Importance of Human Capital Management Software
Updated · Feb 06, 2024
WHAT WE HAVE ON THIS PAGE
Technological advancements have transformed business strategies, created new job opportunities, and eliminated certain job roles. Organizations must become diverse and inclusive in their approach to gain a competitive edge.
According to research, 38% of employees quit within the first year of employment. Perhaps the work environment isn’t productive or inclusive enough. Some employees may also leave when they don’t have enough opportunities for growth.
Any company that has poor human capital management (HCM) practices and standards will face more challenges when hiring and retaining talent. To address these issues, it’s important to evolve HCM strategies with the help of automated tools and applications.
What Is Human Capital Management?
Human capital management is an essential department in an organization that caters to hiring, training, retaining, and managing talent.
HCM professionals impact an organization’s recruitment process by determining the most deserving candidates for a particular role. Based on various factors, they recruit the best talent that fits an organization’s mission, values, and culture.
Human capital management is an important resource that allows companies to innovate and adapt to market trends. They provide people development solutions and establish specific practices to ensure employee growth and satisfaction.
This strategic approach helps maximize a company’s human capital value.
Human capital leaders and managers help create a positive work environment that attracts and retains employees with high potential turnovers. HRM framework leverages technology and data analytics to make informed workforce decisions.
Importance of Human Capital Management
Human capital management is integral to any company’s progress. To achieve business goals in the most productive means, an HCM department will initiate programs to develop the company’s workforce. Other activities include:
- Assisting the HR department with hiring and retaining top talent to reduce recruitment and training costs
- Introducing Learning and Development (L&D) programs and activities to increase employee satisfaction and ensure better business outcomes
- Developing top performers in the company for senior management roles by presenting leadership opportunities
- Implementing equitable compensation and benefits programs to promote a positive organizational culture
- Tracking of key workforce metrics with a performance management system like retention, training, and turnover rates
Should You Integrate an HCM Software?
Most human capital management professionals leverage AI-enabled tools to transform traditional HR functions in an organization. An HCM software is a digital application that helps manage and supervise a business’ employees.
While some programs help track employee productivity and satisfaction, others assist with basic tasks like payroll and bookkeeping. An HCM software can benefit both your organization and the HR team:
- It improves organizational efficiency by automating repetitive and mundane tasks, giving your employees more time for business-centric work.
- It simplifies employee experience by providing an automated platform for attendance, leaves, benefits, and more without the hassle of paperwork.
- It helps manage training and facilitation costs, including the setup and other accessories, by providing an online platform for collaborative work.
- It ensures regulatory compliance by automating important reminders about mandatory training and regulatory issues well before time.
- It provides the HR department with necessary data on employee performance, retention rates, recruitment, and talent development.
Who Needs an HCM Software?
HCM software is essential when companies deal with a large and expanding workforce, so it’s mostly used in huge corporations and multinational companies. In a fast-paced work environment, technology is key to achieving business goals.
Most experts believe that startups can also benefit from using HCM software, as it helps with performance management, recruitment, training, and people development. In fact, HCM software is an excellent tool for ensuring organizational compliance.
If your organization works remotely, HCM software can help bridge the gap between technology, human resources, and the employees of the company. From timesheet management to payroll processing, the platform has everything in place.
Most companies that experience high employee turnover can use HCM software to transform employee development. It helps improve employee capabilities by introducing L&D opportunities and providing access to learning materials digitally.
If you’ve witnessed too many employees leaving, HCM software can help improve retention rates. Human resource professionals use the software to identify areas where employees require more assistance, like a learning or performance gap.
How Does HCM Software Meet Company Needs?
Manages Employee Information
Some of the best HCM software will give you the option to manage an employee database that contains necessary information. With this feature, you can track employee details like their name, title, address, salary history, banking information, and attendance chart. Instead of a physical folder, you can secure all the data in a digital space for easy access.
Manages Recruitment Processes
HCM software programs assist companies by automating different stages of the recruitment process, though some steps require the intervention of an actual employee. You can streamline many other tasks like sending job updates, scheduling interviews, and making assignments. This helps an organization save both time and money in the long run.
Manage Employee Performance
Some HCM software programs help the HR department keep track of employee performance by collecting productivity indicators. The software monitors key performance indicators and helps collect feedback from leadership, issue reviews, and more. You can also share and manage confidential information between employees and employers.
Manage Benefits and Perks
Your company’s human capital management software helps organize and keep track of employee benefits. It helps HR managers determine who’s enrolled in what type of program. The software will also send timely reminders, updates, and requests to employees to change their information. Employees can also access the HCM board to check the status of their benefits.
Manage Compensation and Payroll
HCM software is an excellent way to oversee your company’s payroll processes to avoid any kind of payment delay. Most companies deploy human capital management software to manage hourly, salaried, and commission-based employees. The software also handles other payroll functions like compensatory rewards, employee bonuses, and annual increments.
Manage Professional Development
Human Capital Management software is a great tool for delivering professional training and development programs to employees. You can send automated reminders to the employees when they need to complete training or attend a live workshop. To boost morale, you can also provide certifications to your employees once they’ve completed the training.
Wayne Kernochan has been an IT industry analyst and auther for over 15 years. He has been focusing on the most important information-related technologies as well as ways to measure their effectiveness over that period. He also has extensive research on the SMB, Big Data, BI, databases, development tools and data virtualization solutions. Wayne is a regular speaker at webinars and is a writer for many publications.