The Complete Guide to Human Capital Management in 2023
Master Your Process to Improve Productivity.
From process improvements to automation adoption, businesses everywhere are looking for ways to streamline their operations and improve productivity. And in recent years, optimized human capital management (HCM) has become a priority for businesses.
If you have yet to consider ways of improving your human capital management strategy — or you are unfamiliar with the term altogether — you’re in the right place. This guide to human capital management will set you and your organization up for success in the new year and beyond. Keep reading to master your process, or skip to a specific section below!
HCM is the overarching set of practices that human resources teams use to manage various aspects of their people, such as recruiting, training, payroll, compensation, and performance management. HCM looks different across various organizations, but the goal of HCM is to find the best ways of managing your people to improve organizational productivity. Here are some guiding principles to keep in mind when optimizing your HCM practices:
- Flexibility — Your HCM is not a set-it-and-forget-it policy. Rather, it should be constantly evolving to meet the needs of your organization and employees. Finding the right HCM software helps immensely with that.
- Personalization — Every business has its specific needs, so when you are sourcing various solutions for your HCM, work with a partner that meets you where you need to be met, not the other way around.
- Growth — The goal of streamlined HCM is to improve your organization and help you grow. Because of this, your HCM solution must grow with your organization.
- Comprehensive Solutions — Your software should include everything you need in one package, even if you don’t need all of the solutions. These include:
- Employee benefits
- Payroll automation
- Timesheet automation
- Data reporting
- And so much more
For a deeper dive into the basics of human capital management, read the full guide here.
HCM Platform Features
When it comes to improving your HCM, your first step is finding the right platform for unique needs. With so many options out there, it’s crucial to first consider your organization and what it needs to be successful.
If you’re a smaller organization with fewer employees, you might not stress applicant tracking as much as a larger organization growing at a rapid pace. After prioritizing your needs and identifying your price point, it’s time to shop. While it varies, here are some of the most common HCM platform features that will benefit many organizations:
- Payroll Administration
- Employee Onboarding
- Benefits Administration
- Time & Attendance
- Core HR Management
- Business Intelligence
- Applicant Tracking
- Talent Management
- Employee Self-Service
- Mobile Access
- HR Analytics
We break down all 11 features in-depth here; read the full post so you can make the most confident decision!
Because HCM is all about how you manage your people and your efforts to improve their productivity, you have to pay attention to your payroll and ensure their satisfaction. Employees are your most valuable asset — more specifically, their engagement, satisfaction, and wellness, as those three components lead to more productivity.
Nearly 82 million US workers say that they’ve experienced paycheck errors in their careers.
However, ensuring that happens is near impossible without the right payroll solutions. From ensuring on-time payments to giving employees easy access through direct deposit, your HCM software’s payroll functions should be a priority. Whether you are using outdated, unintegrated payroll software or are looking to adopt software for the first time, there are a number of benefits you can expect from a robust payroll software:
- Improved Accuracy — The fact of the matter is that coded software works more accurately than humans. Automated payroll can remove simple human error from your process.
- Improved Efficiency — At the same time, these processes happen in a matter of seconds rather than the countless hours it takes a human. When this software is integrated into your HCM solution under one roof, all systems speak to each other to further improve efficiency.
- Cost-Effectiveness — When immensely intelligent people within your organization are spending their hours on manual payroll work, your organization is not running as well as it could run. Payroll automation frees up these mundane tasks so your most important people can do their most important work.
- Increased Security — Rather than using paper records that are susceptible to various security threats, the right software solution encrypts payroll data to keep your company’s and your employees’ information secure.
- Simplified Processes — In reality, payroll should be simple. Yet over the years, it has evolved into a convoluted process that takes up too much time and energy. Automating the process simplifies your organization’s operations.
Tracking Your Payroll Data
Within your HCM solution’s payroll offering, tracking the right data is critical. When you have this technology in place, you can take your payroll data to the next level. In addition to simple payroll statistics (i.e. total salary), there are a number of key metrics you must be able to track efficiently to ensure employee well-being:
- Paid Leave
- Withheld Taxes
- Payroll Processing Fees
- Training Expenses
All of these are indirectly related to your payroll, and having the wrong solution in place could force you to miscalculate one of these important metrics. Learn more about each metric in our full guide to payroll data.
Another important aspect of HCM is onboarding — how are you integrating your people into your organization? Are your processes efficient, both for HR and new hires? Are your people able to come in and produce within the first couple of days?
If your onboarding processes are stuck in the past, chances are they look something like this:
- HR team prints and sorts new hire paperwork
- New hires fill out the paperwork on their first day
- HR collects, organizes, and documents paperwork by hand
- HR and new hires connect to schedule meeting times
- HR onboards new hires into the system and trains them on best practices
Before you recognize it, every new hire is taking multiple days just to get into the system, let alone meeting with their direct managers and team members and learning their daily duties. At the same time, HR’s responsibilities are spent on manual work, both preparing for the new hire and onboarding them.
Enter onboarding automation. When your onboarding is automated, HR wastes less time scheduling meetings, collecting paperwork, and documenting paperwork by hand. New hires also benefit by having the ability to onboard themselves with the help of automation before their first day, leading to three main benefits:
- Streamlined onboarding efficiency
- Immediate productivity
- Higher employee retention.
Streamlined onboarding is one of the many benefits that you can take advantage of when updating your HCM practices. For more on onboarding automation, read our full blog post here.
When was the last time you revisited your employer-provided benefits? Not just the benefits you’re providing, but the manner in which you’re providing them. Benefits administration is a core component of HCM, and if you’re not doing it correctly, it could be impacting your organization in more ways than you realize:
- Frustrated Employees — Forcing employees to navigate their benefits alone is bad enough, but when that process is manual and involves them sorting through paperwork and filling out forms manually, it becomes an incredibly stressful process. Don’t let your employees be part of the 33% who don’t understand the benefits available throughout the open enrollment process.
- Distracted Upper Management — Not only does a manual benefits enrollment process frustrate employees, but it also takes away time from upper management. Upper management, especially within the HR department, is expected to have answers to the various questions that are sure to arise throughout the manual onboarding process. Even small interruptions add up when they come from dozens of employees who are confused by the process.
Your employees are your biggest asset — why wouldn’t you do everything in your power to value them over everything else? If you’re in a position to afford it, rework your benefits packages to benefit your team as much as possible.
If not, take your benefits administration online to make the process more efficient, prioritizing your employees’ well-being and your time. By prioritizing a digital benefits enrollment process, your team has easy access to plan information whenever they need it. What’s more, when you can include brokers in the process, you can practically remove upper management’s involvement in benefits enrollment as your team has access to reliable experts. Benefits administration doesn’t have to be such a hassle every year. Next time open enrollment comes around, make sure you’re prepared by reading our guide to benefits administration.
Time & Attendance
Time is money, and when it comes to your time and attendance solutions, you can’t afford the possibility of mistakes. From purposeful time theft to misreported timesheets, time and attendance errors are incredibly detrimental every single year. At the same time, they’re nearly inevitable if you’re still relying on manual processes or unintuitive software.
In addition to accurate time and attendance records, upgrading your software also helps ensure compliance with labor laws by avoiding inaccurate reporting that commonly results from human error. Some other reasons to focus on your time and attendance solution include:
- Time Management — Employees spend less time inputting hours (ultimately resulting in accurate payments) and HR no longer has to track down every hour worked by every employee.
- Integration — Even for employers that have time and attendance software, you should consider upgrading your solution to an inclusive HCM system that allows for seamless integration between time reporting and payroll.
- Mobile Usage — Modern work happens on mobile devices, both in the office and away from it. Your time and attendance solution must allow employees to log hours and supervisors to approve payroll on the go.
Time and attendance solutions shouldn’t be viewed as a nice-to-have add-on to your HCM system — it’s a priority. Learn more in this blog post breaking down the benefits of time and attendance software.
Specifics for Small Businesses
Small businesses have unique HCM obligations apart from larger organizations with more established practices and HR departments. While the goal of almost every small business owner is to scale their organization, doing so efficiently takes the right resources and approach. Here are some of the technicalities that small, scaling businesses must consider in their approach to HCM:
- Recruiting — For many, the first step towards business scale is headcount growth. Once you notice your current human resources have reached their capacity, the next logical step is bringing on more talent. Recruiting the right people based on culture and skillset is a must for talent acquisition, but when that recruitment process is still manual, it makes already-busy executives even busier.
- Onboarding — Onboarding is the next step to talent acquisition. With the right people identified, you want to do everything you can to get them into your organization so they can contribute quickly. As we mentioned above, this process can be especially cumbersome for organizations bringing on many people in a short period of time.
- Performance Tracking — Your talent will need to grow with your organization to reach your scaling dreams. Onboarding new employees into your established systems and processes can take time, and it’s on you and the rest of the management team to track their performance and identify areas of growth. Tracking licenses, certifications, and performance reviews without the help of automation make the process much more difficult.
Small businesses looking to improve their HCM must consider these specifics, along with a number of other factors. Want to learn more about these solutions? Read our comprehensive guide to HCM for small businesses.
Find Your Comprehensive Solution
If improving your human capital management is a priority in 2023, our team at Your Payroll Department is here to help. We help small and medium-sized businesses improve their HR efficiency through robust HCM solutions built to scale with company growth. We can’t wait to get started!