What you need to know about human capital management

Employees are often a company’s largest expense, but they can also be their most important asset. After all, without talented and dedicated staff at every level of the business, organizations will fall behind in terms of productivity, leadership and creativity. Although human resources has traditionally been tasked with handling all matters people-related, as this facet of business management has become increasingly complex and dynamic it has largely gone by another name.

Human capital management (HCM) is often broken down into three categories (workforce acquisition, workforce management and workforce optimisation) and incorporates a vast array of business processes, ranging from the administrative to the strategic. Increasingly, businesses are looking to human capital management to ensure they get the most from their employees,

Workforce Acquisition

There are many reasons why a company may need to acquire new employees. An existing member of staff may be leaving, the business may be expanding or an organization may simply stand to benefit from some fresh blood and new ideas. In any case, acquiring the right member of staff for your business is vital. Although traditional methods of recruitment such as CVs and interviews remain important, many businesses are now using software solutions to give themselves an edge when it comes to workforce acquisition.

HCM resources give recruiters greater visibility over potential staff members via what is known as an application tracking system (ATS). This software can make the recruitment process much more efficient by enabling the automatic filtering of applications based on particular criteria, such as experience, skills and keywords. Some workforce acquisition software also ensures that recruiters can work remotely, allowing them to better identify candidates and review their talent supply methods from their mobile device.

Workforce acquisition also relies heavily on making talented candidates aware of new openings. As such, human capital management also means ensuring that job posts are shared through the appropriate channels, such as social media, and that they are can easily be found via search engines. Reaching passive candidates is also important, so workforce acquisition solutions can often involve personalized job alerts, bulk email options and talent banks containing information on the most sought after candidates. Many tools also include ways of measuring and analyzing candidate engagement, so businesses can assess their workforce acquisition methods and make the necessary improvements.

Workforce Management

Although new employees can prove valuable additions to a company, it is important not to neglect your existing staff. Workforce management is another key strand of HCM, particularly as you begin to scale up your operations and have a large number of employees based in more than one location. Workforce management tools can improve workplace productivity by tracking time, monitoring absences and scheduling labor. By forecasting workload demand and creating clearly defined schedules, businesses gain a clearer picture of the demands they are placing on their employees. What’s more, workforce management solutions for multi-national businesses usually include regulatory information for the country in question, helping organizations to adhere to local labor laws.

A recent study found that UK businesses are some of the most likely to embrace workforce management solutions. "Productivity: Managing and Measuring a Workforce" by Kronos discovered that 71 percent of UK respondents had implemented labor forecasting, compared to a global average of 57 percent, with the UK also coming out on top in terms of automated absence management. The survey results also highlighted the benefits of workforce management, with many firms citing boosts to productivity and profits, as well as greater control over costs.

Ms. Michael Moon, research director, human capital management, at Aberdeen Group believes that the widespread adoption of workforce management solutions can help businesses of all sizes. "The UK is seeing strong results in profit per FTE by automating strategic workforce management", she says. "By implementing a more integrated solution they could see even greater returns in all area such as revenue, sales, and service levels".

Although human capital management pushes businesses to make the best use of their staff, it is important that they recognize that they are unlike any other resource at their disposal. Any approach to workforce management must remember that employees are human beings, each with their own distinct personalities and quirks. Effective employee management, therefore, is as much about understanding this human element as it about using time and resources effectively.

Workforce Optimization

The next stage of workforce management is workforce optimization, where every action is business driven. One of the ways that businesses are achieving this is by employing workforce analytics. By analyzing information relating to recruitment, training and development in terms of success rate, time taken and cost, businesses have access to valuable data informing them of the strengths and weaknesses of their employee resources. Taking a data-driven approach can also help organizations anticipate future trends, rather than simply reacting to them. For example, businesses can evaluate which employees are most likely to leave and why, who their high potential employees are, and how the organization may be affected by a merger or economic trends. Ultimately, by applying statistical modelling to employee data, businesses can take a more strategic approach to HCM.

Other ways of implementing workforce optimization include the use of more targeted employee training programs. These should not only take into account the current skills of your members of staff, but should also include some way of measuring progression to ensure that the training schemes have been effective. Furthermore, automating workplace processes is another great way of optimizing your employee productivity. HR teams are often faced with a number of repetitive manual tasks, whether they relate to payroll processing or attendance tracking. By using software to automate these processes, human capital management solutions let HR teams focus on what’s really important: helping businesses get the most out of their most valuable resource.

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