Human capital management (HCM) is a term that has been gaining traction over the last several years. It has become particularly relevant to behavioral health and human services due to the industry’s challenges of budgeting and maintaining adequate staffing levels. Having solid HCM practices in place can help companies better utilize and allocate resources.
While HCM is a term that has evolved from human resource management (HRM), each has a distinct purpose. Understanding human capital management’s definition (and the story behind it) can help you better apply HCM principles in your own organization to optimize workflows, improve decision-making, and boost profitability.
Human Capital Management Definition
Human capital management is defined as the set of practices used to recruit, manage, and develop an organization's employees. There’s often confusion about the differences between human resources management and human capital management definitions.
HCM involves building and developing the workforce in a strategic and people-focused manner. On the other hand, HRM is more administrative in its approach to talent management. HCM uses common HR processes as part of an overall business strategy and often ties them to long-term business goals.
HCM incorporates a number of HR processes and functions including:
- Performance Management: Tracking employee performance helps organizations maintain high levels of productivity, patient care, and work quality. Performance management can also be used to meet other strategic goals, including improving employee retention and building a more highly skilled workforce. In addition to conducting standard performance reviews, performance management can include setting goals for employees, providing them with tools to learn or cross-train, and having regular discussions about where they see themselves growing within the organization.
- Employee Engagement: HCM also focuses heavily on employee engagement. Engaged employees are more productive, have better attendance, provide better service, and are more likely to stay at the company long-term. As such, it’s important for companies to build an employee engagement strategy and ensure that they have the tools and resources to implement it.
- Onboarding: Starting new employees on the right foot is vital. From entering new hires into the system to providing a positive, streamlined onboarding experience, this process is an important part of human capital management.
- Workforce planning and budgeting: Allocating your resources and identifying current and projected staffing needs can be a complex process. In behavioral health and human services, maintaining appropriate staffing levels is not only required for satisfactory patient care, but also for safety and compliance issues. Organizations must be able to properly project labor costs, understand their hiring needs, and ensure that they hire people with the right licenses or credentials in regulated roles.
- Talent acquisition: Talent acquisition is the practice of identifying, recruiting, and hiring employees. From an HCM perspective, this is a strategic activity. You want to find the right talent to fit your current opening, but also to fit your company culture and future needs. HCM is all about developing your employees to thrive and advance in the organization with a forward-thinking approach.
- Benefits administration: Providing benefits to employees is crucial from a human perspective as well as a strategic one. It’s imperative to take care of your employees’ health and well-being, particularly in fields such as behavioral health, which can be both physically and mentally strenuous. Offering a strong benefits package also helps organizations attract and retain talent in a competitive labor market.
- Workforce analytics: In addition to managing all of your HCM processes, it’s vital to dive into the data to get a clearer view of your workforce. Workforce analytics and reporting can provide detailed information on open positions, recruiting metrics, and time and attendance.
The Evolution of Human Capital Management
The field of human resource management has been around for longer than most people might think. It dates back to the early 1900s when growing industrialization and harsh working conditions lead to unrest among the nation’s workforce. As issues such as working hours, occupational safety, and unionization came to the forefront of America’s labor movement, there became a greater need for workforce management as both an industry and occupation.
Throughout the 1940s, the term “personnel management'' arose as the first iteration of human resource management. Personnel management included training, people management, and industrial relations. In the 1980s, the term personnel management was largely replaced by human resource management and was expanded to include a wider range of administrative and employee-centric functions.
In today’s era, a new term has evolved: human capital management. This term was created to reflect the changes in the HR field and how HR practitioners approach their roles.
The first major change is that the mindset has shifted to one that is more employee-focused. Previous generations had a tendency to remain loyal to one employer for most of their career. Now, employers need to work hard to nurture and develop their teams in order to boost retention and actively engage them.
The second major change is that organizational operations are becoming increasingly complex. The economy has become more globalized, organizations depend more heavily on technology, and the supply chain and labor markets have become more challenging to navigate in recent years. This necessitates HCM platforms that can support and manage these processes effectively to streamline administrative tasks and keep the focus on the employee experience.
Using Human Capital Management Software
Human capital management software is designed to help organizations manage the various aspects of HCM. A well-designed HCM suite can provide a better experience for HR professionals and employees (through an employee self-service portal). Human resource management systems (HRMS) were designed for the more administrative aspects of HR, but often lack the strategic benefits of a true HCM system.
HCM platforms provide the necessary tools to manage staff efficiently. Many organizations find that a unified HCM platform is most effective in coordinating and streamlining HCM tasks. With a unified HCM tool, all HR functions can be managed in one centralized system. There’s no need to enter information into separate portals for recruiting, onboarding, benefits, and timekeeping. This allows HR departments to operate more efficiently and prevents any issues that can arise with mismatched data across various HR databases or software programs.
Continuum Cloud’s all-in-one HCM platform offers a number of key features designed to support the entire employee lifecycle, including:
- Position Control: Position Control is a feature unique to ContinuumCloud that allows organizations to build and manage their workforce by position, independent from the individual employees. It can be used to manage hiring, labor budgeting, credentials, and organizational structuring.
- Timekeeping tools: The platform features web-based time clocks with flexible configurations to improve wage and hour compliance. The web-based timekeeping tool allows organizations to track time for onsite, field-based, and remote employees in a centralized system.
- Employee self-service: Allowing employees access to self-service features improves transparency and cuts down on HR questions. Employees can view and track their own timesheets, performance objectives, benefits selections, and paystubs within the HCM platform.
- Configurable talent management: With ContinuumCloud’s configurable talent management tools, organizations can connect learning objectives, training, performance goals, and credentials all in one system.
Expand Your HCM Approach With ContinuumCloud
Now that you understand human capital management’s definition, take your HCM practices to the next level with a unified HCM platform. From personnel management to human resources to HCM, the terminology has evolved and adapted to changes in the business landscape. Your organization needs to adapt too. If you’re not using a unified HCM platform to manage your human capital management functions, you’re missing out on the many benefits it provides.
ContinuumCloud’s HCM solution is uniquely designed to meet the needs of behavioral health and human services organizations. Contact us to learn how we can help your organization meet its HCM needs.