The Necessary Human Capital Systems
I have been an HCM consultant for the last 7 years and have had the opportunity to work on various modules of HCM - from Recruitment Solutions to Core HRMS to Appraisals. In this forum, I intend to share some of the knowledge that I gained over the years - both systems and processes.
What is Human Capital Management?
In the industrial era, people in the organization were managed through a "personnel" department. This is akin to the current human resources department, but "personnel officers" were mostly involved in labor relations and company law. Their routine was mostly restricted to operational and benefits management.
A couple of decades ago, the concept of viewing "people" as an "asset" of the organization emerged and led to "Human Resources". The human resources team is involved in entire life cycle of the employees - From Recruitment to Retirement. Their work is more strategic and advisory in nature and deals with culture, organization structure, merger & acquisition, and benefits. They serve as an advisory to the business leaders.
In the current era, a new concept of people management is emerging - namely "Human Capital Management". Under this concept, people are viewed as "Capital" rather than just "assets". In a capital concept, people are seen as key stakeholders in business. This is a step-ahead from the "asset" based concepts where people are seen as just future economic benefits. In a "capital" concept, employees are as important as any other stakeholder in the business and provides a level-ground for all-and-sundry.
Why Human Capital Management is Important?
In my opinion, Human Capital Management is important from the following perspectives: Employer-Employee Relations,Talent Sourcing/Retention, and culture. Of these three factors, the most important role played by HR is the Employer-Employee relationship. HR serves as the mediator/arbitrator between the employer and the employee. Its this function that makes HR the most important person in the organization. Imagine a big corporation with 100,000+ employees and without an HR department. If there are any queries/conflicts of interest, to whom will the employee seek help? There will be total chaos and war inside the organization. This leads us to the point that HR is a necessary functionary in any organization - both small and big.
Besides Employee relations, HR is also responsible for sourcing strong candidates and retaining them, and most importantly inculcating the organization culture amongst the employees. (Read "Built to Last" by Jerry Porras/Jim Collins for understanding Organization Culture)
From an economic standpoint, investing in Human capital/Intellectual capital generally leads to increased output. The knowledge of the human capital has a pervasive effective on the whole society. The same logic applies to an organization as well. As organizations invest more on Human Capital, they will reap more benefits in the future. Looking at history, all great organizations have invested heavily on managing their people - their fundamental asset to greatness. (Invest does not mean better compensation/benefits. Organizations should strike a balance between compensation/benefits/work environment.)
How does HCM Systems Help the organization?
HCM systems(a.k.a HRMS, HRIS) helps organizations in two ways: Automate HR processes and Facilitate Decision Making. All the other features in any HCM product will ultimately automate or provide some analytics.
Most of the HCM products - namely Oracle/SAP/Workday/Peoplesoft, there are multiple sub-modules: Recruitment, CoreHR, Self Service HR, Leave/Absence Management, Appraisals, Talent Management, Benefits Management, and Analytics. The CoreHR is the central repository of most HR data and includes the personal information, job information, and compensation information. All the other sub-modules share the data from CoreHR system.
Some of the key advantages of using HCM systems are: Timely Approvals, Reduced Manual work, Holistic view of organization using Real-Time Analytics, around-the-clock availability.
For organizations that are small and growing, its advisable to purchase standard products without customization. Smaller organizations can change their processes to align with the product quite easily. For larger organizations, there should be a detailed process re-engineering, change management process integrated with the system implementation.
Complexity and Time Required For implementation:
The complexity with HCM system arises with different legal frameworks in each jurisdiction. Standard products may need to be customized or enhanced to meet the legal requirements. The second layer of complexity arises from process inconsistency. Its highly recommended to standardize the process across all countries and line of business before implementation.
Time frame for implementation depends on available resources, process maturity, organization willingness, implementation team expertise. In my experience, implementing a recruitment solutions across 70+ countries will take close to 1 to 1.5 years. Implementing a simple leave management system for one country will take less than 2 months.
Key products in the market: Oracle Fusion HCM, Oracle Accelerators, Peoplesoft.
What is Human Capital Management?
In the industrial era, people in the organization were managed through a "personnel" department. This is akin to the current human resources department, but "personnel officers" were mostly involved in labor relations and company law. Their routine was mostly restricted to operational and benefits management.
A couple of decades ago, the concept of viewing "people" as an "asset" of the organization emerged and led to "Human Resources". The human resources team is involved in entire life cycle of the employees - From Recruitment to Retirement. Their work is more strategic and advisory in nature and deals with culture, organization structure, merger & acquisition, and benefits. They serve as an advisory to the business leaders.
In the current era, a new concept of people management is emerging - namely "Human Capital Management". Under this concept, people are viewed as "Capital" rather than just "assets". In a capital concept, people are seen as key stakeholders in business. This is a step-ahead from the "asset" based concepts where people are seen as just future economic benefits. In a "capital" concept, employees are as important as any other stakeholder in the business and provides a level-ground for all-and-sundry.
Why Human Capital Management is Important?
In my opinion, Human Capital Management is important from the following perspectives: Employer-Employee Relations,Talent Sourcing/Retention, and culture. Of these three factors, the most important role played by HR is the Employer-Employee relationship. HR serves as the mediator/arbitrator between the employer and the employee. Its this function that makes HR the most important person in the organization. Imagine a big corporation with 100,000+ employees and without an HR department. If there are any queries/conflicts of interest, to whom will the employee seek help? There will be total chaos and war inside the organization. This leads us to the point that HR is a necessary functionary in any organization - both small and big.
Besides Employee relations, HR is also responsible for sourcing strong candidates and retaining them, and most importantly inculcating the organization culture amongst the employees. (Read "Built to Last" by Jerry Porras/Jim Collins for understanding Organization Culture)
From an economic standpoint, investing in Human capital/Intellectual capital generally leads to increased output. The knowledge of the human capital has a pervasive effective on the whole society. The same logic applies to an organization as well. As organizations invest more on Human Capital, they will reap more benefits in the future. Looking at history, all great organizations have invested heavily on managing their people - their fundamental asset to greatness. (Invest does not mean better compensation/benefits. Organizations should strike a balance between compensation/benefits/work environment.)
How does HCM Systems Help the organization?
HCM systems(a.k.a HRMS, HRIS) helps organizations in two ways: Automate HR processes and Facilitate Decision Making. All the other features in any HCM product will ultimately automate or provide some analytics.
Most of the HCM products - namely Oracle/SAP/Workday/Peoplesoft, there are multiple sub-modules: Recruitment, CoreHR, Self Service HR, Leave/Absence Management, Appraisals, Talent Management, Benefits Management, and Analytics. The CoreHR is the central repository of most HR data and includes the personal information, job information, and compensation information. All the other sub-modules share the data from CoreHR system.
Some of the key advantages of using HCM systems are: Timely Approvals, Reduced Manual work, Holistic view of organization using Real-Time Analytics, around-the-clock availability.
For organizations that are small and growing, its advisable to purchase standard products without customization. Smaller organizations can change their processes to align with the product quite easily. For larger organizations, there should be a detailed process re-engineering, change management process integrated with the system implementation.
Complexity and Time Required For implementation:
The complexity with HCM system arises with different legal frameworks in each jurisdiction. Standard products may need to be customized or enhanced to meet the legal requirements. The second layer of complexity arises from process inconsistency. Its highly recommended to standardize the process across all countries and line of business before implementation.
Time frame for implementation depends on available resources, process maturity, organization willingness, implementation team expertise. In my experience, implementing a recruitment solutions across 70+ countries will take close to 1 to 1.5 years. Implementing a simple leave management system for one country will take less than 2 months.
Key products in the market: Oracle Fusion HCM, Oracle Accelerators, Peoplesoft.
Comments