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Human Capital Management - Meaning and Important Concepts

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sammy kelvin
Human Capital Management - Meaning and Important Concepts

 What does Human Capital Management mean?

Traditionally, capital equipment was something businesses invested in to be able to provide or deliver their goods or services, and which depreciated in value over time, required periodic maintenance and upgrades, and so forth. Think of manufacturing equipment used by a factory, for example, or a delivery truck used by a retailer to deliver goods to customers which are too big or bulky for most customers to take home by themselves.

“Capital” in the more non-equipment sense was essentially the cash a business had available to invest in such equipment, or expand its staff, acquire a larger building, and so forth. In this traditional view, capital did not extend to the people who operate a business, whether management or regular employees.

 What are Human Capital Management functions?
 

HCM software typically includes functionality for recruitment and staffing management, human resources management, employee career development, succession planning, individualized employee learning management, performance evaluation and compensation management, and planning.

 What are the major types of HCM?
 

Generally speaking, HCM software is industry “agnostic,” meaning most HCM solutions are designed to work with any type of business in nearly any industry. This makes it different from some other types of enterprise software, which may be designed for retail stores, for example, or perhaps for supply chain operators, or some other specialized business. In contrast, virtually every company must recruit and hire employees, track their scheduling, compensation, and training, and so forth.

 What are some advantages of HCM?
 

HCM basically grew out of Human Resources Information Systems (HRIS), a category of which they continue to be a part, by adding additional functionality to these older solutions. In essence, HR software is focused on operational functions such as payroll, employee benefits administration, recordkeeping for tax purposes, etc. An HCM solution, however, adds additional functionality aimed at recruiting, hiring, cultivating, and retaining the best employees.

Using HCM, or Human Capital Management is a great way for companies to maximize their HR efficiency and streamline the recruiting, management, and development of employees. Taking a strategic approach will help you function more effectively in the HR department.

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