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What is an HCM and what is it used for?

what is an HCM
Alexandre Diard
what is an HCM

Today, HR professionals are increasingly asked to be proactive rather than simply reactive. To do this, HR must be forward-thinking and anticipate the needs of employees. That's why Human Capital Management (HCM) tools are useful, as they simplify talent management by centralizing all data and putting it on a single platform. HR professionals can obtain a global vision of the career path, performance, and needs of employees. So, what is an HCM, and how does it fit into a company's HRIS ecosystem?

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HCM: a talent management tool


Human resources are composed of many functions and carry out various support missions.

Among them, HCM (Human Capital Management) refers to the management of human capital, in other words, all HR functions related to workforce management, such as recruitment management, skills management, or succession management in the event of a departure or a change of position. In this respect, various HR talent management software packages are essential for an effective HCM. These HR software include, for example, recruitment software, training management software, competency management software, career & mobility management software, and compensation management software.

Adopting an HCM implies being alert to the performance and well-being of employees. For example, HCM tools can monitor talent performance and possibly offer training to fill in gaps. With an HCM, HR professionals can establish frequent follow-ups of their staff and be attentive to their possible needs. A great way to target the employee's missing skills, facilitate internal mobility, and retain talent is by offering them an attentive and supportive environment. Finally, once the talent has been assessed, the HR department must be proactive in establishing a career development plan through dedicated modules, which will enable it to be alert to the career opportunities that arise.

Human Capital Management, or HCM, covers a range of HR practices designed to manage payroll and optimize workforce management. Depending on the company and the size of its payroll, HCM varies, and organizational techniques may differ; however, the strategy is broadly similar in all companies and uses similar talent management mechanisms.

An HR approach that relies on HCM tools is human-centered, the best way to improve the employee's skills and value.

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The HCM: an essential component of the HRIS

Currently, talent management modules are the least integrated of all HR systems. However, they are proving to be particularly useful and are increasingly in demand by companies. While the standard HRIS has the traditional functions of supporting as many HR procedures as possible and keeping employee administrative data on a foundation, the modern HRIS now includes strategic workforce management.

Administrative management and talent management: two major functions of modern HRIS

For responsible and intelligent human resources management, it is fundamental that the HR manager relies on digital and modern HR solutions. This will leave time for HR teams to focus on higher value-added tasks.

Today, the HRIS has become an essential HR software in organizations. An HRIS is a "human resources information system" and integrates all HR functions. A good one should both have an administrative management and talent management section. This second part focuses more on personnel management and its improvement, so it is precisely this management solution that is also known as HCM. Assuredly, the tools dedicated to talent management and personnel administration, or HCM, are an integral part of a modern and efficient HRIS and represent a crucial concern of a good HR policy.

Thus, an intelligent HRIS suite is composed of administrative management modules such as but not limited to:

  • Leave & absence module
  • Time and activities module
  • Payroll module
  • EEOC reporting module
  • Organization Chart Module
  • HR Document Generator Module
  • Planning Module
  • Expense Report Module
  • Electronic/Digital pay stubs Module
  • Document Management Module
  • Badge Reader Module
  • Electronic Signature Module

In addition to these administrative management modules, the HRIS is composed of HCM tools, i.e., all the tools for intelligent and strategic management of the workforce such as:

  • Recruitment Module: This allows you to recruit the best people for your company.
  • Training Module: to support your employees in their professional development and meet their training needs.
  • Skills Module: to anticipate the needs of your employees and evaluate their skills
  • Talent Module: identify your best employees, promote their development, encourage their retention, and anticipate staff shortages.
  • Onboarding Module: create automated onboarding paths to facilitate the onboarding of new employees.
  • Performance management module allows you to monitor the progress of your employees and verify that the objectives set are being met.
  • Compensation module: This allows you to establish solid and efficient compensation plans.

 

This pyramid provides a better understanding of how an HRIS foundation works and how it includes HCM tools:

HCM

Human capital management tools, or HCM, therefore focus on strategic employee management and are a key component of HRIS.

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An HRIS with an HCM: a key asset for the company


Human resources management is now at the heart of digital transformation. To facilitate resource management, HR departments are turning to management and steering solutions that rely on automation. Whether for SMEs or large companies, the strategic stakes of using an HRIS Core and HR dashboards are undeniable.

Human capital management tools, or HCM, are undeniably proving to be essential tools for a company, as they place the employee at the heart of its strategy and focus on better talent management to promote company performance.

For organizations with significant staffing levels, talent management tools, or HCM, are particularly useful for keeping an eye on human capital management, whether it's recruiting, onboarding, career planning, or skills management. It is a real asset for supporting HR processes and change management.

Above all, the goal of an HCM is to provide special attention to talent and their needs. To retain them, and improve business performance, since good human capital management undoubtedly influences employee productivity. In addition, dedicated talent management modules can significantly improve the employee experience and, as a result, the company's employer brand. By focusing on the development of employee skills, HCM inevitably focuses on the company's performance and attractiveness. Therefore, HCM is composed of three pillars: talent acquisition, talent management, and talent optimization.

A study by the Boston Consulting Group found that companies that improve their talent management strategy grow revenue 2.2 times faster and improve profits 1.5 times faster than companies that do not focus on talent management. Thus, talent management is a key strategy for improving business competitiveness.

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Thus, it is fundamental for a company to adapt to the HR function and support its modernization through a complete HRIS system. An HRIS equipped with HCM tools is essential. It not only facilitates HR administrative management but also supports the lifecycle of their talent while keeping them motivated. PeopleSpheres' HRIS is a pioneer in this field since it offers all the modules and HR solutions necessary for talent management, a central and high value-added field for HR.