Human capital management (HCM) refers to the strategic oversight and optimization of workforce-related processes, including recruitment, training, performance management, and employee development—making it a major driver of business value.
Streamlined HR processes, data-driven decision-making, improved compliance, and enhanced employee experiences—there are a lot of reasons to make human capital management a priority in your organization. Unfortunately, sometimes implementing an effective cloud-based HCM system is not as simple as it should be, and may fall short of fully modernizing HR and elevating the work-life of your employees. The key to success lies in having an integrated platform that can seamlessly bring together all the data, tools, and systems involved, connecting the dots, and eliminating the service delivery gaps that often exist across departments. HR Service Delivery is the solution.
ServiceNow's HR Service Delivery takes the risk and ambiguity out of HR management. Mobile-first service experiences empower new hires and employees to find answers with a simple swipe, click, or chat. Digitized employee workflows break down departmental silos and create end-to-end experiences that eliminate enterprise-wide service gaps. Fully unified experiences make it possible for employees to access services from HR, IT, facilities, finance, and legal, all in one place. And, thanks to advanced real-time reporting and analytics, HR Service Delivery likewise enhances enterprise-wide productivity by offering visibility into workforce needs.
The path to successful digital HCM transformations starts with ServiceNow. Learn more about HR Service Delivery. After all, your workforce deserves the best, and with integrated, automated, cloud-based solutions, ServiceNow is here to make sure they get it.
Human capital management (HCM) is a series of strategies that take standard human resources management (HRM) practices—payroll, administration, maintaining records, performance management, training, etc.—and use them to inspire productivity, hire the best talent for the organization, and optimize employee talent to holistically invest in employees as assets.
Human resources (HR): Traditional administrative functions for managing employees, including payroll, performance management, onboarding, and recruitment.
Talent management: Examines the management of employee talent through the talent lifecycle. Activities include performance management, career development, alterations in chain of management, and candidate recruitment.
Workforce rewards: Benefits and compensation, both monetary and nonmonetary.
Workforce management: Absence and labor management of employees.
Human resource management system (HRMS): Technology and systems used during HCM processes.
Human resource information system (HRIS): Virtually synonymous with HRMS.
HCM may seem relatively new, but the concept can be traced back to Sir William Petty in 1696, who proposed factoring in the cost of human life to anything from labor to war. Similar themes of investing in people can be found through history in the writings of Adam Smith, John Stuart Mill, Jean Baptiste Say, and others who wrote on capital and labor. The term “human capital” first appeared in 1961 from Schultz: “Consider all human abilities to be either innate or acquired. Attributes... which are valuable and can be augmented by appropriate investment will be human capital.”
HCM of today is built on this foundation of investing in people and talent management above simple administration from a standard HR role:
HCM software is rapidly moving toward cloud computing and software-as-a-service (SaaS) models. Models based in the cloud can lower IT costs of overhead, accelerate deployment and updates, create more fixed operating costs, and increase agility with simple upgrade options.
Effective communication is crucial for seamless field service operations. Dispatch software bridges the gap between the central office and field personnel by offering instant messaging, file sharing, and real-time job updates. This connectivity ensures that all team members are on the same page, promoting collaboration and eliminating the risks associated with misunderstandings or miscommunications.
HRM refers to the administrative side of human resources, including maintaining records and overseeing benefits. HCM takes HRM tasks and, with talent and asset management, works to incorporate strategy to increase performance and focus on employees' abilities and skills. HRM is process based; HCM is strategically based.
HCM oversees employees from the beginning of talent recruitment through the entirety of the talent cycle.
Performance management: Strategically aligning goals on both a business and an individual employee level.
Competency management: Identifying the competencies needed for an employee to achieve goals and an excellent performance, then applying training and development to best optimize the competencies while aligning with business strategies.
Workflow management: Aligning tasks and business processes to create a sequence of tasks in order to achieve a larger goal.
Contingent workforce management: Managing anybody outside of the standard office location or are not given the benefits of full-time employees.
People analytics: Observing and applying methods based on patterns in workforce data for decision making processes, improved performance, and employee engagement. An HR department takes the principle of people analytics and applies it to an organization to create goals and better processes around the people of the organization.
Decision making: Informing better business decisions for a successful bottom line while focusing on a better experience for employees. HR gathers the metrics to form an understanding of how employees are impacting an organization and its operations to build a more holistic business model and create a better environment for employees by empowering them. An effective way to empower employees is through training and positioning for success while also creating an environment that allows them to grow.
Workforce planning: Proactively managing a line of succession and future hierarchies within the business present and future talent recruitment. Planning attractive benefits, including work-life balance, that can nurture new and existing talent.
Recruiting and hiring: Identifying and attracting the right talent through proactive planning of current and future roles, then streamline the process from interviewing to orientation to keep the talent confident.
Onboarding: Creating a swift onboarding process that provides talent with the necessary information and sets the right goals as they transition into standard workplace functions.
Training: Ensuring that new and existing employees understand processes and expectations, then providing the opportunity to grow skills and knowledge base with available or potential resources.
Employee service and self-service: Providing resources that allow employees to access benefits and other HR programs, including a help desk program that requires more specific or sensitive needs.
Compensation planning: Analysis and planning of compensation, including monetary and non-monetary.
Time and expense management: Time spent by employees on or off the clock and the related expenses of that time.
Payroll: Ensure that payroll is processed, administered, and accurate while accounting for compliance with relevant laws.
Benefits administration: Accounting for current trends in workplace benefits, then delivering those benefits in accordance with business needs.
Retirement services: Analyzing and providing different retirement plans, including any company match of retirement funds.
Sometimes called HRMS or HRIS, HCM software helps HCM processes needed for effective human management.
Recruiting: Effectively creating job requisitions, searching for potential applicants, and sorting through existing applications.
Applicant Tracking: Using data collection to account for the number and types of applicants during the talent search process.
Onboarding: Adding new talent into existing HCM software to account for information like pay, position, and department. Using automated systems to train new employees on company policies, benefits, and expectations.
Employee Recordkeeping: Avoiding physical record buildup by keeping all relevant employee information in a software system that makes sorting, searching, and storing more streamlined.
Workflows and approvals management: Accounting for workplace workflows and approvals for new or altered workflows.
Time tracking and attendance: Clock in/clock out systems for employees and management to track time, information about salary and hours per week, and tracking time off requests.
Payroll: Automated administration of paychecks that accounts for accuracy, timeliness, and compliance.
Performance management: Accounting for any notes of commendation or concerns about a certain employee, and tracking any patterns in performance.
Employee self-service: A portal for employees to access information, benefits, and HR programs without assistance.
Reporting and analytics: Gathering data about performance, payroll, workflows, and anything related to HCM solutions and performing an automated analysis within the software, then generating different types of reports.
Attract and retain talent
Optimize workforce management and spending
HCM makes it possible to identify a balance between monetary and nonmonetary compensation, while tracking time, schedules, and expenses that are related to workforce time management.
Reduce cost and improve ROI
An effective HCM solution can help organizations reduce operational costs by streamlining HR processes, automating routine tasks, and minimizing manual data entry errors. This efficiency not only leads to cost savings but also increases the return on investment as businesses can allocate resources more strategically and make increasingly data-driven decisions to enhance overall productivity and profitability.
Respond with agility to change
Track business strategies and analyze a way to align it with people strategies while anticipating attrition and quick organizational changes. HR processes can also be tailored based on instant and individual needs.
Streamline HR operations
HR processes and data can be consolidated under one HRMS for automation and acceleration for intelligent decisions and self-service portals.
Integrate systems for HR functions
HCM software streamlines HR processes by consolidating various functions such as recruitment, onboarding, payroll, performance management, and talent development into a single, unified platform. This integration reduces the need for manual data entry and helps ease administrative burdens. Integrated HCM systems facilitate seamless communication and collaboration among HR departments, managers, and employees, leading to better coordination and visibility across the organization.
Drive decision-making with reliable data
HCM solutions provide access to up-to-date workforce data, giving organizations the insights they need to make informed decisions. HR professionals can analyze key metrics related to employee performance, engagement, and retention, helping them identify trends and areas for improvement. The most advanced HCM systems can even leverage predictive analytics to forecast future workforce needs. This allows businesses to proactively address talent gaps and plan for succession, ensuring long-term sustainability.
Improve compliance
With the enhanced capabilities of HCM, organizations are more able to remain in compliance with changing labor laws and regulations. By automating compliance processes and tracking the data most relevant to current policies, businesses reduce the risk of legal penalties while also ensuring fair employment practices. HCM solutions maintain a comprehensive audit trail, documenting all HR activities and changes. This trail provides transparency and accountability, crucial for compliance audits and reporting.
Increase data security and privacy
Given the sensitivity of the data they manage, most HCM systems come equipped with comprehensive security measures, encryption, and access controls to protect employee information from unauthorized access.
Enhance reporting accuracy and effectiveness
HCM software allows HR teams to generate customized reports and analytics tailored to their specific needs. This flexibility provides deeper insights into a business’ workforce and helps them measure the effectiveness of their HR initiatives and adjust their strategies accordingly. Many HCM solutions offer user-friendly, visual dashboards that make complex data easy to understand.
Employee Lifecycle: Overseeing employees from hire to retire, including full-time and part-time.
Strategic HR: Accounting for employee information to better manage employee documentation, create structures, and use predictive analytics to analyze future performance.
HR service delivery: Provide self-service systems that can help employees and managers manage HR needs without direct contact with the HR department, save for special cases.
Employee Engagement: Provide motivation by championing volunteer opportunities, competitions, personal tools, and individual wellness.
Compliance and fraud detection: Incident reporting that can improve all-around employee health and safety while also providing security and fraud detection for your data.
Talent acquisition: Recruiting the best talent using innovative technologies and an experience that is centered around the candidate during the process.
Performance management: Developing consistent checkpoints to facilitate individual and business goals for the best performance.
Career development: Helping employees identify and develop areas of career advancement, including relevant goals and milestones.
Talent review and succession management: Taking the time to plan for future roles and other types of organizational trends that may be needed in leadership and other roles.
Learning: Identifying the current and future demands of the workplace to develop the skills of employees while leveraging existing skills and knowledge in the workplace.
Compensation: The identification and implementation of compensation plans across the organization.
Total Compensation: A more thorough insight compensation to all levels of employees.
Pay-for-performance: Offering other compensation based on performance ratings and metrics.
Compensation: Analyzing compensation plans for modeling, budgeting, and implementation of benefits.
Benefits: Providing benefits that are in line with unique and evolving business practices.
Payroll: Accuracy in processing and delivering pay in compliance with necessary tax and regulatory standards.
While implementing a human capital management system can deliver a range of business benefits, maximizing its value requires careful planning and execution. Here are some best practices to ensure you get the most out of your HCM solution:
Engaging employees in the HCM process is crucial. Encourage employees to actively participate by providing self-service options for tasks like updating personal information, accessing pay stubs, and requesting time off. Employee engagement not only empowers your workforce but also reduces administrative burdens.
Consider adopting unified HCM applications that cover a wide range of HR functions. Unified solutions simplify management and maintenance, ensuring that all components work seamlessly together. Supported by the right software, users can enjoy a frictionless experience that provides direct and secure access to the vital HR information they depend on.
The most effective forms of human capital management are not limited to only one aspect of workforce management; HCM has the capacity to bring together the full range of processes—from onboarding and offboarding to scheduling, attendance, retention, performance management, budgeting, and beyond. Making data immediately available across every facet optimizes the overall management of your business.
Ensure that your HCM system maintains a single, unified employee record. This eliminates duplicate data and ensures that all relevant employee information is accurate and up to date. A single employee record enhances reporting and analytics capabilities and helps reduce the risk of penalties from regulatory noncompliance.
Evaluate the cloud and mobility functionality of your HCM solution. Cloud-based HCM systems offer scalability, accessibility, and reduced infrastructure costs. Mobile-friendly features enable employees and managers to access HR tools on the go, improving overall efficiency.
If there is a primary thread running through these suggestions, it’s that you should unify your HCM solution, eliminate data silos, and prioritize establishing a single source of truth for your users. Deploying a common platform across the entire organization reduces security risks and makes it easier to integrate relevant systems and applications for faster, more accurate processes. This may be the most important best practice listed here, as a unified HCM platform offers the best possible support for your workforce management initiatives.
Streamlined HR processes, data-driven decision-making, improved compliance, and enhanced employee experiences—there are a lot of reasons to make human capital management a priority in your organization. Unfortunately, sometimes implementing an effective cloud-based HCM system is not as simple as it should be, and may fall short of fully modernizing HR and elevating the work-life of your employees. The key to success lies in having an integrated platform that can seamlessly bring together all the data, tools, and systems involved, connecting the dots, and eliminating the service delivery gaps that often exist across departments. HR Service Delivery is the solution.
ServiceNow's HR Service Delivery takes the risk and ambiguity out of HR management. Mobile-first service experiences empower new hires and employees to find answers with a simple swipe, click, or chat. Digitized employee workflows break down departmental silos and create end-to-end experiences that eliminate enterprise-wide service gaps. Fully unified experiences make it possible for employees to access services from HR, IT, facilities, finance, and legal, all in one place. And, thanks to advanced real-time reporting and analytics, HR Service Delivery likewise enhances enterprise-wide productivity by offering visibility into workforce needs.
The path to successful digital HCM transformations starts with ServiceNow.Learn more about HR Service Delivery. After all, your workforce deserves the best, and with integrated, automated, cloud-based solutions, ServiceNow is here to make sure they get it.
Learn more about what ServiceNow could do for your organization.