Do you get the most out of your employees? One of the critical factors of corporate success is effective human capital management (HCM).
This task means ensuring that your HCM and ERP (Enterprise Resource Planning) systems for hiring, payroll, benefits, training, and other administrative functions are efficient and transparent.
But how exactly should companies do it? Read on to find out!
What Is Human Capital Management?
Human capital management establishes a set of practices that encompasses employee acquisition, retention, management, and optimization.
Simply put, it’s the process of managing human capital and is rooted in the theories and practices of human resource management.
Human Capital Management vs. Human Resource Management
If you have human resource management policies and systems, why do companies need human capital management? They both indeed play roles in maximizing the effectiveness of human resources. But they differ in their primary functions.
HCM encompasses roles more than the administrative tasks of HRM, like managing people and encoding data. Rather, it uses the core functions of HRM and integrates them into the dynamic system built in HCM.
It comprises a system that quantifies and evaluates the impact of workforce performance on business performance.
Elements of Human Capital Management
It’s crucial to first recognize what companies need to maximize in understanding how human capital management works. It focuses on one critical resource: human capital. So HCM aims to bring out the best in your staff.
These functions include:
- Employee skills and abilities
- Attitude toward work
- Work experience
- Employee behavior
- Employee performance
- Payroll and compensation
- Employee retention
How To Achieve Effective Human Capital Management
Human capital management is becoming an important system in today’s fast-paced world. Among the many assets of a company, human resources require the most finesse. To manage your employees’ potential, here are some ways to effectively manage your HCM processes.
Improve Human Resource Management
If you need to build a sturdy house, you first have to gather high-quality cement, bricks, and wood. This means that your company has to improve its workforce management first before aiming for a good HCM system.
Effective human resource management leads to successful human capital management.
The first step in improving your human resource management is to evaluate your HRM system.
For example, does your recruitment process carefully review and assess your employees’ skills and talents? Does your analysis of potential employees match the organization’s business objectives?
If not, a lack of goal synergy may cause employees to perform less effectively. So this can affect your organization’s goal to maximize the workforce and minimize costs.
Increase Employee Engagement
Human capital management shouldn’t simply consist of recruiting, training, and paying your staff. This realization is due to the fact that company success is a two-way process.
It’s not only a matter of getting customers to take an interest in your product or service. It’s also a matter of engaging the workforce behind your business operations.
Employee engagement can be achieved through enhancing employee satisfaction. Re-evaluate your onboarding, training, and performance review processes. Do you consider their needs as workers? Are they provided with enough resources to perform well?
Here are some tips to better motivate your employees:
- Provide regular employee recognition
- Provide work flexibility
- Encourage communication and interaction
- Display care for employee’s health and well-being
- Create a healthy company culture
Utilize Available HCM Tools and Technology
There are tools and software that can help allocate and minimize costs associated with human resources. These options can help you achieve an efficient HCM process.
So HR professionals should adapt and invest their time in finding the right HCM and ERP technology to assist them in their diverse roles.
HCM tools can benefit you in a handful of ways that traditional human resource management can’t. Some of the benefits of HCM tools and technology include the following:
- Automation of reporting on key areas of human resource management
- Assistance in controlling expenses
- Efficient repository for information on costs, resources, and capital
Integrate a Personalized Approach to HCM
Good human capital management should provide a sense of comfort for employees to express their needs as workers. Integrating a personalized approach encourages employees to communicate and provide better information.
Employees’ personalities, preferences, cultures, and situations should be considered in this approach. For instance, some might need more supervision or require greater levels of communication from managers and peers.
Improve Hiring and Recruitment
The recruitment process serves the valuable functions of acquiring employees and identifying talent. Set a detailed system in place that addresses the spread of recruitment information, employee referral programs, and candidate tracking.
If recruitment involves a large number of applicants, HCM tools can help.
Assign a competent manager to oversee this critical step and incorporate reliable software options to help you source the best talent. Make sure that the recruitment process also maintains ethical and moral standards.
Improving this phase ensures your future employees start off on the right foot and can contribute value to your company.
Improve Your Talent Management Process
Finding the best talent may not always be the primary reason for your shortcomings in your HCM process. You may already have great workers, but you may not have systems in place that allow their skills to shine.
You may have an introverted employee who’s good at math or an outgoing staff member who is good at engaging with customers. Improve your talent management stage if you want to tap into the skills of your staff.
Implement Better Solutions to HCM
Businesses are constantly evolving to incorporate efficiency into their operations and achieve competitive advantage. New HCM and ERP technologies have emerged to streamline each human resource process to provide an all-in-one solution.
Today, a myriad of human capital management (HCM) tools cater to the need for automation and fast data systems.
Human capital management plays a crucial role in creating value for your company. After all, human resources are a company’s most important asset.
And in today’s competitive business world, it is vital to squeeze out every ounce of benefit you can muster. So it is critical to introduce HCM systems to get the most out of your staff.
Interesting Related Article: “The Future of Human Capital Management Technology“