HCM, HR, and HRIS 

 

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What Is Human Capital Management?

Human capital management (HCM) is the set of practices an organization uses for recruiting, managing, developing, and optimizing employees to increase their value to the company. Done right, human capital management results in:

  • Hiring the right talent
  • Having all the necessary skill sets in the company’s workforce
  • Managing employees effectively
  • Increasing productivity

What Practices Are Included in Human Capital Management?

HCM covers various administrative and strategic practices and processes that include:

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

 

HCM Best Practices

The four pillars of HCM best practices, with examples, are:

    • Alignment: If your company goals focus on differentiation, your HCM strategy should center on hiring the most innovative product developers with a proven track record.
    • Automation: Invest in the right technology to automate processes for planning, payroll, workflows, reporting, and analytics to increase accuracy and productivity.
    • Communication: Build a culture of trust by proactively and openly communicating with employees, especially during times of transition.
    • Personalization: Check in with each employee to ensure they’re engaged and progressing in their career.
 

Human Capital Management vs. Human Resource Management

These terms are often used interchangeably, but they have different meanings. Human resource management (HRM) primarily focuses on core administrative HR functions such as maintaining employee records and administering benefits. On the other hand, HCM is a broader term that includes HRM functions and strategic functions such as analytics and performance management.

HCM aims to maximize the value and ROI of the people in an organization. HRM creates and manages the systems and processes needed to recruit, train, and retain employees.

What Is HCM Software?

Human capital management software (HCM software) handles many functions and processes needed for effective workforce management, saving time and money. HCM software is sometimes called a human resource information system (HRIS) or human resource management system (HMRS).

Full-featured software streamlines and simplifies such things as:

  • Recruiting
  • Applicant tracking
  • Onboarding
  • Employee recordkeeping
  • Workflows and approvals management
  • Time tracking and attendance
  • Payroll
  • Performance management
  • Employee self-service
  • Reporting and analytics

How to Choose the Right HCM Software

There are many HCM software systems on the market. Their capabilities and advanced functions vary, so it’s important to carefully assess your organization’s current and future needs before selecting one.

Some organizations buy HCM software that’s installed on their hard drive or server, but most choose cloud-based HCM software. The benefits of the cloud include convenient access from anywhere, flexible expansion capability, and automatic software updates.

To protect your organization, choose software that can keep pace with the ever-changing regulatory and statutory requirements at all jurisdictional levels. This is especially critical for multinational corporations. Also, ensure the system provides real-time and predictive analytics for benchmarking, modeling, and forecasting and that the vendor’s service model meets your long-term requirements.

 

What Is HR?

Human resources (HR) is the department within an organization that handles all employee-related matters, from the application stage to the time an employee leaves the company. This includes areas like recruitment, hiring, and onboarding, as well as performance management, payroll, and benefits administration. HR also encompasses employee relations and policies and procedures.

In managing all of these areas of the business, HR professionals must ensure compliance with all current wage and labor laws. HR professionals also provide short-term guidance and long-term strategy for managers and company leadership in all of these functions.

 

Typical Responsibilities for an HR Department

If you’re wondering what exactly HR is responsible for, you should begin by looking into which employee-related tasks HR professionals are equipped to handle. Here’s a brief overview of the typical responsibilities the HR department manages and coordinates.

Recruitment and Onboarding

Finding and attracting top talent to fill open positions, including writing job descriptions, evaluating applications, interviewing candidates, and selecting the best person for the job, are all HR responsibilities.

Once a candidate is selected, the HR department also oversees onboarding to ensure the new hire gets acclimated to organizational culture, understands their job responsibilities, and can access all the tools and technology they need for the job.

Payroll and Benefits

HR professionals evaluate budgets, laws, and industry trends to decide on a compensation strategy and determine what benefits should be offered. The department then becomes responsible for processing payroll, calculating and paying employment taxes, and administering benefits so that employees can properly access them.

Performance Management

HR professionals develop systems to measure employee performance. They also create and oversee training programs that help employees gain the skills needed to improve their performance.

In some cases, those in this role help employees figure out their career paths and outline requirements for promotions and advancement.

Employee Support

Employee support requires a broad range of functions, including developing policies and procedures to help employees thrive, answering questions, resolving disputes, and administering discipline. The HR department may also create and launch diversity, equity, and inclusion initiatives and find ways to keep employees happy and engaged.

In today's world, this role often involves supporting remote employees and ensuring they remain connected to company culture. The human resources department has to coordinate IT support and understand and comply with labor laws in different jurisdictions, including those surrounding employee classification and wages.

Administrative Management

A large part of human resources is managing the department's day-to-day functions. This includes a variety of tasks, from processing leave requests to ensuring proper storage of employee records.

Administrative management also involves distributing policies, obtaining signatures as recognition that employees have seen them, and disseminating notices and announcements.

Compliance

Though most departments have to adhere to laws and regulations on some level, HR departments have one of the most daunting jobs in this regard. This is because HR professionals have to comply with more than a dozen laws related to employee classification, wages, and workplace safety, as well as disability accommodation, benefits, wage deductions, and leave policies.

They must also keep up with constant changes and amendments to these laws. Doing so reduces risk and helps keep the organization from having to face costly audits, fines, penalties, and lawsuits.

Roles Within an HR Department

Multiple people must work together to fulfill the employee-related needs of the organization. To accomplish this goal, HR professionals often take on a variety of different roles within the department:

  • HR Director: Oversees and coordinates the entire department, ensuring legal compliance and collaborating with senior leaders to align HR with strategic goals
  • HR Generalist or HR Coordinator: Acts as a human resources director for small businesses, overseeing and coordinating all HR management tasks
  • HR Assistant: Completes office-related organization tasks for HR director and managers, including making phone calls and filing and processing paperwork
  • Benefits Administrator: Handles the open enrollment process, explains benefit options to employees, processes paperwork, and answers related questions
  • Training and Development Manager: Identifies skill gaps, develops training programs to fill them, and helps employees gain skills to reach professional goals
  • Recruiter: Sources, selects, and onboards qualified applicants to fill open positions based on strategic needs and goals
  • HRIS Specialist: Selects and manages HR technology by coordinating the needs of the department with the expertise of IT specialists
  • Employee Relations Specialist: Addresses employee concerns, administers disciplinary procedures, and oversees employee engagement programs

Typically, smaller companies will have a few HR team members who take on multiple roles. Larger companies can often afford to invest in specialists or even assign entire teams to each function. In states that allow unions, there may be a separate labor relations specialist to help with salary or contract negotiations and grievance resolution.

 

HRIS Meaning: It’s HR’s Most Important Software Tool

An HRIS is a system used by human resources (HR) teams to organize key information companies need to know about their employees, including:

  • Name
  • Address
  • Social security number
  • Birthdate
  • Employment status

An HRIS also contains reporting capabilities for HR managers to easily view and share data points, employee trends, and other important business insights.

For example, BambooHR is a comprehensive HRIS platform that combines employee records and reporting with capabilities for critical HR programs like:

  • Hiring
  • Onboarding
  • Payroll
  • Benefits administration
  • Time management
  • Employee performance management

An HRIS  allows HR teams to digitize paperwork, automate manual processes, and pull data from a single real-time source so they can feel confident they’re making decisions based on full and accurate information about their employees.

 

Do You Need an HRIS Certification?

No, an HRIS certification isn’t mandatory to work in HR; HR teams usually rely on the HRIS provider to train them on how to use the software.

In terms of certifications for the field of human resources, only 1 in 4 HR managers hold a professional certificate. However, a certification can be a powerful way for HR managers to further their skills, show their commitment to keeping up with the latest technology and best practices, and grow their careers.

There are many HR certification options to choose from—here are some examples:

SHRM Certified Professional (SHRM-CP)
Human Resource Information Professional Certification (HRIP)
Certificate in Human Resource Management
HRCI Professional in Human Resources (PHR)
Global Professional in Human Resources (GPHR)

HRIS vs. HRMS

The terms human resources information system (HRIS) and human resources management system (HRMS) are used interchangeably as the two systems work so closely together that most providers now combine them into one.

Traditionally, an HRIS describes a system that tracks static or quantitative employee information, like names and social security numbers, while an HRMS focuses more on the qualitative aspects of managing employee functions, like performance, time off, and onboarding.