fuel business decisions in one centralized platform.
Also, during talent acquisition, Omni provides HR teams and managers access to custom reports on recruitment KPIs in the hiring process. This ensures you address possible bottlenecks and drive company success.
Workday
Workday is a cloud-based enterprise management system that integrates finance, human resources, industry operations, and planning into one platform. It gives businesses real-time data-driven insights that enable them to make informed decisions. Furthermore, this HCM software also offers AI-driven tools and continuous innovation that support companies in automating their processes, improving efficiency, and adapting to evolving business needs.
Workday offers different benefits, from financial management to human capital management, expense management, and enterprise planning. By doing so, this HR tool helps companies effectively manage their operations amid the changing work environment.
Whether managing payroll, hiring talent, or organizing compensations and benefits, Workday simplifies complex HR tasks and gives you the tools to stay afloat in a competitive market.
BambooHR
BambooHR is a human capital management software that assists with payroll, hiring and onboarding, HR data and reporting, and employee experience and performance.
Furthermore, this HCM software helps you find, hire, and onboard the best candidates in your industry. With its applicant tracking system and proactive onboarding tasks, you can create a captivating candidate experience and smooth first days for new hires.
BambooHR also provides tools that help you listen to employees and invest in their development by gathering feedback, strengthening employee satisfaction, and growing your team.
Building a High-Performance Workforce with Omni
By evaluating your business needs, researching and trying out different solutions, finding the perfect human capital management software for your business needs does not have to be intimidating. Affordable, functional, and suitable for modern businesses — Omni is an HR software that HR teams can count on.
With Omni, you gain access to data-driven insights that empower informed decision-making, as well as seamless integrations that effortlessly connect with your existing employee favored systems, making your entire engagement process more efficient and modern.
Our full suite of modules provide support for every aspect of your business through an intuitive and fully customizable platform that integrates with your team’s favorite tools for a seamless and timely adoption.
Powering Asia’s fastest-growing, modern companies, Omni scales alongside your company so you can customize and leverage the system to meet your business exactly where you are — as well as where you’re going.
To join the 83% of Omni customers who have unlocked new, actionable insights after using our modern HR software solution,
