What is human capital management? In a nutshell, human capital management (HCM) is a business strategy that views a company’s workforce as an asset. This is a departure from the way that employees have traditionally been viewed — as a business expense.
When you think of your employees as an asset, it helps you think about how you treat them. Just as you would with other assets, you invest in them to maintain the greatest returns. When a company invests in the employee including training, employees become more productive and, therefore, more valuable to the business.
HCM encompasses traditional human resources administrative functions such as onboarding, payroll processing, and benefits administration. After all, those functions are essential for employees. However, HCM also focuses relentlessly on talent development, performance management, and engagement. The term “HCM” also refers to the technology used to implement an HCM strategy. If you are a human resources or training professional, you should understand how adopting an HCM solution could benefit your company. This article will provide an overview of what HCM does, the benefits of HCM, and tips for effectively implementing HCM in your small or medium-sized company.
HCM solutions enable companies to increase the productivity of their workforces. By using the HCM approach, your company could better attract and retain top talent, respond nimbly to changing conditions, optimize spending, and streamline HR processes.
HCM incorporates traditional HR functions, and HCM software enables companies to carry out essential administrative tasks efficiently. This frees up the HR staff to spend more time nurturing the talent of your workforce. Also, accurate performance of tasks such as payroll and benefits administration improves the employee experience, which helps with employee retention. Core HR processes include:
Talent management involves continually developing employees, retaining them by increasing job satisfaction and engagement, and bringing in great new hires. These actions go beyond traditional HR processes by treating employees as company assets.
Another component of the HCM strategy is getting the right employees with the right skills to the right place at the right time.
Small and medium-sized businesses benefit from using an HCM approach in many ways. HCM solutions help SMBs get the most out of their workforce, while performing human resource duties more efficiently.
Let’s examine three common strategies for using HCM to improve your business operations.
Companies usually accumulate a lot of data about their employees. An HCM system puts that data to work by providing valuable analytics. You can use employee records to help predict your workforce needs for the future and make better decisions about how to be prepared.
Data-driven decisions can help your company model the effects of change, anticipate future gaps in your workforce, identify top employees, and predict the performance of both teams and individual employees.
Employee turnover is expensive. On average, the cost of replacing employees who quit because they feel burned out is 15% to 20% of a company’s payroll budget. You can use HCM to fight burnout by improving employee engagement. Increasing employee engagement starts at the very beginning of the employment process — recruitment and onboarding — and continues throughout the employee lifecycle. HCM can help ensure that these early phases run smoothly and that potential and new employees feel included in the company culture right from the start.
Past the initial stages, HCM can identify ways to reward employees for outstanding work. The system can help set and measure goals and competencies and provide continuous feedback. HCM systems make it easier for employees to communicate with their co-workers and managers, both of which are key aspects of employee engagement and satisfaction. These systems help connect remote and hybrid employees with the in-office workforce and promote a feeling of being included in the company culture.
Software services can help your company take advantage of HCM. If you’re a small or medium-sized business, a software service can help save you time. Instead of trying to run an HCM system in-house, you can rely on the expertise of a third-party HCM provider. That way, you don’t have to use your own internal resources to maintain the system. It will be handled by the HCM provider.
An HCM provider may have the capabilities to integrate the technology with your current workflow. You can use the technology to improve every aspect of employment in your organization, making your HR processes more efficient and accurate and increasing employee engagement and retention.
HCM solutions help you keep up in an environment that is constantly evolving. However, small and medium-sized companies may find it too expensive and time-consuming to improve human capital management on their own. For these companies, TriNet’s full-service HCM software and service helps provide the solution, combining convenience and support with cutting-edge technology.
When you work with TriNet, you get a whole HR team dedicated to your success. You and your employees will receive the support and guidance you need to reap the benefits of HCM. TriNet’s cutting-edge HCM platform:
To find out just how easy it is for an SMB to gain all the advantages of HCM using TriNet’s comprehensive HR solution, contact us today.
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