This blog is part of a series explaining the technologies that help companies manage their people and money.
Profound shifts are happening in the world of work. How, when, and where people work is constantly in flux.
Today’s workforce encompasses five generations, a range with different workplace needs and expectations. The workforce is also more nimble than ever before with salaried, hourly, contingent, and contract workers. In the digital economy, skills are the new currency, and the value of scarce skills is on the rise.
At the same time, people have broader expectations of work. They want more than just a paycheck. This new world of work, this new workforce, and this new social contract between work and worker requires new ways of managing human capital.
In this blog post, we’ll discuss human capital management and its value to organizations. We’ll also answer common questions about HCM and explore how technology improves HCM and business performance, and helps drive organizational agility.
At its most basic level, human capital management (HCM) is the practice of managing, recruiting and developing a workforce, and is overseen by an organization’s human resources (HR) department. Yet there’s much more to HCM that involves not just direction from HR, but engagement from people managers across an organization: workforce planning, providing learning opportunities, and building a diverse and inclusive culture, to name a few. Because a happy and engaged workforce is so critical to a company’s success, and helps attract more great talent, smart businesses view HCM as a highly strategic practice.
Years ago, HCM was dominated by a mindset that personnel were to be “managed.” Today, leading-edge companies see stellar HCM as something that enables people to be their best, most productive, and most engaged selves. In a people-first culture, an HCM mindset also views employees as the most important of all company assets. That’s true for good reason. Research shows that better, more prepared, and more diverse workplaces deliver superior results. To get there, good human capital management practices are key.
Leading-edge companies see stellar HCM as something that enables people to be their best, most productive, and most engaged selves.
Human capital management is important because people are the heart of any company, the source of its ability to innovate and compete. An effective HCM approach allows businesses to hire the best talent possible, maximize their potential, and further develop them for greater success. The executive leadership of forward thinking organizations, including the CEO, CFO, and COO, view human resource leaders (such as the chief human resources officer, or CHRO) as strategic partners, and expect them to help advance corporate objectives through strong leadership.
In summary, human capital management is important for:
Human capital management software supports all aspects of the HCM function and eliminates manual processes. Such software may bring talent planning, management, and analytics together in a single system so companies can help people reach their full potential now and into the future. The best HCM software makes it possible for a company to manage HCM processes effectively and support its workforce in faster, smarter, and more agile ways than it ever could before.
At Workday, human capital management software is an all-in-one solution. Instead of having separate applications for talent management, workforce analytics, and so on, human capital management software integrates those functions into one platform. What’s more, HCM software can help an organization plan future staffing needs by sharing information with other enterprise applications, such as payroll or financial management software. HCM software may be sold stand-alone or as part of a larger enterprise solution.
Today, a shift in the fundamental nature of work, new technology, and the needs of new generations are changing how work gets done, employees engage, and organizations operate. As a result, companies are reimagining performance management to focus on the future rather than past contributions.
A shift in the nature of work, new technology, and the needs of new generations are changing how work gets done.
In today’s workplace, among the key priorities for human capital management include:
In today’s digital, fast-paced world, HR functions have expanded beyond the traditional responsibilities.
In the past, HR was often associated with administrative duties, such as gathering, filing, and storing paperwork and establishing and enforcing regulations. Today, HR is transforming. In today’s digital, fast-paced world, HR functions have expanded beyond the traditional responsibilities. Seven key attributes of an effective HR leader are:
Companies are deploying HCM software to improve efficiency, planning, and agility, and to drive a better employee experience. For example, Norconsult, one of Scandinavia’s leading multidisciplinary consultancy firms for social planning, engineering design, and architecture, has more than 3,800 employees in 97 offices across four continents. Previously, Norconsult had multiple HR systems and no single source for people data. Instead, there was one source for performance management, one for recruiting, and another for learning—all across different geographies. The disparate data sources meant it took weeks to get necessary data pulled together. From a talent management perspective, Norconsult relied on spreadsheets to match employee skills with requirements across the business. That was time-consuming and inefficient.
By moving its HR data into Workday, a single system for human capital management, Norconsult achieved access to real-time, accurate data and visibility into the skills it had or didn’t have across the organization. In other words, for organizations that want to ensure they're ready for a changing world, HCM software is a key piece of technology.