Guide to Human Capital Management & Productivity

For businesses across all sectors, 2022 will represent an opportunity for the lessons of the pandemic era to inform and shape their future direction and strategy, adapting to new ways of working to strive for greater productivity and profitability.

A key element in achieving this success will be how effectively businesses can leverage the technology and systems they use in order to remain connected with their employees and craft a working environment which is able to nurture and drive productivity and engagement.

The Advanced trends survey found that 44% of HR professionals felt that ensuring employees have access to the right tools in order to be productive is one of the major qualities which business leaders must strive for.

With productivity playing such a key role in determining the ongoing success of organisations, the dominant question for business leaders will be how can they effectively gauge the level of engagement and overall output of their people.

We believe that Human Capital Management technology (HCM) represents the bow wave of the future for businesses who want to drive forward their productivity and ensure a strong post-pandemic recovery. Your people are the lifeblood of your business after all, and it makes sense that without safeguarding their wellbeing and engagement, any drives to boost productivity will struggle to get off the ground.

This guide explores some of the ways that HCM technology can help your business stay connected with your people, boost their engagement and drive forward your productivity and profitability.

What is Human Capital Management?

Although it may seem like a bit of a cold and impersonal term, Human Capital Management, or HCM for short, represents the scope of initiatives implemented by HR teams in order to support employees in their roles. These can range from wellbeing measures such as employee benefits and reward schemes to processes dealing with the recruitment and onboarding of talent.

Human Capital is the measure of those intangible, hard to define qualities which serve as an indicator of employee wellbeing and engagement. Rather than viewing employees as resources, we use the term “Human Capital” precisely because the people element cannot be separated from these assets- they are intrinsically linked.

Human Capital has its origins in the early 50s and 60s when Nobel prize winning economists Gary Becker and Theodore Schultz first posited their theory of Human Capital. Becker’s reasoning was that just as businesses invest in their infrastructure in the form of equipment and resources, so too can they invest in their people- the Human Capital at their disposal, in order to yield greater results in terms of productivity and profitability.

Becker divided Human Capital along two lines- between the general and specific:

Specific human capital: training or education that benefits only one company

General human capital: training or qualities that benefit the individual at any company

Becker’s research found that on the whole, there was a greater desire for businesses to invest in programmes of specific Human Capital training as it presented less opportunity for those learned skills to be poached by other organisations.

Regardless of its specific form, Human Capital Management is all about transformation and improving the abilities and overall quality of your workforce. Just some of the areas Human Capital touches upon include:

• Education
• Technical or on-the-job training
• Health
• Mental and emotional well-being
• Punctuality
• Problem-solving
• People management
• Communication skills

Individually, each of these components are desirable qualities for businesses to engender within their people. However, when these properties are harnessed collectively, that is when organisations can truly expect to see a transformation in terms of their overall economic output.

Examples of Human Capital Management

As mentioned previously, Human Capital represents a relatively broad church in terms of the aspects of business in which it covers. With this in mind, what are some of the key examples of Human Capital management?

Recruitment and onboarding

It may seem obvious but one of the most effective ways of ensuring an employee’s motivation, engagement and wellbeing is by making these factors a priority from day one. The recruitment cycle is an important factor as it presents an opportunity for businesses to attract talent who are a right fit for their organisation both in terms of their professional goals but also from a standpoint of company culture.

The onboarding process is also a particularly key element as regardless of how suitable a candidate may be, a bungled introduction to a business can have huge consequences for their engagement and motivation, not to mention the overall likelihood that they will stay with the business long term.

Onboarding has presented a unique challenge for HR leaders in the wake of the pandemic as the continued trend for hybrid workforces has seen teams continue to become more geographically widespread. From the requisitioning of equipment to even the simple matter of introductions to the business, it is clear that HR teams have a challenge ahead of them when it comes to creating a universal employee experience.

Training and development

Whilst being vital in driving forward success, employee training also plays a vital role in an employee’s wellbeing and job satisfaction. Research by MHS found that 96% of employees would be more likely to stay with their current organisation if they offered a clear and well defined programme of training and development.

Every person within your organisation will undoubtedly want to understand where the potential for growth is within their place of work, and by fostering this desire for learning and development, it can go a long way towards ensuring the long term engagement and overall job satisfaction of an employee.

A clear and well defined policy of training and development can be the factor which determines whether employees choose to stay with an organisation or move elsewhere. It will be of vital importance for businesses to foster this desire for upskilling if they wish to retain the services of their most talented people. Organisations who fall behind in this respect run the risk of losing out to competitors both in terms of employee retention as well as sourcing new talent.

Benefits and rewards schemes

Having a well embedded and widely communicated policy of employee rewards and benefits is one of the most vital tools in your arsenal for helping your employees remain engaged, motivated and ultimately, more inclined to stay with your organisation long term.

It is also important to understand the need for benefits packages and reward structures to not remain static and to appreciate how the priorities of your people may have shifted over the past couple of years.

Research shows that a demand for wellness allowances are foremost in employee’s minds with a focus on reward schemes that support mental and physical wellbeing such as gym memberships and mindfulness courses. Out of the people surveyed, 41% stated that wellbeing is a priority for them when determining the suitability of a workplace, ranking it evenly with salary.

This is an important consideration for organisations, many of whom may operate under the assumption that financial incentives and rewards trump all.

As with all policies, the most effective rewards schemes will be those which take the wider needs of your people into account. This is an area where your HR teams will be able to play a crucial role, by instigating conversations with employees and then taking note of where their priorities seem to lie.

Time and attendance

The ability to effectively track hours worked, reducing wage processing errors and boosting overall productivity sounds like the ultimate dream for HR professionals. Fortunately, this is far from a pipe dream as an effective time and attendance solution can enable you to achieve this and much more.

Time and attendance solutions allow employees to clock in via a variety of means such as keycards and fobs or biometrics such as fingerprint scanners and facial recognition technology.

These can be tied into access control solutions to provide an element of security but most importantly, they provide organisations with a clear understanding of where and when your people are working.

As the wider world looks to fold elements of remote working into the future structure of the workforce, time and attendance systems are ideally placed to assist businesses in preparing for this change.

Many comprehensive time and attendance solutions already offer the ability for employees to clock in remotely via mobile or tablet devices. Traditionally used to supplement the requirements of off site workers such as logistics drivers, this mobile functionality looks set to play a key role in helping businesses stay connected and aware of the working patterns of their people, even when they aren’t tied to an office location.

Payroll

It’s not overstating things to say that payroll sits at the heart of your business. The ability to pay your people accurately and on time month after month is a demonstration of your commitment to looking after their wellbeing and rewarding them appropriately for their hard work.

Payroll as a function is a labyrinthine thing, with numerous legal and legislative concerns which have to be navigated carefully in order to avoid serious repercussions. Many organisations rely heavily on the knowledge and expertise of their payroll teams in order to stay on top of any changes which may impact their pay cycle in such a way.

The COVID-19 pandemic placed a great deal of strain on payroll professionals, with many finding themselves having to adapt to an increasingly disparate and remote working world. As the organisations they work for now look to make a strong post-pandemic recovery, payroll professionals will find this expertise and agility leveraged once more in order to help influence ongoing business strategy.

What is Human Capital Management software?

HCM software covers a broad scope of workforce management responsibilities from payroll and time and attendance, to managing and maintaining programmes of employee learning and development.

Over the past couple of years, businesses have been looking at HCM systems to serve as more than just tools to manage core functions like payroll, benefits, and time and attendance. Today’s HR software addresses fundamental workforce management needs and offers businesses a framework to be able to engage with and look after their people.

Your HCM systems should ultimately help you achieve two functions: Firstly, they are designed to provide your business with the information you need in order to drive forward success. Secondly, they should help support your HR teams by freeing them from the more tedious elements of their role and allowing you instead to leverage their talents in order to help influence your ongoing business strategy.

The strength of HCM technology is that it will already work in lockstep with the wider pivoting to virtual platforms which many organisations have made over the course of the pandemic. The purpose of HCM suites in employee engagement is to allow the voice of the employee to be heard, utilising engagement surveys, feedback tools and other resources to ensure that no employee experience exists within a vacuum.

With the shape of the modern working culture looking to move away from a centralised work space, having an understanding of your employee’s voices will be absolutely vital in helping steer your organisation in the right direction.

As workforces continue to remain widespread, business leaders will find themselves turning time and time again to their HR systems in order to provide them with a holistic understanding of the needs of their people.

Why is investing in Human Capital Management beneficial?

Whilst pre-pandemic, many businesses had already taken advantage of the power of digital transformation within their HCM function, the course of the global crisis has forced many organisations to completely rethink their existing structure.

Now, the wider shift to hybrid working serves as the impetus for businesses to seek out change in their systems and processes.

Research by Gartner indicates that by 2025, 60% of mid level to corporate sized organisations will have invested in some form of cloud-deployed HCM management suite. This represents a significant acceleration in the digital transformation of the people management function and highlights how the course of the pandemic has influenced businesses’ perspectives on HCM projects, placing them as a higher priority than they may have been before.

Keep your workforce engaged

As the workforce has become more widespread and hybrid working policies look set to make up a significant part of modern working culture, the concept of keeping engaged with their people will be a primary concern for businesses who want to drive forward their recovery plans. Naturally, issues of engagement fall at the feet of HR teams and therefore, it is imperative that organisations are providing their teams with the necessary tools to help grant them the proper overview of their employees.

HCM technology is designed specifically to give your businesses the oversight and the information you need to be able to shape and drive forward your strategy.

From time and attendance systems which give you an unparalleled overview of the working patterns of your people, to comprehensive HR suites which allow you the ability to keep on top of the wider needs of your workforce and drive conversations around engagement.

Issues that HCM software can solve

Human Capital Management software can help mitigate numerous issues. Some of the advantages of leveraging this kind of technology include;

Increased visibility

One of the most common issues which companies come up against when monitoring time and attendance is when disjointed processes lead to gaps which can be exploited or lead to lapses in visibility.

Typically, this is seen when companies rely on manual clocking methods such as key cards or fobs which can easily be manipulated by employees, otherwise known as “buddy punching”.

Paper based timesheets offer their own set of issues as data accuracy and integrity is extremely difficult to guarantee. Furthermore, these manual based processes offer very little in the way of an intuitive link between other parts of the HCM function, meaning that data often has to be duplicated which vastly increases the potential for error.

By leaning on technology, particularly by implementing a biometric based clocking system, you can ensure accuracy when tracking hours worked as well as automatically feeding that information through to your payroll system, ensuring accuracy across the whole HCM function.

 No more running payroll weeks in advance

When dealing with outdated and inefficient systems, businesses can find that they lose hours upon hours every week simply from accommodating some of the more temperamental aspects of their technology. When it comes to payroll and the absolutely vital nature of ensuring data accuracy and integrity, this means constant manual cross checks which soon eat into the available time in the working week.

The worst instances of inefficient payroll systems can find businesses having to run their payroll weeks ahead of time in order to ensure that sluggish systems are able to collate and process information in time for the pay cycle.

This presents a particular issue in that businesses who run payroll in this way will be unable to correct errors in the weeks leading up to that pay period, meaning errors then bleed into the following month.

As with all technology, the most effective payroll systems should provide you with a degree of automation, handling the burden of complex calculations and collating information in a way that ensures you have accurate data, right up until the second that you run payroll.

Resistance to change? No need to worry

As with many elements of a business, HCM technology has different meanings for different people. Your HR teams are very much the boots on the ground, end users of such technology and therefore their sense of how great a need there is for digital transformation is perhaps greater than that of someone at an executive level.

This disconnect can often lead to a resistance to change with upper management, particularly FD’s that are struggling to see beyond the price point of new technologies, not understanding the true value that investing in new systems can bring.

The increased influence that HR teams have enjoyed over the past couple of years should mean that their knowledge and experience is being leveraged in such a way that executive level talent can acknowledge any concerns they have about gaps in the process and can also take on board HR’s considerations when it comes to digital transformation.

No more constant course correction

The worst instances of outdated processes can lead to hours lost due to the necessity for manual checks and balances. The time sink that this represents for businesses can mean that many have taken the step of creating entire job positions solely to deal with data anomalies.

Even for organisations who don’t take such a dramatic step, it is clear that by automating the HCM function you are able to free your HR teams from admin-heavy tasks whilst ensuring that you have the data accuracy you need, without losing your working week to constant checks and balances.

The remote functionality you need

It’s clear that hybrid working has moved beyond a trend or emergency expedience and is instead forming a core part of the modern working structure. Despite this, many businesses find themselves lacking the framework necessary in order to fully engage with and manage their hybrid workforce.

HCM technology is an undeniable boon in helping to bridge the gap between remote workers and their organisations. By allowing a degree of employee self service functionality, you empower your people to take charge of their schedules, as well as allowing them the ability to push through holiday requests and gain access to their remaining leave allowance as well as payslips and other relevant documentation.

This will be an undeniable advantage for your HR teams who often find themselves losing hours every week fielding these types of requests.

How HCM technology can boost productivity

In order to maximise their success moving forward, business leaders will need to be proactive in embracing the permanent move to hybrid working and be aware of some of the complexities of managing a workforce split between the office and at home. The greatest challenge of which will be monitoring and driving conversations around productivity.

HCM technology offers a two fold solution for businesses who are looking to maximise the productivity of their workforce, regardless of where they are working from.

Firstly, by freeing their HR teams from manual based processes and giving a degree of self service functionality to your employees, you are better placed to be able to harness the talents of your HR professionals in guiding wider business strategy. You also empower your people to take charge of their schedule, regardless of where they choose to work from.

Secondly, the best HCM technology is all about getting you the metrics you need to help guide your business. Having the proper overview of your people is more important today than ever, especially as workforces become increasingly widespread.

Businesses can’t afford to let old biases around remote working cloud their perception of their people and by having the proper information at your fingertips, you have the confidence of knowing the output of your people whether they are working from home or the office.

What is the difference between HCM and HR?

It is clear then, that there is a great deal of overlap between HR and HCM as business functions.

But how do we distinguish the two?

The HR function is typically viewed as the foundation of all elements relevant to the management of a workforce. From employee benefits to time and attendance and payroll, HR encompasses the core concepts of the workforce experience- those specific elements which businesses rely on for their day to day operations.

HCM, on the other hand, can be viewed through a more aspirational lens, being seen as a way for businesses to look beyond the everyday routine and to explore ways of achieving more. HCM is all about identifying and drawing out the best qualities in your people in order to be able to reach for greater success.

Effective HCM management is a two fold step of both enhancing the employee experience by encouraging the growth and development of your people and also harnessing that same experience to drive forward greater productivity and profitability.

Essentially – every good business requires a focus on HR but the truly great businesses place their focus on HCM.

Who is responsible for HCM in a business?

Being so closely entwined with the role of HR, it is a natural assumption that HCM will fall at the feet of HR professionals.

Whilst this is true for the most part, given that the purpose of HCM as a function is to empower your people, a truly effective HCM policy will rely on drawing upon various aspects of the business.

From an executive level, a willingness to invest in new systems and processes will be necessary in order to drive forward effective policies of change. Similarly, it will fall to business leaders to effectively harness the talents of their HR teams in order to allow them to take the lead in crafting a policy which promotes the HCM function.

As much as a focus on digital transformation will enhance the HCM process, the information gathered will never be truly effective if treated in a vacuum. Therefore, the experience of mid level or shift running managers needs to be leveraged in order to help form the decision making process.

Choosing the right HCM software for your business

Although HCM as a function is universally applicable across all industries, the specific way in which businesses will harness the talents of their people is likely to differ greatly. Similarly, when looking at investing in new systems and technologies to help support HCM within an organisation, the requirements and priorities for each business are liable to differ wildly.

As discussed, HCM covers a broad scope of responsibility across a business and the technologies and systems which supplement the function mirror this, with a wide range of functionality available to cover a range of needs such as:

• Workforce planning
• Compensation planning
• Recruiting and hiring
• Onboarding
• Training
• Time and attendance
• Payroll
• Performance management
• Workflow management
• Reporting and analytics
• Compliance
• Employee service and self-service
• Benefits administration
• Retirement services

When looking at investing in HCM software and technologies, one of the greatest dangers is allowing the complex and broad scope of the function to overwhelm and distract you from achieving your specific goals.

Complexity is a wonderful thing to have in a system but it cannot come at the cost of you losing sight of what you need to drive for in order to achieve greater levels of engagement and productivity from your people.

Given the broad nature of HCM as a function, most businesses will benefit from looking at it from a bespoke perspective. This includes focusing on specific elements and picking and choosing systems and functionality which will help them to achieve their immediate goals, whilst tackling the most pressing issues hampering performance.

More comprehensive functionality can be looked for down the line but in the here and now, businesses must focus their search to be able to achieve their goals.

How to improve your Human Capital

It is clear then, that a strong investment in HCM is the most effective way for your organisation to be able to push for greater levels of productivity and profitability.

The strongest examples of post pandemic recovery plans will see businesses empowering and harnessing the talents of their people to reach new heights and the systems and technologies which they introduce today will stand as a testament to their commitment to investing in their people.

At Mitrefinch, we understand how important it is for your business to reach the heights that you deserve, which is why our suite of HCM products such as workforce management solutions and  Flexipay payroll have been designed to help free HR teams from the pains of manual processes and admin heavy tasks and to also arm your business with the information you need in order to craft policies and strategy that put productivity first.

We know that your focus is firmly on the future and pushing for greater levels of success. As we move into a new year, we want to help you achieve those goals and we believe that the first step begins with investing in your people.

If you’d like to find out more about how Mitrefinch HCM software can help transform the way you invest in your human capital,  Get in touch with one of our friendly team members today.