HR Management & Compliance

What Is HCM?

Have you heard of human capital management (HCM)? HCM refers to the entire suite of activities an organization undertakes to optimize and maximize the value derived from the organization’s employees. Essentially, HCM strives to make recruiting employees, managing employees, and employee productivity as optimal as possible.


HCM typically includes the entire set of activities involved in this, from before an employee is brought onboard through the person’s entire tenure with the organization. HCM needs to take into account the organization’s current and future situation, including its vision, mission, goals, budget, competitive landscape, and more.

In essence, it takes a strategic look at talent management and ensures the people within the organization are being utilized in the best way, which includes helping each person reach his or her full potential. Here are some types of things HCM may include:

  • Acquiring new employees who meet the skills the organization will need both currently and in the future:
    • This typically includes analyzing the company’s talent needs and assessing what skills new hires should have to prepare for the future. It may also include a skills gap or talent gap analysis or the use of predictive workforce planning tools.
  • All aspects of the recruiting and hiring process, including tracking applicants and communicating and onboarding;
  • Efficient administration of all personnel-related tasks;
  • Training of employees, both at the start of employment and throughout their tenure with the organization;
  • Compliance and efficiency in compliance processes;
  • Optimization of compensation to ensure the company is hiring the best talent for each role;
  • Employee engagement measurement and improvement activities;
  • Productivity maximization;
  • Utilizing tools and technology to ensure the organization’s employees are the most efficient at their tasks;
  • Using software to optimize employee interactions with HR;
  • Assessment of the best and most strategic benefit structure that will attract and retain the talent needed for the business to be optimized—in other words, investing in employees in ways that will help them both personally and professionally;
  • Employee development and training plans to both retain top talent and grow the skills needed for the company to succeed;
  • Optimizing the applicant/candidate experience, as well as the employee experience, to help attract and retain top talent;
  • Utilizing data as a guide to make decisions that will have an impact;
  • Monitoring employee performance and being proactive at improving it; and
  • Automation of HR-related tasks when it will optimize efficiency, such as payroll optimization through software investment.

These are some examples, but there isn’t one simple set of rules for what must be included in an organization’s HCM practices.

Overall, HCM views an organization’s employees as valuable assets and seeks to optimize the return on those assets. It’s a move from administration to having a strategic mind-set. This requires a strategic approach to talent management and requires the team to be proactive. If done well, HCM can result in improved efficiencies, leading to increased productivity and improved profitability.

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.

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