What Is Human Capital Management?

Human capital management or HCM is the set of practices that manages individuals in an organization in terms of recruiting, training,  developing, and optimizing them to add more value to the organization. Several benefits of HCM are:

  • It leads to the development of crucial skills in employees
  • It helps in hiring the right people
  • It increases efficiency and productivity
  • Helps managing employees

What Are the Practices Involved in Human Capital Management?

HCM is a vast management program involving the following practices and strategies:

  • Recruiting
  • Onboarding
  • Training and development
  • Workforce planning
  • Compensation management
  • Benefits management
  • Workflow planning and management
  • Time and attendance management
  • Succession management
  • Learning management
  • Compensation management
  • Career planning

Why Is Human Capital Management Important?

A big upside of HCM is that it increases the productivity and creativity of employees. When done right, HCM can help increase the profitability of an organization. On the other, implementing it poorly can have several downsides such as loss of revenue and increased labor costs. Other benefits include:

  • It helps with changing demographics. Hiring a new generation of employees helps in bringing new styles, needs, creativity, and potential.
  • Large organizations have many employees and therefore they need to store a massive amount of internal and external data. This isn’t possible with smaller database systems. In such a case, HCM  can help these organizations store, manage and analyze this data easily. 

What Is the Difference Between Hcm and Hrm?

Although both HRM and HCM are used interchangeably, there are some differences. The process of creating and managing systems or policies that are requires when hiring and training and retaining employees, is called human resource management. 

On the other hand, human capital management is rather a broad term involving optimizing and, maximizing the value and the Return On Investment of the human capital. 

What is HCM Software?

HCM software is a technology app that helps managers look after their employees. This software is also commonly known as human resource information system HRIS or human resource management system HRMS. 

HCM software stores employee data and helps employers gain better insight on how to recruit and retain employees in the best way.

Some HR functions that HCM software supports are as follows:

  • PayrollWhat Is Hcm Software?
  • Recruiting
  • Employee tracking
  • Benefits management
  • Performance management
  • Onboarding
  • Attendance and time tracking
  • Reporting 
  • Employee self-service

Although there are many HCM software currently available in the market, it’s best that you pick the one that suits your organizations’ unique needs.

 

Related Terms 
Onboarding