What is Human Capital Management?

A company’s health and ability to grow depend on the amount of value gained through its assets. When it comes to the full scope of value that a company has, human beings can be counted as assets; this is the Human Capital Management (HCM) approach.


HCM is a system of assessing the value that employees provide and predicting their potential to provide more value in the future.

hcm people

Through HCM, analysts can get a better perspective on how well the company’s human workforce is facilitating its growth. HCM can give analysts signs that certain kinds of investment in human capital may provide the most favorable outcome for the company as a whole.

Setting Performance Quota

HCM functions best through a quantitative method of determining the value provided by human capital. Companies may quantify human capital value by establishing certain minimum standards for its employees to meet through their performance.

In order to create the best chance at performance standards being met, performance expectations must be consistently communicated to the workforce with sufficient clarity. Holding every worker accountable for their performance, while offering incentives for meeting or surpassing performance standards, can potentially result in a steady rate of improvement.

Enterprise Resource Planning

HCM data must be accurately logged and analyzed for the most well-informed conclusions to be drawn from worker performance. The information gleaned from HCM is processed through a system known as enterprise resource planning (ERP).


ERP could be described as an umbrella that covers a wide array of different activities and initiatives that can help streamline a company’s management. With the ERP system, HCM data can be swiftly and seamlessly automated.

This data-driven approach can accelerate the process of analyzing performance averages at every level of an organization, allowing for corrective measures to be made in a more timely and efficient manner.

Constant Automation

HCM software can automate the process of recording all of the factors that HR needs to be aware of, such as regulatory compliance and payroll.

Data relevant to performance management, recruitment, and compensation management can be instantly recorded and organized with designated HCM applications built for managing talent.

Not only does HCM data give managers a clearer perspective on the value of the company’s human capital, but it also positions the company itself to be more effective at growing and and strengthening its workforce.

With the right response to HCM data, employees with good potential can be made even more productive and retained for a longer period of time.

See this hourly Workforce Management Software video.


HCM is a simple concept on paper, but it is made up of many different critical factors that play into the big picture. HCM concerns time management, attendance, talent management, payroll services, benefits administration, and a host of other things that need to be recorded accurately.

Though HCM may be made up of many different moving parts, there are technological solutions and outsourced teams that can greatly streamline the process.

Proper HCM can help a company quickly organize their workforce goals, corporate goals, and improvement strategies to meet performance quotas at all levels.