Without the right people, your business will fail. And without the right tools in place to manage your people, meeting your goals becomes infinitely more difficult, especially when a large workforce and global considerations are in play. HCM software (Human Capital Management), which is a particular type of HR software, bridges this gap by providing capabilities that support human capital strategies and activities.
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In today’s environment, a talented workforce has become a company’s most valuable asset. Companies with the best talent are more strongly poised to dominate their markets, putting organizations that must attract this talent at a short-term disadvantage. As a result, companies are investing in human capital strategies, with the expectation of developing and retaining employees, as opposed to having to hire and train new people.
In order to meet these expectations, you need to have processes in place for attracting professionals with the proper skills, which requires a strong emphasis on talent management. HCM and talent management go hand-in-hand because in order to successfully develop human capital and foster and expand expertise within your organization, HCM needs to draw upon candidates with the right skills and aptitudes. Proper talent management can help deliver the most suitable candidates early on in the hiring process, reducing costs and ensuring targeted training that matches employee skills with your strategic goals.
At this point, human capital management software steps in to facilitate the execution of the day-to-day tasks and planning that form the foundation of your strategy. For that reason, it’s critical to choose a system with capabilities that are sufficient to support your requirements.
We’ve compiled a list of the leading solutions that you should consider. We’ll also cover:
- What HCM software is
- Key benefits you can expect
- Top features to look for
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What is Human Capital Management Software?
Human capital management software (commonly called HCM software), generally indicates a suite of seamlessly connected apps that enable organizations to maintain and manage critical people-centered functions. Such systems are also referred to as HRIS (human resource information systems) or HRMS (human resource management systems), although the terms aren’t synonymous. We’ll get to that shortly.
HCM has grown as a discipline and as an industry thanks to greater emphasis on the value of human talent as a strategic priority. Companies have become increasingly aware that their most valuable asset is their human capital, and that the combined skills, training levels and productivity of their workforce can mean the difference between success or failure. In this new reality, companies have directed additional resources to workforce development and the product suites that support it.
Software vendors have responded to this market demand. Today, businesses have a wide array of HCM solutions to choose from and can unite many aspects of HCM management, making the process as streamlined and intuitive as possible.
HCM vs. HRIS. vs HRMS
The distinction between human capital management (HCM) and human resource management (HRM) isn’t always extremely clear, which isn’t surprising. While many analysts would argue that the two disciplines are quite different, there’s enough overlap that the terms can be – and are – used interchangeably. So a short discussion of the differences and similarities may contribute to a better understanding of HCM in its proper context.
Human resources refers to the people who make up a workforce within an organization, which can extend to imply the workforce of a business sector or an entire economy. The word resources implies “an available source that a company can utilize when needed until it is no longer available.” It isn’t limitless.
Consequently, HRM is an organizational function that manages the existing personnel activities of a company. Its tasks are more transactional and administrative in nature — payroll, employee benefits, compliance issues, reporting and so on.
Human capital, on the other hand, builds on the concept of human resources and adds a value component. Capital can grow with investment, producing more capital, and it isn’t a finite resource. Therefore, human capital is the collective value (and replenishable source) of knowledge, skills, motivation and commitment of the organization’s workforce.
HCM provides an important strategic function for the organization, focusing on professional development, performance measurement and human resource planning for future company growth.
HCM and HRM software play a complementary role in developing and promoting human capital assets. Combining the abilities that strengthen recruitment, retention and talent cultivation with typical HRM functions that deal with the operational management of payroll, benefits and recordkeeping makes the process less fragmented, leading to greater cohesion and efficiency.
HRIS, the original technology, which began as a system for managing administrative tasks, has become less common as a term. However, it offers similar functionality to an HRMS suite and still exists in the dictionary of terms vendors use to describe their HR products.
Check out our article that explores the differences between HRIS, HCM and HRMS software for a more in-depth discussion on the capabilities of each software type.
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