The Future Of Human Capital Management Systems

Well-designed HCM systems are key to reduce attrition, increase retention, and improve top-line performance

The nature of work is changing. Commercial-grade applications and tools are more accessible than ever thanks to the rise of flexible “as-a-service” models. Platforms like Upwork have made it easier for people to build freelance businesses. And the Covid-19 pandemic accelerated a transition to remote work that questions the need for physical office spaces. 

Given these trends, companies need to find new ways to engage employees. People have more control over their career trajectories, which means it will only get harder for employers to attract and retain talent over the long term. Employers that don’t invest adequately in their employees or enhance their experiences will struggle to compete.
 

One strategy HR leaders will be able to implement soon involves using sophisticated human capital management (HCM) systems that go above and beyond what traditional platforms provide. Historically, HR teams have used legacy HCM systems to support payroll processing, onboarding, and other activities related to human capital management. But outdated systems make sharing data with employees difficult, which makes for an inefficient and lackluster experience. 

Fortunately, more modern HCM systems are surfacing that will enable HR teams to share their data with employees, allowing people to make better decisions and connections throughout their organizations. HR departments should start adopting these HCM systems today so they will be ready to open them up to employees to promote their development and career aspirations in the near future.

The Value of Extending HCM Systems Beyond Payroll

By nature, many HCM systems store information that could be useful to employees. For example, HCM systems typically maintain information about an employee’s professional background and educational history. These systems may also keep data about which skills people possess and what behavioral assessments they’ve taken. In the future, employees could use these data points to support their career development and day-to-day working experiences. 

HR teams that extend their HCM systems will empower employees to connect with others who share common interests or experiences, making it easier for people to find potential mentors or other employees who can help them grow as professionals. For organizations that administer behavioral assessments, sharing these insights will also help employees better understand their peers’ working styles and strengths, improving interactions throughout the business.

Modern HCM systems could also serve as the foundation for internal job boards or similar capacity planning platforms. For instance, an HCM system could house data about different projects in progress across the enterprise, giving employees the opportunity to explore other lanes that are outside of their core job responsibilities. People with excess capacity could provide some of their time to other teams where their skills and working style would fit well, enabling them to develop their skills while interacting with new team members. 

It’s these possibilities that will keep people engaged and help employees get more out of their everyday work experiences. As HR teams look to get more out of their HCM systems in the future, the key will be finding the right HCM platform that integrates with existing HR applications. 

What You Will Need to Look for in Modern HCM Systems

To get the most out of tomorrow’s HCM software, HR leaders will need solutions that integrate seamlessly with existing workforce management systems. Too many organizations today rely on disparate applications that don’t work well together, which adds operational complexity without generating incremental value. If companies were to have compatible HCM and workforce management systems, corporate trainers would be able to uncover richer insights about their workforces and make decisions accordingly. 

For instance, leaders could combine behavioral assessment data from an HCM system with scheduling data from a workforce management system to match employees to open roles more effectively. Corporate trainers could update initiatives or programs to address skill gaps within specific employee segments that weren’t obvious before. And managers could create better succession plans, having more context on who in the organization has the skills, working style, and background to fulfill specific responsibilities. 

Beyond bringing HCM and workforce management systems together, it will also be critical for HCM systems to push data directly through other popular enterprise applications, such as Microsoft Teams and Outlook. Knowledge workers already use so many software platforms today to do their jobs. Asking them to log into a separate HCM portal could be a lot to manage for employees, which is why HCM systems that deliver value to people within other applications will be so useful. 

To summarize, HCM systems of the future should not only extend data to employees but also be compatible with other HR tools and share insights in such a way that is easy for people to absorb in their normal workflows.

There Is No One-Size-Fits-All Solution

Outside of the above requirements, HR leaders need to keep several other things in mind. First, there will be no perfect out-of-the-box HCM systems. Optimizing HCM systems will take time, so companies need to be comfortable with the idea of growing into their platforms. The goal, after all, should be to improve long-term human capital performance, not to put out short-term fires.  

Furthermore, HCM systems should be backed by strong vendor support and past results. HR decision-makers should ask potential vendors about customer retention, satisfaction rates, contract requirements, and pricing. Additionally, HCM systems should comply with the latest domestic and international data privacy regulations, and HCM systems that depend on artificial intelligence will need to prove that their AI models were trained correctly. 

Finally, HR teams can’t forget the motivation behind wanting to upgrade HCM systems in the first place. Organizations today need to reimagine how they engage employees, particularly when it’s easier than ever for people to find new jobs or start freelance businesses. 

Well-designed HCM systems will play a crucial role in bringing this reality to fruition by reducing attrition, increasing retention, and improving top-line performance. After all, happier employees work harder and stay longer, which means better results for the business. 

Derek McIntyre is COO at TCP Software. Visit www.tcpsoftware.com  Connect Derek McIntyre