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What is Human Capital Management?

October 12, 2018

Written by Complete Payroll

human capital management payroll women using phone

human capital management payroll women using phone

Specialization is an important part of what makes modern corporations work. You have someone who is excellent at sales handling sales. Someone who is a great graphic designer handling design. A strong project manager managing projects. Even at startups where people tend to wear multiple hats, you have specialization. This means people can (ideally) focus on their strengths, using their best talents and skills towards moving the business forward.

What this sometimes creates, though, is unnatural and unhelpful fragmentation. Rita is in recruitment, so she handles things in such-and-such a manner. Brian is in HR, so he’s focused on a lot of paperwork and payroll. Vivienne is a manager, and has developed her own systems for making sure her team is performing well. All of this is fine, except for the fact that they’re all dealing with the same people.

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If Rita recruits new programmer Paula, Brian handles Paula’s onboarding, and Vivienne manages her, they’ve got multiple systems that may or may not communicate. But Paula the candidate, Paula the new hire, and Paula the employee are all the same person.

Managing people from beginning to end

This is what human capital management is about. Human capital consists of people. These people are applicants, finalists, and employees. They are new employees, employees who track their time, employees who use benefits, employees who take time off, employees who need training, employees with great or awful or mediocre performance, employees who transfer to different locations, employees who get promoted, employees who mentor and are mentored, and former employees. And at every stage they accumulate and generate new information.

Unfortunately, this information is often lost when it is transferred from one system or way of looking at an employee to another. The solution, of course, is to end the fragmentation. This doesn’t mean Rita needs to take on HR responsibilities, or that Brian needs to get involved with recruitment. Rather, it means using a system in which all the information generated by and about employees is gathered in a single place. This means less information lost, and more information accessible to the people who need it.

So if Vivienne notices a gap in Paula’s knowledge that would otherwise be expected of someone at her level, she can peek at her resume to see whether she ever mentioned having experience in this area. If, five years later, Rita sees a role that would be a perfect fit for Paula’s new skills and abilities, she can reach out. And if Paula herself decides to apply for the promotion, she can easily gather up all the positive feedback and evidence of improvement from five years of performance reviews in order to bolster her candidacy.

Using technology to bridge the gaps

While all this makes sense, it wasn’t always feasible in the past. Private data stayed locked in a variety of file cabinets behind HR’s closed doors. Today’s cloud technology and analytical tools mean that keeping large amounts of information and making it available to the right people (and only the right people) from anywhere is not only easy, it’s massively beneficial. We can learn not just about Paula, but about the company’s employees in aggregate. And we can do so in a way that is both efficient and secure.

Thinking about implementing human capital management in your business?

We can help with that. Get in touch to learn more.

Our complete guide on Human Capital Management is a comprehensive resource about how effective HCM helps organizations manage their workforce more effectively. Whether you're interested in seeing an HCM platform or just want to learn more about the practice of Human Capital Management, this page is for you.

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More Blog Posts about HCM Topics:

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.

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