Human capital management is an essential part of human resource management and can make a massive difference in an organization’s success or failure. This concept may seem vague but has a genuine impact on any business or corporate organization.
Human capital management, also known as HCM services, refers to a set of approved industry practices related to human resource management that cover the acquisition of employees, employee management, retention, and optimization.
It is relevant to any business or organization, but it is particularly crucial for companies that leverage people as their primary asset - including any health and human services organization.
Why Is HCM significant?
HCM is essential to businesses and organizations because it sheds light on the needs, aspirations, requirements, and performance of a workforce. Your people are your best and most valuable asset, and these insights are necessary to help your organization grow and thrive.
HCM departments ensure that workers are well-trained, happy, and ready to tackle daily challenges in the performance of their duties. The positive impact of these efforts is also felt by the organization’s clients and stakeholders, contributing to the organization’s overall success.
How Do HCM Services Function?
Human Capital Management services enhance the traditional administrative roles of HR departments, such as recruiting, payroll, training, performance appraisals, and compensation. These enhancements create opportunities to boost value, productivity, and engagement in the workforce.
Those in charge of managing people oversee all recruitment and termination of employees, and they streamline the onboarding process. HCM team members also manage all new employees’ training, transition them into their jobs, and clarify what their jobs entail.
HCM departments focus on reducing employee turnover. High turnover can damage an organization’s success by eroding at employee morale and productivity. HCM professionals concentrate on retaining top performers with the appropriate incentives, nurturing new talent, maintaining morale, and investing in each employee’s future.
4 Strategies That Help Improve HCM
1. Create clear employee profiles
Employee profiles give a face to employees within a company, which humanizes the workforce and makes it easy for managers and coworkers to identify their colleagues. Because of this, many organizations use employee-based HR software to organize their workforce. However, due to the constantly changing nature of the workforce, a position-based system often offers a better alternative.
Position-based HR software stores important information within the position itself and allows employees to fill or occupy these positions. This enables the organization to create an interactive organizational chart (or org chart) that’s easily navigable and clearly shows the chain of command.
Position-based systems also store data efficiently, enabling supervisors and managers easy access to employee details like salary, performance reviews, and disciplinary actions.
This software’s central nature makes accessing employee data stress-free and ensures that no relevant or sensitive information is lost or leaked.
2. Institute better communication
Proper communication is the bedrock of HCM services. Organizations that make communication a priority often report better performance, productivity, and human capital management improvements.
Enhanced communication also improves employee engagement in company processes and enables staff to understand better how their organization works and what it expects of them.
Today’s workforce does not just want to earn a salary; most employees also want to develop their careers and contribute meaningfully to their success. HCM services allow them to do just this as it allows them take ownership of their development and contribute to the organization’s mission.
3. Implement regular performance appraisals
Consistent and reliable performance appraisals are essential to any company’s human capital management system. They should be timely, preferably occurring every quarter or more frequently, and contain valuable information that can help an employee understand their achievements and their areas for improvement.
All performance appraisals should feature:
- Detailed and fair manager assessments
- Employee self-ratings
- Peer reviews
These appraisals teach employees to leverage their strengths, understand their weaknesses, and optimize their performance for their overall and long-term benefit. It’s also an opportunity to reiterate goals and provide a guide for professional development.
4. Align human capital management policies with overall business strategy
Human capital management must align with a company’s overall strategy for organizational success. It must solve specific business problems that help the organization succeed, such as:
- How to increase productivity
- How to improve service delivery
- How to align company values and employee values
This alignment increases an organization’s HCM effectiveness, drives executive support, and enables leaders to formulate a company culture that is beneficial to all in the organization.
The Bottom Line
HCM services are more than just recruitment, pay structures, and termination. The services promote employee performance, career development, talent acquisition, and employee retention.
For a human capital management system to be effective, it must align with a business’s goals and long-term strategy to ensure its eventual success.
If you’d like to know more about human capital management and improve HCM services in your organization, contact DATIS today for a tailored demo.