Human Capital Management – How to best develop and promote your employees?

Human Capital Management

Human Capital Management (HCM) is a process for recruiting, managing, developing and optimizing the human resources of an organization. Employees are the lifeline of an organization. It runs with the help of individuals who contribute in their own way to success and productivity. Employees spend most of their day in offices and strive to achieve the goals of the organization. Employees should be motivated from time to time so that they develop a sense of connection with their organization and also do their best.

Human Capital Management refers to the management of the employees of an organisation, i.e. the leadership of employees so that they contribute significantly to the overall productivity of the organisation. In layman’s terms, the management of an organization’s workforce refers to the management of human capital.

What is HCM?

Human Capital Management refers to an approach to Human Resource Management (HRM) in which employees are seen as assets that can be invested in and managed to maximize their business value.

HCM is now almost synonymous with the human resource function in organizations. In HR technology, the comprehensive software systems used to manage HR processes differ little from HCM. For example, the functions of most HR information systems are often the same as those of human capital systems. Often, human capital management also stands for the work scheduling and time tracking functions of HR.


The functions of the software are generally divided into the following categories:

  • Core HR
  • Including payroll accounting
  • Benefit administration
  • On-boarding
  • Compliance Management
  • Maintenance of employee data

Talent Management is therefore the collective term for the recruitment, development and retention of employees. Talent Management suites consist of different, but integrated modules for Recruitment, Performance Management, Compensation Management, Learning and Succession Planning.

Workforce Management describes a set of functions for providing employees with the required skills for specific regions, departments or projects. It includes time and attendance management, workforce planning, work scheduling and budgeting.

Service delivery includes staff help-desks, intranet portals, employee self-service and manager self-service.

Human capital management suites typically also have technology that addresses functional areas, particularly analysis, social media, collaboration and employee engagement. Many also allow mobile access to HR data and applications, especially self-service functions. Analytics is usually the critical element of strategic human capital management, which it seeks to align more closely with the financial success of the company. Sometimes the analysis tools for a particular function are localized. For example, workforce analytics can help optimize decisions made in the workforce planning module, while social media and collaboration tools can facilitate the frequent feedback and communication required for continuous performance management.

The 5 components of the human capital strategy

Human capital management strategies recognize that employees and their skills, experience, knowledge, concepts and innovative ideas are valued within a company. A company must understand its employees inside and out to expect the best from them. A human capital plan refers to the development of strategies to recruit the best available talent, develop career plans for employees, guide and coach employees, motivate employees to give their best at all times, and in accordance with the Human Resources Management Office. Five key elements of these strategies are listed below.

Clarity in human capital objectives

It is important to understand the gap between the current status of an organisation and its desired status. This can help to develop human capital objectives that not only increase overall efficiency in managing people, but also lead to them feeling more closely bound to the organisation. Examples of human capital objectives include retaining committed and hard-working employees, continuously developing the skills of the workforce, developing realistic induction programmes for new employees and recruiting only the best talent in the pool.

Understanding of an organization

This important component involves understanding an organization from the inside out. You need to understand senior management, customers, stakeholder expectations and requirements, the vision of an organisation, budgetary constraints and the needs of current employees to achieve clear strategic direction. To do this, companies need to collect data from employees, customers and stakeholders to understand their expectations and needs. Discussing these issues will help to define the overall vision of an organization and its team. An effective analysis can include an analysis of current employee leadership and the view of employees and the company over a two-year period. This type of analysis can help organizations to identify errors or gaps in the system.

Accountability system

No plan or process is successful until it is well managed. It is important to track progress. A accountability system involves measuring the failure and success of an implemented plan. It also helps organizations analyze the gaps in the plan and correct them where necessary. Without a system of accountability, organizations have no knowledge of whether a strategic management plan is working or not.

Implementation plan

An implementation plan comprises the steps and measures required to implement human capital strategies. Successful plans include assigning a responsible resource, allocating budget, and setting a deadline or time-frame for implementing the human capital plans. As with every component of a human capital management plan, clarity is essential. Create an implementation plan that clearly states the strategy and goal.

Strategies and guidelines for achieving goals

Once an organization has set goals, it can develop policies and strategies to achieve them. Human resources professionals must establish long-term plans to ensure that their employees are satisfied with their work. Satisfied employees are more likely to perform at their best, which increases the likelihood of success.

Organizations can assign responsibilities to employees based on their areas of interest, expertise, educational qualifications and skills. However, managers need to interact with their employees on a regular basis to understand their employees’ expectations and monitor their growth within the organization.

Human capital planning helps an organization design human capital policies, programs, and strategies to increase the efficiency of employees and help them achieve the organization’s previously defined goals. Implementing the human capital management plan helps ensure that HR professionals hire the right candidates, train them as effectively as possible, manage them as employees, improve their skills when necessary, and retain them as employees.


Human capital management enables HR professionals to hire the right candidate for the right job. Talent Acquisition is one of the most important functions of an individual who represents the human resource vertically. Remember that the wrong employee can cause problems in the system. Supervisors and management do not need to spend a lot of time and energy training someone who is already aware of their position and tasks.

Published by Dave John

Decade of work experience in leadership consulting with strong focus on talent acquisition & assessment across different industries and geographies.

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