Human capital management is an approach to business that helps companies get the most value from their employees. Traditionally, an organization may consider its workforce as a cost of doing business. Instead, the human capital management (HCM) approach considers your employees as assets.
And to maximize the value of an asset you invest in it. That’s just as true when the asset is your workforce. Human capital management systems include the traditional functions of human resources, such as payroll processing and benefits administration. However, HCM goes well beyond these basic HR services. Tools that help HCM invest in employees can include talent management, performance management, human resource management, workforce management, and using data analytics to help make inform decisions.
The benefits of human capital management can include:
While these benefits are clearly desirable, implementing a human capital management approach is not something you can do overnight. It’s a long-term and often complex endeavor. For best results, start by developing a strategic plan. The effort will be worth it.
This article will provide an overview of the steps involved in the planning process. We’ll discuss the key elements of an effective human capital strategy and provide suggestions for how to get started and how to follow through to help ensure you achieve long-term success.
The first step in developing a human capital management strategy involves taking stock of your current and future needs and establishing benchmarks you can aim for.
Assess your employees’ current characteristics, skills, performance levels, and needs using tools such as interviews, surveys, and focus groups. To identify your future needs, use market research tools that will help you identify market trends and industry benchmarks.
At this stage, set short-term and long-term business objectives that are aligned with your overall organizational strategy. Consider your company’s mission and values. Are you satisfied with how they are stated, or do you need to fine-tune them? Which people and what processes do you need to put into place to achieve your objectives?
You can establish key performance indicators (KPIs) to measure how each of your departments and each of your employees contribute toward reaching your objectives. Regular performance reviews and adjustments can be organized to measure the success of these KPIs. This is a process that fits in naturally with a human capital management approach because it provides valuable feedback and guidance to your employees.
There are certain key aspects of an HCM strategy that you will most likely want to include in your planning. These elements go to the heart of the HCM approach by optimizing the hiring process, boosting employee engagement, and strategically managing performance.
Based on your objectives and your analysis of your current workforce, what skills does your company lack that it needs to meet its goals? Can any of these needs be filled by providing training for your current employees, or do you need to bring new talent on board?
Once you identify your current talent gaps, you can implement diverse hiring strategies targeted at attracting the people you need. Applicant tracking programs can help make the hiring process more efficient for the HR professionals who oversee it and help you access candidate information on one platform.
Companies also use an HCM strategy to help elevate onboarding to achieving short- and long-term goals. When you create interesting onboarding events, new employees will feel engaged right from the start. The onboarding process is also a good time to introduce newcomers to your company’s culture and show them how their role fits into achieving your mission. You can also involve some current employees in onboarding to help your new employees get to know them and feel like they are part of the team.
Increasing employee engagement is a key part of human capital management strategies. The need is especially great now. A series of Gallup surveys found that employee engagement has been decreasing over the past several years, while disengagement has been rising.
Continuous learning and development, including training programs and skill-building initiatives, can be structured to fit your HR strategy. Building a positive workplace culture and optimizing employee feedback and recognition are two key ways to increase employee engagement and retention.
Providing opportunities for growth is crucial for keeping your workforce satisfied and engaged. This shouldn’t be left to chance but instead be a part of a deliberate business strategy. Succession planning is a natural part of investing in human capital because it helps you identify potential new leaders to fill spots as others grow and advance.
Regular feedback and employee growth are important aspects of HCM performance management. Your strategy may include:
Creating a solid plan for your human capital strategy sets the stage for success. However, that’s not the end of the process. You’ll need to be vigilant throughout the rollout and execution. Once your plans are put into action, you may need to make adjustments, based on how well they’re working, to keep your new processes aligned with your objectives.
Actively communicate with employees while implementing your new human capital strategy to make sure they feel involved and informed. Be transparent and solicit feedback. Bring all your stakeholders on board and include information about your HCM approach in your marketing and recruiting materials and communications.
To get the feedback you need on how your HCM strategy is working, conduct regular assessments to measure whether your human resources functions are meeting your goals and KPIs.
TriNet can be a key provider in your human capital consulting solutions. We provide tools to help you improve your HR functions. TriNet's consulting services provide the information, support, and guidance to help you implement a human capital strategy that will help increase your employees’ job satisfaction, commitment to your mission, and productivity.
To find out whether TriNet and its human capital consulting solution is right for your business, take our free assessment.
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