In the early days, companies used to leverage multiple software solutions to help with human resource (HR) tasks, which led to a tangled web of spreadsheets, stand-alone systems or add-ons to their financial software or the enterprise resource planning system. However, today when managing human capital effectively and sensitively is critical for businesses, choosing the right human capital management (HCM) system can have a direct impact on the bottom line.
There are three primary reasons for the existence of HCM systems: compliance, cost and talent. Non-compliance with local government regulations puts a business at risk. For example, some countries stipulate a minimum data retention law, while others have strict regulations relating to the issue of physical payslips given to employees. One of the measures of success for an HCM system is whether you can seamlessly manage compliance needs across geographies.
A good HCM system is also one that allows for greater cost efficiencies in the way a business can implement an HR strategy. Some examples of cost savings are:
Payroll management: An HCM helps in eliminating manual calculation in payroll that not only helps in saving time and money but also removes the scope for error which could lead to overpayment with no audit trail.
Attendance management: The task of managing and reporting employee attendance and leave is an expensive and time-consuming one. Implementing an HCM system not only saves substantially on processing costs but also unlocks analytics.
Indirect cost savings: Organizations that implement HCM systems see indirect cost implications from areas such as reduced HR administration and compliance costs, lower technology costs due to consolidation, and costs saved due to better analytics-driven strategic decisions.
While compliance and cost remain fundamental reasons, modern HCM systems today hinge on the third major raison d’être: talent. Can an HCM system help the enterprise understand who the right kind of employee is—or how to attract the right type of talent, and engage and retain them? This is the new direction where HCM systems are moving—enablers of business in a scenario where talent is the fuel for business success.
As companies continue to grapple with the challenges of employee engagement and retention, HCM systems too need to evolve to keep pace with the changing realities. Today, talent search has become more complicated and time-consuming. HCM systems accelerate hiring. They read CVs with natural language processing and search job portals automatically. Bots call the prospective candidates and gauge interest through an interactive voice response system—leaving the recruiters with more time to engage the interested candidates.
The belief in a kind of professionalism that “keeps emotions at the door" is on its way out. Today, companies believe in wellness that helps employees be their best they can be—both at work and off work. Modern HCM systems enable organizations to become more collaborative and build a strong culture. Such systems are equipped to facilitate collaboration between teams to help harness employee capabilities optimally. They are also geared to identify high-potential talent and groom them for better opportunities.
HCM systems have evolved from being a cost-saving or regulatory-compliance system to something that is core to the business of managing talent. Soon, crowdsourced, continuous feedback mechanisms will replace performance management systems, and learning will be peer-driven and gamified. Time sheets and attendance will be based on mobile location, and tasks will be crowdsourced to a distributed workforce.
HCM systems will thus continue to create frameworks that will help businesses bring together data, processes and empathy to focus on enabling the right people to be at their best—for the organization and for themselves.
Subhadeep Panda is global head of Oracle HCM Solutions at Wipro Ltd.