Modern workforces are more diverse and geographically distributed than ever. This shift demands that HR adapt to varied cultural, generational, and remote work needs. Employees now prioritize experiences, well-being, and flexibility, and HR must focus on creating personalized and engaging work environments to attract and retain talent.
For organizations still struggling through manual HR processes, HR software is becoming an increasingly important weapon in an arsenal aimed at collecting better data for more accurate and timely decisions, finding and retaining top talent, nurturing and developing talent, and providing end users and employees with the best experiences. HR leaders are finding that their current systems and strategies aren’t effective at achieving these goals. Mindset and technology need to come together in a unique way, and Human Capital Management (HCM) may be the answer.
Continuous transformation
Human Resources leaders must embrace a transformation mindset to achieve an efficient and effective HR function that is agile, efficient, and transparent. Envisioning the future is the first step, but leaders often aspire to a future they never achieve. Some believe that implementing new technology will be a silver bullet to a brighter future, but there are no easy fixes. Before considering technology, leaders must understand how their current operating model stacks up against their vision of the “transformed” function. This means deliberately mapping out how the HR department will not just support but also enhance the business. Common aspirations are changing from a transactor to an internal consultant, a gatherer of data to an analyzer of data, and an administrator to a driver of talent development. Then, take a cold, hard look at your current state, including the capability of the staff in the HR department to explore gaps, internal blockers to success, and inefficient business processes.
Before taking on technology implementation, know what you want to accomplish. Don’t waste this opportunity to change with a “lift and shift,” essentially trying to force old or broken business processes into a new system. Take the time to understand your vulnerabilities and what you need to change. Document your current state, discuss options with your team, and aspire to adopt leading practices. It may be time to consider HCM if you are:
- Operating in a silo
Siloed legacy systems contain basic HR information but fall short of providing data critical to effective talent management. Strategic HCM leaders need solutions that provide all the necessary tools to help them make faster and more informed business decisions. Built-in analytics are now necessary tools that help HR departments identify flight risks, profile skillsets, organize training, and align talent with organizational goals.
- Overwhelmed with manual processes
While most HR departments are overwhelmed, many still execute day-to-day processes manually, adding to backlog and end user dissatisfaction. Effective HCM solutions deliver the ability to replace manual paperwork functions with automated, low-touch employee self-service processes that are critical to freeing up valuable department resources. HR professionals can then turn their attention to higher-value processes which lead to time and money savings.
- Low to no data integrity
Some legacy HR solutions lack an environment that ensures the integrity and security of an organization’s data. An effective cloud HCM solution provides multilayered security featuring scalability and performance enhancement components designed to better protect company, customer, and employee data. Employees need to know their information and data is secure, especially in today’s breach-heavy environment.
- Outdated recruitment storefront
A company’s career site is the equivalent of a recruitment storefront. It is the first line of contact with your targeted audience and a key first-impression opportunity for steering the best talent through the front door. Today’s potential candidates operate in a consumer world that is exceedingly driven by advanced technologies, and their expectations extend to the workplace. Employees want to work for a company that is driven by modern technology. Review your career page; does it align with organizational branding? Does it entice next steps from your candidates? Arguably, the employee experience starts here. If your talent acquisition solution is not connected to your HCM solution or is lacking the tools you need for a successful talent acquisition strategy, it’s time to replace it.
- A recruitment paper trail
To sustain the long-term goals of an organization, successful recruitment includes much more than just compensation. Today’s onboarding process can comprise a whole range of steps, tasks, and drivers for getting new hires up and running, and new employees want those processes to be modern, mobile, and easy-to-use. Candidates want to take charge and be able to do things easily on their phones, leaving the paper trail far behind in lieu of a seamless, candidate-centric recruitment process.
- Disconnected HCM and payroll
For some organizations, payroll is a part of HR while others consider this to be a finance function. Regardless of organizational structure, it is critical that your HCM solution “talks” to your payroll solution. Without a fully integrated HCM and payroll solution, organizations face a higher rate of payroll leakage, errors, redundant processes, and manual work. If your HCM and payroll solutions are not seamlessly integrated, this may be a primary driver for considering a new solution that encompasses both.
HCM defined
According to Gartner, HCM is a set of practices related to people resource management. These practices are focused on the organizational need to provide specific competencies and are implemented in three categories: workforce acquisition, workforce management and workforce optimization. The applications that help to enable human capital management include core administrative support, strategic HCM support, and additional reporting, analytics, and workflow support.
What is the difference between HRIS, HRMS and HCM?
The distinction between HRIS (Human Resources Information System), HRMS (Human Resource Management System), and HCM lies in scope and functionality.
- HRIS focuses on administrative tasks such as payroll, benefits administration, time tracking, and employee record management. HRIS is primarily data-driven and handles core HR operations.
- HRMS is a more advanced version of HRIS, including features for talent management and learning and development. HRMS integrates technologies and analytics to add strategic elements to HR operations. HRMS solutions are often considered more transactional, handling the day-to-day operations of human resources. For companies with smaller-scale or more transactional needs, HRMS might be sufficient. It's a solid solution for managing administrative HR processes like payroll, benefits, and compliance without requiring advanced strategic capabilities.
- HCM encompasses a broader and more strategic approach. While it includes HRIS and HRMS functionalities, HCM systems also integrate tools for talent acquisition, learning and development, performance management, succession planning, and workforce analytics. HCM is geared toward enhancing the overall employee experience and aligning workforce strategies with organizational goals. If your focus is on long-term workforce strategy and aligning talent management with business goals, HCM is often the best choice. It encompasses HR functions and adds strategic components like workforce planning, learning and development, and analytics-driven decision-making. HCM is ideal for organizations looking to drive innovation and enhance employee experiences.
Think of HRIS as the administrative manager, and HRMS as the operational backbone, while HCM acts as the strategic guide. The choice often depends on an organization's specific needs and long-term vision, and the complexity and aspirations of your organization. Does your business lean more toward operational efficiency or strategic growth?
Key elements to consider when transforming your human capital processes
The latest HCM software incorporates several key elements to optimize workforce management and enhance employee experiences. Here are six important components:
- Workforce planning and analytics: Tools for forecasting workforce needs, analyzing trends, and making data-driven decisions.
- Talent acquisition and onboarding: Streamlined processes for recruiting, hiring, and integrating new employees into the organization.
- Performance management: Features for setting goals, tracking progress, and providing feedback to improve employee performance.
- Learning and development: Platforms for training, skill development, and career growth opportunities.
- Compensation and benefits management: Systems to manage payroll, benefits, and rewards effectively.
- Employee engagement and self-service: Solutions that empower employees to access information, update records, and engage with HR processes independently.
These elements collectively help organizations create a more efficient, engaging, and strategic approach to managing their workforce.
The proof is in the pudding
From branding and recruitment to retention and succession planning, successful companies take a holistic and combined approach to their HCM and payroll needs. Many organizations view their HCM technology as a gateway to digital transformation for the entire company for greater efficiency, lower costs, improved productivity, and an increased employee experience.
Top HCM platforms
Increasingly, organizations are adopting cloud-based HCM platforms for real-time collaboration and employee engagement. According to SNS Insider, the biggest players are:
- SAP SE (SuccessFactors, SAP HCM)
- Oracle Corporation (Oracle HCM Cloud, PeopleSoft HCM)
- Workday, Inc. (Workday HCM, Workday Talent Management)
- ADP, Inc. (ADP Workforce Now, ADP Vantage HCM)
Will you consider upping your HCM game? Alithya is here to answer any questions you may have about HCM and its alignment with your strategic HR goals.