What is human capital management (HCM)?

Human Capital Management (HCM) encompasses practices and tools utilized by HR departments to acquire, manage, and optimize a workforce, ultimately driving business value.

What is Human Capital?

Human capital refers to an employee's economic impact on their company and the value they contribute to their team. It encompasses an individual's skills, knowledge, experience, and creativity.

Purpose of Human Capital Management

The primary objective of HCM is to maximize the collective human capital within a workforce. This involves enhancing essential experiences and processes such as recruiting, onboarding, learning and development, and performance management.

The Four Components of Human Capital Management

Core HR Functions:

Payroll management and administration Benefits administration Onboarding and offboarding Compliance management Other administrative functions

Talent Management:

Talent acquisition Compensation planning Learning and development Succession planning Performance management

Workforce Management and Optimization:

Workforce planning Time and attendance management Budgeting Employee data and analytics

Service Delivery:

Employee self-service portals HR help desks HCM software

Human Resource Management vs. Human Capital Management

While both HRM and HCM focus on managing people within an organization, they serve different aspects of the employee experience. HRM primarily deals with administrative functions, whereas HCM encompasses strategic practices aimed at increasing the value of the workforce and enhancing the employee experience.

Positive Impact of HCM on Organizations

Implementing HCM practices can have several benefits for organizations: Streamlining talent acquisition Promoting career growth and retaining top talent Optimizing employee placement Strengthening company culture and engagement Aligning business strategy with talent acquisition and training Boosting HR productivity through automation Human Capital Management Software

HCM software automates HR processes, facilitates employee self-service, and enables HR professionals to focus on nurturing and engaging employees rather than repetitive tasks.