Human Capital Management (HCM) is a business strategy that focuses on hiring the right people, managing workforce effectively, optimising employees’ productivity, and ultimately benefiting the organisation. It encompasses the fundamental tasks of Human Resources (HR), which include payroll processing, managing employee time and attendance and administering benefits. But what makes HCM truly essential is its focus on workforce management including employee recruitment, development, compliance, engagement and retention.
What are the benefits of HCM as compared to a traditional HR approach? First, HCM streamlines recruitment, improves payroll processes, enhances performance evaluations and career planning, and boosts operational efficiency. Moreover, it enables the seamless flow of information between supervisors and subordinates, promoting transparency and accountability, which is critical for successful communication and collaboration in the workplace. However, despite these benefits, many organisations struggle to effectively implement HCM strategies. This is where Human Capital transformation comes in.
Human Capital transformation is an approach that assists organisations in outlining, organising, and implementing their HCM plan by focusing on the creation and delivery of services aimed at their most valuable assets, which are the employees. This process establishes a culture and operational framework that allows everyone, including leadership, management, and HR, to be accountable for efficient HCM.
In the digital era, technology is a key enabler for Human Capital transformation. According to Allied Market Research, the size of the global HR tech market was $32.6 billion in 2021. It is projected to increase at a compound annual growth rate (CAGR) of 9.2% between 2022 and 2031, and reach $76.5 billion by 2031. By leveraging technology, organisations can better manage their HCM tasks, responsibilities and processes, thus increasing productivity and efficiency.
At aAdvantage Consulting, we work with our HR tech partners – enabley, Whyze and JobKred – to help deliver Human Capital transformation. Here, we look at three trends in HCM and how our partners can play their part.
Trend 1: The need to better understand the capabilities and competencies of the workforce
One of the most significant trends in HCM is the need for organisations to better understand the capabilities and competencies of their current and future workforce. In the past, HR managers would typically create job descriptions outlining the competencies required for specific roles, then use employee self-assessments, manager assessments, and performance reviews to determine whether employees possess the required competencies. However, this approach has several limitations including the potential for human error and the limited visibility of the skills and competencies of the entire workforce.
A digital platform like JobKred provides a more comprehensive and data-driven solution for determining, storing, and assessing staff competencies. Organisations can use JobKred to identify skills gaps, align individual skills with organisational objectives, improve employee performance, and store and access competency data in a centralised location.
Take for example, Company A, a leading global operator of tank terminals for oil, gas and chemicals, which has a diverse workforce across different regions. Company A had difficulties identifying and providing training opportunities in keeping up with a rapidly changing Oil & Gas industry. Within six weeks of adopting JobKred, the company received a comprehensive skill-gap analysis for all its employees across 12 departments. The analysis identified 1,814 skill gaps, and targeted training courses were rolled out to close the gaps. As a result, Company A’s average job readiness increased by over 80%. JobKred helped the company stay competitive in the industry, contributing to its continued success in the global market.
JodKred’s talent management platform goes beyond just workforce competency management. It also includes tools for managing employee goals and succession planning. By investing in employees’ skills and career growth, organisations can boost employee engagement, retain top talent, and ultimately drive business success.
Trend 2: The importance of institutional learning packages and learning management
Another trend in HCM is the shift towards more advanced and comprehensive institutional learning packages and learning management systems. Organisations need to equip their employees with new skills and knowledge to stay ahead in this fast-paced and constantly evolving business environment, where technology, competition and market dynamics are rapidly changing. They also need to ensure that their employees have the skills and knowledge to succeed and remain competitive. To achieve this, more organisations are developing learning management systems that go beyond traditional HR solutions such as tracking of learning hours and topics.
Enabley provides a holistic solution to engage employees in the learning experience and a comprehensive platform for talent management. It offers a range of tools for tracking employee performance, such as skill assessments, quizzes, and evaluations. These features enable organisations to gain insights into their employees' strengths and weaknesses, track their progress, and identify areas for improvement. Most importantly, the platform also provides a customisable learning experience that allows organisations to create and transfer institutional knowledge and skills to employees in a short time. This approach ensures that employees receive the training on a timely basis, to develop the skills required to succeed in their roles.
Trend 3: The cost and complexity of enterprise solutions
The third trend in HCM involves the implementation of enterprise solutions to manage the end-to-end employee solutions through integrated cloud-based solutions, not necessarily from one solution provider. Through technology interfaces, employers need not be limited by one solution provider. Despite recognising the advantages of these solutions, small and medium-sized enterprises (SMEs) may lack the financial resources or willingness to invest in such technology. Additionally, they may not have the technical expertise or IT infrastructure to support the implementation of multiple technology solution providers.
To illustrate, consider a small manufacturing firm that aims to optimise its HR processes but faces budget constraints. Global sophisticated enterprise solutions often cater to organisations of workforce sizes more than 1000 employees and our local SMEs may find the cost of implementing and maintaining an enterprise solution to be unfeasible and opt to allocate its limited resources to other areas such as equipment, research and development, marketing, or expanding its product lines.
As our local SMEs adopt more holistic HCM practices, there is a need for more sophisticated HR technologies. More local providers like Whyze have developed talent management modules to complement the traditional transactional modules (payroll, time management, leave & benefits management) and can support processes such as recruitment management, performance management and learning & development. The advantages of using local solution providers like Whyze are the user-friendliness, scalability, customisation, and cloud-based deployment with local support.
At aAdvantage Consulting, we recognise that managing Human Capital is essential for organisations to thrive in today’s ever-changing business landscape. The success of a company is heavily dependent on the abilities, skills and competencies of its employees. However, managing Human Capital is not a straightforward task. It requires a comprehensive solution that caters to the specific needs of each organisation. We partner technology providers like JobKred, enabley, and Whyze to provide a comprehensive solution to transform organisation’s human capital practices and the ability to technology solutions to provide data insights, improve employee experience and streamline HR operations.
By managing the organisation’s Human Capital effectively and efficiently, organisations can thrive in today’s dynamic business landscape and stay relevant and ahead of the curve.