If you’ve come across the term “HCM” recently, you may be a little confused. The acronym is often mistakenly used interchangeably with other terms such as HR or HRM. So what does HCM stand for? HCM stands for human capital management.
It’s important to understand HCM, particularly for behavioral health and human services administrators and HR professionals, as the key components of HCM can be used to produce a wide range of positive business outcomes. This acronym comes up often in relation to HCM software solutions, but it’s also used frequently in business strategy and resource planning discussions.
How Does HCM Differ From HR?
Human capital management is all about managing the people operations of your company. Traditionally, your organization’s “human capital” would be your employees. However, HCM also covers how you develop and utilize your freelance talent pools or outsourced labor. This is important to note as the gig economy continues to expand. It’s also relevant to behavioral health care centers that use contract labor, such as travel nurses.
“Human resources” (HR) also refers to the employee resources that are available to the company. It includes the employees themselves, as well as their knowledge and skills that the company may call upon as needed. However, HR largely focuses on the administrative functions of people management such as payroll, policies, and timekeeping.
The terminology has evolved just as the HR field itself has. The term “human capital” has been growing in popularity in recent years as a more comprehensive and people-centered alternative to human resources.
Human capital management includes many core human resource management functions like recruiting, hiring, attendance management, conducting performance reviews, and payroll. However, HCM typically emphasizes employee development and organizational growth more heavily than HR does. It is used by organizations that emphasize internal training and development, employee engagement efforts, and data-driven strategic decision-making.
For example, posting a job opening for the company may be a standard HR function. However, the HCM approach would look more at the strategy around identifying candidates with the right skill set who are a good cultural fit, and determining how such candidates could grow within the organization.
HCM’s More Advanced Approach
Managing your organization’s human capital requires a more strategic approach to meet the growing demands and challenges in people management. Behavioral health organizations in particular need to adapt to new challenges such as managing remote teams, combating burnout, dealing with staffing shortages, and maintaining strong internal communication during periods of change. To meet these demands and keep employees engaged, organizations need to invest time and resources into their HCM planning and adopt a strong HCM solution.
The purpose of HCM is to provide a more holistic approach to people management that improves the experience for employees while producing better results for the business. With HCM, employees receive development opportunities and support, while the organization cultivates a more highly skilled and engaged workforce.
Often when people ask the question “What does HCM stand for?” it’s because they’re confused about the difference between HCM (human capital management) and HRM (human resource management).
The distinction can be a bit tough to unpack by definition alone, so let’s look at some examples of how organizations can approach common HR functions through HCM rather than HRM.
Recruiting: HCM involves identifying employees with the right skill sets, goals, and cultural fit to help the organization fill open roles and meet their objectives. HRM focuses more on the administrative functions of creating a streamlined recruiting and onboarding process to fill current job openings. These two can work in tandem, and most HCM platforms will provide the tools to manage both sides of the recruiting process.
Performance management: In traditional HR, performance management is focused on ensuring that job expectations are being met and company policies are being followed. HCM takes performance a step further by looking not only at what the employee has been doing, but at what they can or would like to do. HCM performance management is a collaborative process between management and employees who work together to create development paths and encourage professional growth.
Workforce analysis: HCM involves using data and analytics to extract valuable and actionable information that can be used to make decisions, improve process or staff efficiency, and identify current organizational needs. HRM focuses more heavily on the administrative processes required to hire, train, pay, and maintain employees. HCM is used to look for opportunities to add value to the organization through ongoing analysis.
HCM Software Solutions Can Help
HCM software solutions are products designed to help improve the employee experience with tools and resources for the entire employee lifecycle. They help organizations leverage strategic human capital management into functional processes that can lead to more measurable outcomes.
Some common features that you can find in HCM platforms include:
- Talent acquisition tools: A unified HCM provides a seamless recruiting and onboarding process by centralizing candidate information in one place and allowing that data to flow directly into the employee file once a hiring decision has been made.
- Employee data management: Employee data can be stored and updated within an HCM system in place of an human resources information system (HRIS) or paper employee records.
- Talent management functions: HCM solutions can also be great tools for performance management. Administrators can assign goals, credentials, and learning requirements to employees, teams, and departments—which can all help develop your workforce while ensuring regulatory compliance.
- Payroll: While some HCM tools leave out payroll, you can find payroll features in unified HCM platforms. These unified platforms can make payroll processing easier by automating shift differentials, secondary pay rates, labor allocations, and other special payroll needs.
- Benefits administration: Again, this may only be found in unified HCM systems. When benefits administration is included, it can help streamline the benefits enrollment process by integrating with the system’s payroll function to automate deductions. HCM platforms can also be used to configure benefit plan eligibility and rules for various teams and roles.
- Time and attendance: Time-tracking tools such as web-based and mobile time clocks, time sheets, and attendance reporting can be used to manage time and attendance compliance for onsite and remote teams.
- Reporting: HCM systems typically provide reporting and analytics features. Business intelligence reporting tools help administrators or HR professionals get a clearer picture of what is going on with their workforce. These analytics can help them make more informed and strategic decisions on hiring, budgeting, and more.
- Employee self-service: Employees can also enjoy the advantages of HCM platforms. While many of the features are targeted toward managers and HR team members, HCMs also provide employee-facing tools. Employees can access their time sheets, pay stubs, benefits information, performance goals, and more in a centralized system without having to get HR involved.
You may have heard of other HR software solutions such as HRIS (human resources information systems), HRMS (human resources management systems), or ATS (applicant tracking systems). Like HCM platforms, these are software solutions that support HR departments with different tasks. HCM systems often offer additional strategic tools like business intelligence and forecasting on top of traditional HRMS features. Top HCM systems also help organizations consolidate their people management functions into a singular unified system so that HR professionals and employees can access all of the data that they need in one place.
Step Up Your HCM With ContinuumCloud
Now that you know the answer to “What does HCM stand for?” and you understand the benefits of having an HCM system, you’re ready to choose an HCM platform for your organization. Streamline your HR processes and enter the new age of human capital management with a system designed to meet your needs.
ContinuumCloud’s unified HCM system is the only HCM solution designed to meet the unique needs of behavioral health and human service providers. Our HCM solution is powered by Position Control, which is a system of viewing and managing the workforce by positions rather than by individual employees. This allows organizations to set specific criteria for job roles, manage compliance and credentialing requirements by position, and budget for open roles. Position Control can also be used to keep track of how your actual labor costs are stacking up against your forecasted labor costs to see whether you have room in the budget to hire more labor and to keep better track of your expenses – an essential feature for managing the complex operations of behavioral health organizations.
Contact us to learn how ContinuumCloud’s HCM service can help your organization optimize your workflows and engage your employees.