In today’s increasingly complex business world, there is no shortage of different approaches and management styles used by organizations to handle anything related to employee staffing or HR.
One of those approaches, called human capital management (HCM), has grown in popularity during the last couple of years and is now being implemented by a variety of businesses all over the world.
What Exactly is Human Capital Management?
Even though interest in human capital management has increased in recent times, it isn’t some type of new business philosophy born in the digital age and unheard of before.
Simply defined, it’s an approach to HR that sees a company’s employees as assets, which are defined as human capital. These assets have a current value that can be measured and just like other categories of assets, this value can be increased by making smart investments.
How Businesses Have Successfully Put This Approach to Work
While HCM solutions can have many benefits for a business, it has to be carefully set up and maintained on an ongoing basis. While there are some basic principles to follow, some elements will need to be adapted to the structure and needs of the organization.
For example, the owner of a small firm with a dozen employees may decide to adopt an HCM approach for all staff members with just a basic amount of planning. On the other hand, a large corporation may want to roll out changes gradually by department, as doing so gives senior HR managers the chance to address any issues encountered.
This allows for a more efficient and problem-free transition to human capital management across the entire organization.
A business using an HCM approach will need to ensure all employees received performance expectations that are defined very clearly and communicated to the right people at the right time.
Managers are given the responsibility of making sure those working under them are aware of individual or collective business goals to be achieved, creating an environment where employees are accountable for meeting these goals, periodically rating performance and rewarding those who make noticeable efforts to meet and exceed objectives or who find innovative ways to increase performance.
This doesn’t mean managers should constantly micromanage their team members or create a corporate culture where everything is reduced to numbers on a spreadsheet.
The specifics of what the goals are, how performance is measured and strategies used to improve performance or encourage employee growth will be unique to each business and can vary between departments or teams in the organization.
Technology Helps Put HCM in Action
There are now many HR management platforms built specifically for businesses using HCM.
These solutions combine the usual HR management functions (recruiting, payroll and benefits, time and attendance, etc) with a system enabling managers to set various performance objectives and adjust them if needed, monitor progress and performance, generate reports and manage incentive programs.
There are HCM tools, platforms and software solutions for any type of size of business. The simplest ones are designed for small organizations and are fairly straightforward. They can come in the form of a cloud-based online app, desktop software or even a mobile app.
Basic HCM tools give small business owners and managers an easy way to configure parameters, update information, create reports and share data.
For larger businesses, more advanced solutions exist, including entire enterprise-class systems that can be deployed on an in-house server or hosted in the cloud by the provider.
They come with hundreds of useful features, such as automatic performance data collection from different sources, scheduled report creations and alerts, integration with other business systems and anything else imaginable.
For companies with highly unique needs, custom modules can be developed by the platform creators, third parties or an in-house team.