People-first human capital management (HCM) strategies help modern leaders stay agile and prepare for the future. Modern leaders focus on providing a positive company culture in a supportive environment, prioritizing employee wellbeing and development.
Thanks to advances in HR tech, human resource leaders can use HCM software to implement their people-first strategies. Human capital management software can help HR professionals power productivity, engagement, and retention to create value for their business and its customers.
What is human capital management (HCM) software?
Strategic human capital management acknowledges your people’s critical role within the organization. It encourages your company to provide valuable learning and development opportunities to your people in exchange for their contribution to the organization’s success.
HCM software simplifies these processes by offering an integrated suite of HCM tools for recruitment, onboarding, performance management, payroll, benefits administration, and more.
This software streamlines HR management by centralizing data and automating processes, enabling HR leaders to optimize their HCM strategies. This helps maintain global compliance, boosts employee productivity, and improves the bottom line.
Key components of HCM software
Effective HCM software includes features for:
- Recruiting: Manage the recruitment process, including job postings, application tracking systems, and initial candidate screenings to streamline the hiring workflow
- Onboarding: Facilitate the integration of new joiners into the organization, handling everything from admin paperwork to training modules
- Training: Create structured and trackable training programs for new software and technology, role competencies, compliance requirements, and more
- Employee benefits: Provide and manage employee benefits, including health, dental, and life insurance and wellness programs
- Payroll processing: Manage wage calculations, tax deductions, and timely direct deposit payments
- Learning and development: Promotes continuous professional development to help people assume new responsibilities and elevate their work performance
- Culture building: Foster a positive company culture through employee engagement initiatives, recognition programs, and team-building activities
- Performance management: Align team member objectives with company goals by setting clear performance goals, monitoring progress, and providing regular feedback through performance reviews
- Workforce planning: Use advanced analytics within HCM software to forecast future staffing needs
- Reporting and analytics: Access actionable analytics on your people to inform strategic decisions
- Compliance: Ensure all HR practices adhere to current legal and ethical standards
Benefits of HCM software for your organization
Implementing HCM software offers valuable benefits that enhance organizational efficiency and employee satisfaction. With the right HCM software, HR leaders can:
Improve the employee experience
HCM software enriches company culture by facilitating an engaged and connected workplace environment. HR teams can use HCM systems to improve employee retention strategies by making people feel valued and engaged, through employee recognition programs, mentorships, personalized development plans, and culture-building efforts like company-wide volunteer days, corporate retreats, and team-building activities.
Make data-driven decisions
HCM software enables leaders to make informed decisions by providing access to real-time data and analytics. Look for HCM systems with AI enablement that pull out powerful insights to drive your workforce planning, skills matching, and team engagement.
Armed with people data, you can align your work with the wider strategic objectives of the business.
Automate time-consuming tasks
HCM software helps automate routine HR tasks like time tracking, payroll processing, and benefits administration. This automation frees up HR professionals to focus on more strategic initiatives that contribute to company growth.
Human capital management platforms with organizational agility features can support regular workforce restructuring for global businesses with a blend of full-time employees, contractors, and remote workers.
HCM software challenges
While HCM software brings numerous benefits, organizations may also face some challenges when implementing a new platform.
Cost and determining ROI
While the initial cost of HCM software can feel substantial, improved work output and reduced labor costs can offset the initial expense over time. Stick to your predetermined budget and use Requests for Proposals (RFPs) to evaluate vendor options.
To accurately evaluate the ROI (return on investment), measure relevant metrics like employee turnover rates, training completion rates, and time-to-productivity. These metrics can help quantify the direct impact of the HCM system on your bottom line.
System integrations
Integrating HCM software with existing systems can appear complex at first. Ensuring compatibility and seamless data flow between platforms requires proper planning and technical expertise.
Look for an HCM that offers robust API capabilities and support for multiple integrations.
<<Download our free HCM integration checklist for IT and operations.>>
Data security
Since HCM systems handle sensitive employee data, maintaining high-security standards remains critical. Organizations must ensure the HCM software complies with data protection regulations and implement robust security measures to prevent data breaches.
Use your HCM RFP to access your vendor’s security protocols and make sure your IT team stays on top of required system updates.
How to choose the right HCM software
Choosing the right HCM software can maximize the output of your team and drive organizational success. Let’s look at how to find the best system for your business.
1. Outline your business requirements and goals
Clearly define what you need from an HCM system. Consider your key HR processes, the size of your organization, and the specific challenges you face—from improving employee engagement to streamlining payroll processing.
2. Communicate with key stakeholders
Engage with HR leaders and executives to align on organizational needs. Work on a budget together to ensure cost-effectiveness.
Also speak with IT teams to review infrastructure compatibility, data security needs, and integration with existing systems.
3. Send out Request for Proposals
Prepare and distribute RFPs to potential HCM vendors detailing your software requirements and expectations. Include details of your organizational structure, number of users, technical specifications, support services required, and budget constraints.
Ask vendors for case studies or proof of their capability to deliver on your requirements.
4. Attend HCM software demos
Demos can provide insight into the functionality and user-friendliness of the software—and if a vendor is the right culture fit. Come prepared with questions, like:
- What kind of support and training do you offer during and after implementation?
- Can you show us how the system handles real-time analytics and reporting?
- How does your system handle data privacy and security?
- Can you demonstrate how the system integrates with our existing apps?
5. Follow your organization’s vendor approval process
Each organization may have security, operational, and technical requirements for approving new software. Involve your legal team in reviewing contracts and service level agreements (SLAs) to ensure all terms meet your organization’s standards.
Ensure the vendor presents a proven track record of data security and compliance with industry standards. Avoid vendors who cannot provide detailed responses to your technical queries or evidence of successful implementations in similar industries.
6. Get the final sign-off on your proposed HCM system
Secure approval from all necessary decision-makers within your organization, which can include senior HR executives, IT leaders, and even finance teams, depending on the scale of the investment.
Present detailed ROI analyses, an overview of benefits for different departments, and takeaways from the software demos. Be prepared to answer questions about implementation, costs, or integration with existing systems.
7. Create an HCM implementation plan
Develop a comprehensive plan for implementing your new HCM system. Include implementation timelines, training assets, training schedules for team members, data migration requirements, and testing plans.
Keep key stakeholders informed throughout the process and gather regular feedback from users.
Learn more about HCM software
Explore frequently asked questions about HCM systems.
What is an example of HCM software?
An HCM software like Bob helps HR teams revolutionize productivity, engagement, and retention. The platform handles HR’s needs—but doesn’t stop there.
HR leaders utilize Bob to optimize team members through advanced analytics and workforce planning tools. Tools like scheduling, budgeting, time and attendance, and succession planning help HR meet both immediate and long-term goals.
The blend of Bob’s features greatly improves employee satisfaction and retention for small and large businesses.
What’s the difference between HCM and HRMS?
HCM focuses on strategic growth and maximizing employee value. It encompasses all HR functions and extends to talent management and analytics.
HRMS (Human Resource Management Systems) typically focus on core administrative functions, including time tracking, labor management, and payroll. They may also include high-level analytics to analyze performance trends within an organization.
What are the main features of HCM software?
An effective HCM software typically includes features for:
- Recruitment management
- Employee onboarding
- Performance management
- Learning and development tools
- Payroll and benefits administration
- Compliance tracking
- Analytics and reporting
Recommended For Further Reading
Does HCM software include payroll?
Yes, most HCM software solutions include payroll functionality.
Choose the best HCM software for your team
An important resource for modern HR teams, HCM software helps create a positive work environment for your people and helps HR leaders remain agile in their approaches, structures, and processes.
Use a next-generation HCM system to streamline and optimize your HR functions so you can plan for the future, put your people first, and maintain a competitive advantage in today’s fast-moving marketplace.
