If you’re searching for hiring, payroll, or human resource technology, you might see the term Human Capital Management or HCM during those searches. If this word is coming up often, it’s probably because you’re looking for a platform to meet the needs of your growing business.
Typically, business owners and leaders start looking for new “people technology” at year-end as they are preparing their budgets for the new year — or when they have experienced growth of some kind (hiring a lot of people, need to offer health benefits to employees, looking to develop a training system internally for their teams, etc…). All of these events could trigger an HCM search.
As you search for your next platform, here are a few ideas to consider beforehand to make sure you choose the right one.
What IS HCM?
Human Capital Management refers to end-to-end, cloud-based software to help you manage your employees. A true HCM platform will include hiring components, digital onboarding, time and attendance, payroll processing, human resource document portal, benefits administration, learning management, expense and reimbursement management, and other employee perks like self-service portals for paystubs and year-end forms.
This is important and ideal for growing companies because all the tools you need to hire, train, and manage your employees can fall under the same platform if you choose correctly.
You likely have a lot of systems and technology you use today. Wouldn’t it be nice to have one single sign-on for all things employee related? That’s the main benefit of human capital management software over different partners for time, payroll, human resources, etc. Many companies will split out these different functions, but when possible, it’s ideal to use one platform to manage it all.
This means sensitive employee information is updated everywhere and you reduce entering the same employee details like direct deposit info, benefit elections, employee id number, etc… into multiple platforms.
Think of HCM like a house, each room has just what you need to live comfortably. Some houses have bigger kitchens, garages, and multiple bedrooms, but in the end, everything is housed under one roof. Human Capital Management Software is like your house. It can be configured to meet the growing needs and demands of your company. Learn more about the different HCM components in this article, Understanding HCM, and its features.
Know your company’s needs
If your company is changing, it’s best to identify where there is friction in your management process. Usually, most companies struggle with hiring, tracking employee hours, and managing benefits so we’ll review those three major pain points.
Are you heavily focused on hiring employees and have a constant stream of candidates to interview, screen, and hire? If so, you’ll want to review the applicant tracking system and onboarding functionality of human capital management software. HCM platforms will offer an applicant tracking system, think of it as a CRM for candidates, which allows you to post on company-approved job boards, interview candidates, screen and disqualify candidates, and automate the hiring process. You can even initiate background checks and new hire paperwork for the candidates you extend offers to through this platform.
Are you an Applicable Large Employer under ACA rules, and need to offer medical, dental, and vision benefit options to your employees? You will want to review the benefit administration options of your human capital management provider and ensure they will manage your ACA compliance to file 1095s at year-end. It’s also a good idea to meet with your broker and see what reports, EDI files, or carrier connections can be set up between your benefit capture system (the benefits administration part of your platform) and your plan providers. Most HCM companies will also offer things like cobra integrations, FSA, HAS, and HRA options that you can use as well as 401k retirement plans. This is a great option for employers who want to manage everything in one system and not worry about managing deductions and calculations in several places.
Better yet, a human capital management partner may also offer administrative services which means they are responsible for making sure elections, enrollments, and terminations are turned on and off appropriately so that you don’t overpay benefits as an employer.
Tracking Time & Attendance
Are you looking to manage complicated shift differentials, expense reimbursements, track salary and hourly staff, and job cost? Do you have multiple job departments and types of employees that you are responsible for? Almost every organization will have a mix of salary workers, hourly workers, tipped workers, and more. You likely have a PTO and sick policy and will want those hours to accrue based on your policy. You might even have different policy groups and will need to create rules and schedules around different employee groups. Then you will want to heavily review the time and attendance functionality of a human capital management platform. Most HCM platforms will even have scheduling options as well, so it can truly be your one-stop shop for scheduling and time needs.
With the time and attendance options, you will always have many different ways to track employees’ hours through their phones with an app, on a company-approved laptop or iPad, and you even have physical clock options like biometric scanners and IP-restricted clocks that only allow employees to punch in and out in company approved locations. You will want to work with a solutions engineer to see how it could work for your company.
Outside of hiring, benefits, and time and attendance, the other features that are worth reviewing in an HCM platform are expense management components and employee engagement modules for performance reviews, learning paths, and career development.
What Buyer are you? Owner, HR Director, Operations
Now that you have a clear idea about all the ways HCM platforms can help manage employees better, you need to consider what type of buyer you are to determine which HCM platform is right for you.
If you are the owner or founder of your company, you likely have two important goals in mind when partnering with technology partners. You need to make sure the solution is cost-effective and you need to ensure that your culture and brand are represented correctly in the marketplace.
An HCM platform can reduce the cost of hiring and managing employees because it’s an all-in-one tool. One of the best tools in my house is a handheld multi-tool. It can get almost any job done, hanging a picture, fixing the sink, or putting together a new piece of furniture. An HCM platform is a multitool – it covers almost everything a company would need when they have employees. Since all HCM platforms are end-to-end and cloud-based, you get the benefit of a competitive price for a lot of functionality. HCM has changed the payroll industry and made solutions for tech-savvy and forward-thinking employers much more affordable than traditional payroll solutions.
If you care about branding your company to future employees, an HCM platform is a great distribution tool to make sure potential employees see your job postings and can easily interact with you anytime anywhere.
As an operations director, you likely juggle a little bit of everything from sales, production, marketing, finance, and research and development. You need to make sure you are staffed correctly to meet your company goals and ensure productivity is at the proper levels.
You likely need a quick pulse of company morale and are responsible for managing key budgets for your founder. If this is you, you’ll value the real-time data and insight that an HCM platform will provide you.
Do you need to know your gross payroll and total overtime hours worked last week, or determine who needs to be offered benefits? Look no further than your executive dashboard with real-time hiring, managing, and payroll analytics of your staff.
Do you want to document no-shows, tardiness, and employee rewards? Your HCM platform is the place to help you manage certifications, keep a steady record of both corrective actions and employee rewards as well as provide annual salary increases with the click of a button.
An operations director will be able to gain insight into all of their labor numbers and total compensation reporting with just a few clicks of a button.
Say goodbye to conglomerates of reports and formatting in excel to ensure you’re on track.
Last, if you are the HR Director in your company, you likely skipped the introduction about what HCM is at the start of this article. You are swimming in industry insights, and updates on HR compliance, and already know the HCM and payroll world.
As an HR Director, you should be looking at the new horizons of HCM. How can an HCM platform help you predict the future behavior of your employees? Will annual salary raises reduce your turnover rates? Could real-time weekly feedback take the place of yearly, overly stiff performance reviews?
In a world of salary transparency, corporate responsibility, covid mandates, and quiet quitting, how will you set your company culture apart from the crowd?
Leveraging the insights of an HCM platform to predict the future of work and reward employees in real-time is a key way to being the best HR Director you can be.
As an HR Director equipped with real-time data and company analytics, you can foster innovation, drive employee satisfaction, and build a culture that anyone would be proud to be involved with. This kind of insight makes the annual Christmas party a lot of fun and your employees will thank you for the ease of use when interacting with your office.
As you start reviewing your current partner and consider new HCM platform partners, don’t be afraid to ask for their product roadmap and see what features they believe you should consider for the future.
When should you consider a new HCM partner?
There are three ideal times to consider a new partner: quarter-end, year-end, or when your needs have changed. You are likely reading this article because you have a new need in your company and you’ve outgrown the technology you have — or you are reviewing your budget and want to ensure you have a cost-effective solution in place. Both are great reasons to look into HCM platforms and partners.
It’s time to review your HCM platform. We can help.
More has changed in the past two years in the human resource world than in the last twenty, so if you haven’t looked at HCM platforms lately, now is the perfect time to review. To continue your search, check out this article, How to choose a Payroll Partner in 2023.