What is Human Capital Management?

Posted by Kelly Allen on Sep 20, 2017
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human capital management

Would you subscribe to multiple accounting software platforms? Deploy two different point-of-sale systems? Probably not. But when it comes to human resources, using a variety of systems is common practice.

Many of today’s HR departments have a mix of digital tools such as online recruitment and applicant tracking software, an online benefits enrollment system through their broker, and yet a separate platform for payroll.  

When the various platforms don’t integrate, it can mean additional time to download and upload files, or maintain a set of spreadsheets to analyze data and create reports. Sometimes HR processes are made even more complicated by the existence of paper-based processes.

So what is human capital management (HCM), and how can it solve HR challenges like these?

Human Capital Management Definition

Human capital management is a single platform solution that helps employers attract, hire, pay, manage, and empower employees to be their very best. It keeps track of employee data from the time they apply for a position with your company through termination or retirement, often termed “from hire to retire.”

Human capital management software can:

  • Empower recruiters with tools for tracking applicant and hiring manager tasks
  • Streamline onboarding processes and make a good first impression on new hires
  • Reduce payroll errors and time dedicated to the payroll function
  • Enhance internal communications and automate fulfillment of employee requests
  • Tighten compliance processes; organize and protect employee paperwork, forms and tax documents

So what does that look like in practice?

Human Capital Management System

An integrated HCM solution is the modern way to automate HR processes. It takes key HR and payroll functions and combines them in one system. All of your most essential employee data is accessible in one location and made to work for you through helpful alerts, workflows, and reporting functionality.

Today’s human capital management solutions combine these fundamental HR functions into one system:

  • Recruitment and applicant tracking
  • Onboarding
  • Payroll and time
  • Benefits enrollment
  • Training and certifications
  • Position and job management
  • Compliance reporting (EEOC, I-9, FLSA, ACA)
  • Performance and compensation management

Combining essential functions in one unified system means data entered once populates throughout the system, creating efficiencies and improving accuracy for the HR team. And key stakeholders, like employees and managers, are empowered to view and update their own data, complete important HR-related assignments, and submit requests, thereby reducing the need for HR involvement.

Human capital management systems work best when they are highly customized to your company’s needs. Your job descriptions, onboarding documents, benefits plans, pay schedules, and much more are set up in the system for you and are updated as they change over time.

An HCM solution is a constantly-evolving system made to facilitate your growth and to nudge you towards best practices as identified by the HCM system experts and millions of system users.

Request a Demo of Inova HCM

The Human Component of Human Capital Management

In a 2016 report by SHRM, 38 percent of HR professionals stated that their greatest human capital challenge was maintaining high levels of employee engagement.[1] So it makes sense that these HR leaders want to know how HCM software can enhance, and not detract, from the human element of the job.

There is often a false assumption that automating HR processes removes the human element and trust that is so important to human resource professionals. The reality is the opposite. Streamlining processes and using a third-party HCM solution to manage daily activities, like approving PTO requests, actually frees up time for HR professionals. They can better use that time to focus on one-on-one interaction and problem-solving.

Here’s an example of this in action:

Company A has a generous PTO policy, but employees work directly with their managers to schedule PTO and flex time. An employee sends an email to their manager about taking time off but doesn’t hear back. The employee worries that they have used too much time or that it is a bad time to request time off. In reality, the manager overlooked the email and has no idea that a request was made. The employee misses out on a family reunion because they are afraid to follow up on the request. The result is that they feel ignored, and disengagement is the exact outcome of a process that is supposed to help managers work directly with employees.

Company B also has a generous PTO policy, but one administered via a comprehensive HCM software package. Employees can request time off in the system, and requests are viewed by the manager and HR. Reminders are sent for unapproved requests, and HR quickly identifies two managers who are failing to provide timely responses to requests. HR adds training for these managers and puts a policy in place that requires managers to discuss denied requests with employees within 48 hours. Employees feel empowered to manage their time off and heard by management because of the quick responses they receive.

This is just one example of how a human capital management system can provide value to HR teams and help them better care for and engage all of their employees.

As unemployment hits record lows, it’s time to invest in long-term solutions that drive positive outcomes for the whole company. Deploying an integrated HCM system is one way you can gain an advantage in today's competitive environment.


SHRM Vendor Directory – Human Capital Management Systems and HRIS

Improving Employee Experience through Integrated HR Technology


[1] “Business and Human Capital Challenges Today and in the Future.” Society for Human Resources Management. 2016.

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Thank you for visiting our blog. Please note that we do our best to fully research the blog topics you see here and present accurate and up-to-date information. We believe the information to be accurate but make no claims as such. We also want to share with you that we do not provide professional accounting, financial, legal or tax advice and we recommend contacting a licensed accounting, financial, legal or tax advisor for business advice. For any comments related to the blog, please email us at info@inovapayroll.com.