Human Capital Management or HCM is a set of practices related to human resource management like recruitment, managing employee performance, optimizing employee engagement, etc. It poses immense value to the organization if done correctly.
Among the several benefits of HCM include:
- Hiring talented resources
- Providing the needed skill-set to the workforce
- Increasing employee productivity
- Improves organizational output
What are the practices of Human Capital Management?
- Hiring and recruiting resources
- Employee training
- Benefits and compensation management
- Time and attendance
- Performance management
- Reports and analytics
- Employee self-service
- Retirement benefits management
Difference between Human Capital Management and Human Resource Management
While both these terms are used interchangeably, there is a fundamental difference between the two. Human Resource Management or HRM refers to the focus on maintaining administrative HR tasks like employee records or benefits management. HCM, on the other hand, includes HRM functions along with strategic functions like performance management, analytics, and reports. Human Capital Management maximizes value and increases the ROI of the organization.
Here’s how organizations can successfully leverage Human Capital Management:
- Focus on training and mentoring
Many high-performing organizations offer employees supplemental training programs to hone their skills. The modern workforce expects their organization to arrange training and mentoring programs to support their careers and job profiles. Training and mentoring programs are an important part of attracting millennials to the workforce. HR managers should organize engaging and educative training programs that challenge employees to learn and update their skills.
- Attract top-quality talent
Recruitment and onboarding are some of the main practices of HCM. High-growth companies are constantly looking at attracting the top talent for filling their key positions. As an HR manager, it is important to put in place strategies that attract this high-performing talent to your organization. They can further help line managers in understanding the need to provide an outstanding offer that will make a difference in the long run. Top-ranking companies are constantly looking for employees who can make a positive difference to the bottom line.
- Reward and provide feedback
Gone are the days when employees were solely rewarded based on their tenure with the company and not their skills or quality of work. Many top-ranked organizations of the world like Google, and Apple, have employees with average tenures of only a little over a year. The modern workforce is moving towards employee relationships that look more like short and successful stints than long-term engagements. To keep them motivated, it is important to introduce a reward program that compensates for their talent and skill, rather than honouring the years of service.
- Plan for the changing demographics of the workforce
The demographics of the modern workforce has changed with millennials entering the organization. This shift in workforce dynamics requires the HR management to keep pace by bringing in new strategies of engagement. The young demography focuses on work satisfaction, seamless work-life balance, engaging tasks that help them learn and grow, timely feedback, and value for their work with proper reimbursements and perks. Relying on annual performance feedback doesn’t work anymore, and organizations should focus on providing monthly feedback that incorporates developmental planning.
- Leverage the power of data
Modern organizations have in place advanced analytics and tracking tools that leverage data to gain insights into key processes. Data can help organizations to understand their people, measure performance, and make valuable predictions. It is helping companies be future-ready and stay on top of their business at all times. The HR management can gain meaningful information to the business, and understand their people better. They can then re-organize strategies, plan better, and bring in meaningful initiatives and activities. Data is going to be a big thing in the future, and organizations not tapping into this will only lose out to their competition in the long run.
High-performing organizations are strategic about their workforce, and proper implementation of HCM practices will help them in furthering their cause. It helps in creating a meaningful work environment, that is needed to acquire, train, and retain the organization’s workforce.