Best HCM Software

What Is HCM Software?

Traditionally, the role of the human resources (HR) department in an organization was limited to hiring and onboarding employees. Today, however, HR teams perform a multitude of other functions. These include payroll processing, conducting disciplinary actions, updating company policies, maintaining employee records, and acting as a liaison between staff and management. 

This is where human capital management comes in. Human capital management, or HCM, refers to handling the workforce of a company. It covers the entire employee lifecycle – starting from attracting and recruiting the best candidates, training and upskilling them, payroll processing, compensation management, performance management, employee benefit and health management, and retirement. 

So, what is human capital management software? Human capital management software, or HCM software, consists of a set of tools that helps in carrying out every HR-related activity. These platforms are cloud-based and designed to enhance employee experience. 

Today, HCM software incorporates artificial intelligence (AI) and virtual assistants to enable companies to collaborate and share information among teams. Rather than considering employees as a cost, HCM considers them a business asset whose value can be maximized through strategic investment and management. 

Benefits Of HCM Software

With the best HCM solutions, companies can not only automate and streamline their HR processes but also hire and retain the right talent. Let us look at some of the other advantages of human capital software.

1. Attracts and Retains Talent

   Using an HCM platform, companies can identify and screen the right candidates across multiple channels. Be it through social media, online resumes, or LinkedIn, organizations can find the right talent, thus, increasing the hiring speed.

   In terms of talent retention, HCM tools allow firms to identify each employee's individual strengths and competencies and match them to the right role.

2. Boosts Work Productivity

   Top HCM solutions not only help identify which roles suit candidates best but also aid in creating programs and training sessions to upskill the candidate accordingly. These training programs are designed keeping the competencies and needs of the role in mind, improving employee productivity and efficiency.

3. Improves Employee Development

   Besides providing upskilling opportunities, HCM tools also improve employee development. It entails tracking employee performance and identifying underperforming candidates. The performance gaps can be identified through performance reviews, training, surveys, and other sources of feedback.

4. Increases ROI

   A human capital management system automates mundane or repetitive tasks, saving time for HR managers to focus more on developing training programs and increasing engagement in the organization. Besides, it streamlines tasks which enables optimization of workforce deployment, ensuring that the company hasn’t hired extra than required. All these results in increased ROI for the investment in implementing the HR system.

5. Creates Standardized Compensation Structures

   With an efficient HCM solution, businesses can design standardized compensation structures according to their needs. It involves setting budgets for each role and department and incorporating monetary rewards and bonuses into the compensation structure.

Key Features Of HCM Software

A human capital management software solution has multiple components. Let us look at each of them.

1. Employee Tracking

   The best HCM software aids in employee tracking that involves managing the hiring, exit, and retirement of the entire workforce, including full-time, part-time, and freelance workers. It stores all important information and documents related to your employees, creates job structures based on your company’s requirements, and predicts employee performance and attrition based on current and past data.

2. HR Service Delivery

   HR service delivery is a system that ensures that employees can get in touch with the HR department of their organization to raise their grievances or concerns. This typically includes creating an HR helpdesk or an online chatbot system where employees can simply sign in and raise tickets.

3. Employee Engagement

   Any general HR software helps with organizing and keeping track of various activities for employee engagement. For instance, it helps design training programs to upskill them or organize competitions and other recreational activities to keep the employees motivated.

4. Fraud Detection and Compliance

   You can use fraud detection and compliance tools to ensure your organization's safety and sensitive information. This includes data protection and regular background checks on your employees, vendors, and other parties.

5. Talent Management and Acquisition

   The talent management module in the human capital management platform helps companies strategically deploy tactics to hire and retain the best talent within the organization. It helps with smooth onboarding processes, training and development programs, conducting performance reviews, and developing career development programs for employees.

6. Performance Management

   Performance management is one of the core HR functionalities that help companies align individual goals with common business objectives. In other words, HCM software supports employees in achieving optimum performance so that they can also achieve their targets and improve the overall company performance.

7. Talent Review and Succession Management

   Talent review is an important human capital management tool that allows organizations to evaluate the current workforce along with prevailing macroeconomic talent trends. It allows them to proactively plan for future needs in leadership and various other roles in the company.

8. Workforce Management

   Using workforce management, firms can identify and reduce labor costs, minimize or eliminate manual processes, and simplify employee compliance. Moreover, workforce management also entails designing the compensation structure for an organization. This can include calculating the pay structures across various departments, budgeting, administering local and global compensation plans, leveraging performance ratings into compensation plans, and so on.

9. Time and Expense Management

   The HCM tools eliminate the need to maintain manual timesheets to track employees' work hours. Instead, it can automatically log in the number of hours employees work once they log into their systems. Similarly, it helps with expense management, whereby employees can submit invoices for any company-related expenses, raise approval requests, and get reimbursement.

10. Organization Visualization

    With human capital management applications, businesses visualize data or model different scenarios related to workforce management, such as increasing or decreasing the number of employees, creating new positions, or designing new training programs to upskill the staff of the company. The best HCM software offers an intuitive dashboard whereby you can generate reports and visualize data of your needs.

11. Reporting and Analytics

    Human capital management solutions usually include a reporting and analytics tool. This component helps generate reports within minutes regarding specific recruting metrics such as hiring speeds, employee turnover, attrition rate, and overall employee performance across departments.

12. Payroll Processing

    The best HCM software comes equipped with a payroll management system that automates the process of processing employees’ salaries, generating salary slips, supporting tax compliance, and other related activities.

What Are The Different Types Of Human Capital Management Software?

Broadly, there are four types of human capital software. These include in-house HCM software, HCM partner-led software, hybrid software, and third-party HCM software.

1. In-House HCM Software

   An in-house HCM software is one that an organization implements using its own workforce. It typically includes a team of business experts and IT consultants in charge of customizing human capital management tools to meet the company's needs. 

   Some of the advantages of building an in-house HCM software are that it optimizes cost and also ensures product quality. Besides, you can modify your product as and when required without much hassle with the help of your expert developers in a team.

2. Partner-Led HCM Software

   With an HCM partner-led software, a certified software vendor is hired to install the new HCM product. The vendor oversees the entire implementation process – from installation to training the employees and upgrading it at regular intervals. Big companies often prefer partner-led software since they usually have large and complex needs. In such cases, hiring a vendor to install the HCM software saves time and money.

3. Hybrid HCM Software

   In hybrid HCM software, the organization works together with a third-party vendor to implement human capital management tools. For instance, while the vendor may be in charge of software installation and upgradation, the company might be responsible for training its employees to use the HCM software tools.

4. Third-Party HCM Software

   In some cases, the vendor who installs the HCM system and the vendor from whom the application was purchased might be different. This is known as third-party HCM implementation. It is typically done when the human capital management software vendors, though not necessarily certified to implement HCM applications, may boast expertise in its implementation and software knowledge.

Who Uses Human Capital Management Software?

Typically, human capital management software is used by the human resources department of a company. But given its vast functionalities, human capital management solutions also finds uses beyond the HR department in an organization and serves the needs of various stakeholders, HCM software finds uses in a company.

1. Strategic HR Buyers

   Strategic HR buyers aim for greater objectives such as workforce optimization and strategic workforce planning. To achieve these targets, organizations require data analytical tools that can help with planning and reporting. Using HR process automation tools, companies can create customized reports on relevant HR metrics, including employee performance, compensation planning, estimating workforce requirements, and more.

2. Core HR Buyers

   Core HR users seek HCM applications that automate and perform basic HR-related functions. For such buyers, the ideal human capital management platform would be one that boasts essential tools like attendance and leave management, payroll processing, benefits administration, employee performance tracking, and hiring and onboarding.

3. Best-of-Breed Core HR Buyers

   At times, a company might have already implemented HCM software. However, it requires additional functionalities. Known as best-of-breed core HR buyers, such businesses or individuals purchase more tools or applications for an existing HCM platform. For instance, they want to deploy an employee self-service portal to streamline their HR operations further.

What Are The Alternatives To HCM Software?

Although HCM software encompasses a wide range of functions, not every company or organization requires all the tools. Hence, there exist multiple alternatives to HCM software that offer standalone HR operations tools, such as a human resources information system (HRIS), human resources management system (HRMS), payroll systems, and applicant tracking systems (ATS).

1. Human Resources Information System (HRIS)

   A human resources information system, or HRIS software, helps the teams manage policies and procedures pertaining to the company. Some of the key applications included under an HRIS are recruiting, onboarding, benefits administration, employee attendance and leave tracking, reports and analytics, compensation management, and staff training. The objective of an HRIS is to automate repetitive and manual tasks as much as possible.

2. Human Resources Management System (HRMS)

   A human resources management system, or HRMS, is more employee-centric, focusing on the workforce's activities in an organization. Some of the key functions of an HRMS involve tracking employee performance, hiring and onboarding, employee data management, payroll solution, leave approval, time and attendance tracking, and employee self-service portal.

3. Payroll System

   Payroll is the process followed by companies to compensate employees for the work they have delivered in a particular time period. Payroll software help organize all the tasks related to employee remuneration. These include tracking the payment status, tax filing, calculating salaries, tracking attendance, withholding tax and deductions, performing direct bank deposits, and paying employment-related taxes to the government.

   Today, payroll systems can either be purchased individually or as part of the HR software package.

4. Applicant Tracking System (ATS)

   One of the easiest ways organizations can screen job applications is by using the applicant tracking system (ATS). ATS helps process thousands of resumes within a matter of minutes by filtering out unfit candidates with the help of certain keywords and other predefined criteria or qualifications. 

   Although commonly used during recruitment, ATS also finds other applications, including tracking potential hires, creating email marketing sequences, and posting job alerts online.

Challenges With Human Capital Management Software

While the usage of HCM software within an organization can’t be ignored, it certainly comes with its own challenges. 

1. Lack of Security

   Today, all crucial information related to employee data and company documentation is stored on a cloud server. Although these platforms have robust security features and the  probability of data breaches or hacking is minimal, companies can be reluctant to implement third-party HCM applications due to the sensitivity of data. In fact, in the in-house system, they bear the risk of information being accessed by unauthorized persons, which can compromise the data safety of a company.

2. High Implementation Costs

   Although there are various HCM platforms that are affordably priced, the cost of implementing them is usually high. Further, companies need to train their staff on how to use the different HCM applications as well as upgrade the software from time to time. This can result in a rise in expenditure for companies, particularly for small and new businesses.

3. Increase In IT Workload

   Implementing a new application means the IT team would be responsible for ensuring that the software is up and running, stays up to date, and constantly monitors its maintenance. Any technical glitch in these platforms will hamper the overall activities and will result in increased costs for the company. You can either hire an IT team for its maintenance or choose to outsource it to an agency, either way, it’s going to cost your company. But the real question you need to ask is: is the cost justifiable for the amount of ROI you are generating from it?

4. Lack of Integration

   Typically, the sign of the best HCM software is that it integrates with your existing cloud-based systems so that it doesn't disrupt your operations. However, some human resource management tools may not be well-compatible and may not operate as smoothly as desired. But many HCM software vendors are working towards developing a platform that enables seamless integration across third-party applications.

5. Scalability Issues

   Once companies have implemented HCM software, it is not the end of it all. With the expansion and changing needs, businesses need to make sure that the HCM platform is equipped to meet their demands. However, finding human capital management software that provides all the necessary tools is difficult. As a result, firms may need to purchase additional software or upgrade the existing HCM platform, which can be costly.

How Much Does HCM Software Cost?

Typically, the cost of HCM software ranges between $500 and $10,000 although it can go up to even $100,000 or higher. The cost of human capital management software depends upon several factors, including the brand name of the software, the size of your company, the number of tools included in the HCM platform, and the legacy system used by your company. 

Further, the cost of HCM software for a company also depends upon its installation costs. If an organization has used in-house implementation or partner-led software, it may be able to save costs. However, for other companies, hiring a third-party vendor may prove more cost-effective.

5 Top HCM Software to Look For

1. ADP Workforce Now

ADP Workforce Now is one of the best HCM software that designed its platform for all sizes of businesses. 

Features

• Payroll: Now process payroll and tax with just a click and save time and effort. 
• Time and attendance: Keeps track of employees’ hour and automatically calculate their compensation based on their pay structure
• Talent management: Helps attract and retain the best talent in the market
• Compliance: Ensures your company complies with all regulations and guidelines

Pros

• Easy to implement
• Responsive mobile app

Cons

• Users find it hard to navigate
• Lack of error messages

Pricing

Contact their sales team for full pricing information.

2. Paylocity

Paylocity is an all-in-one HR platform designed to simplify your entire employee management system in your organization. 

Features

• Workflow & documents: Offers pre-built templates for common uses like handbook sign-off
• Benefits administration: Empowers your employees with a self-service portal to increase productivity
• Reporting and insights: Gives you a detailed analysis of employee sentiment, performance metrics and engagement
• Onboarding: Streamlines and automates the process of onboarding for a smooth experience

Pros

• Seamless integration
• Robust functionalities

Cons

• Complicated interface
• Unresponsive customer support

Pricing

• Paylocity offers standalone platforms as well as an all-in-one HR solution. Contact their sales team to get a direct quote. 

3. Oracle HCM Cloud

Oracle HCM Cloud is one of the best HCM solutions that take care of every aspect of your workforce management. 

Features

• Recruiting: Improves candidate experience and drives better mobility of talents
• Learning platform: Offer personalized learning based on their work history, engagement activity, etc.
• Payroll: Enables efficient, compliant payroll processing across the globe
• HCM analytics: Provides detailed insights into workforce diversity, talent acquisition, etc. 

Pros

• Easy usability
• Detail-oriented tools

Cons

• Difficulty in downloading the CVs' of applicants in bulk
• Navigation can be simplified

Pricing

• Contact their sales team to get a quote. 

4. Paycom

Paycom is a human capital management software solution popular for its seamless user experience. It offers a wide range of functionalities that makes it easy to manage the HR department. 

Features

• Talent acquisition: Streamlines the entire employee hiring process 
• Talent management: From performance management to compensation structure, it takes care of all
• Time and labor management: Automates the process of tracking employees’ work hours
• Document management: Promotes easy collaboration and syncs files to updated version in real-time across all devices

Pros

• Easy and affordable option
• User-friendly interface

Cons

• Time sheets can get messed up

Pricing

• Contact their sales team to get a quote. 

5. BambooHR

BambooHR is an all-in-one HR platform that provides tools for every stage of employee management – from hiring to retirement. 

Features

• Workflow management: Create and get workflow approval on the mobile app itself
• Compensation: Keep track of every hour and calculate accurate payable amount
• Onboarding: Ensures a smooth onboarding experience for your employees
• Hiring: Helps attract and retain top talent with proper employee engagement and management program

Pros

• Reliable and active customer support
• User-friendly platform

Cons

• Benefits administration can be improved
• Reporting needs some improvement

Pricing

• Contact their sales team to get a quote.

HCM Software Trends

In recent times, workplaces have been experiencing rapid digitization. The COVID-19 pandemic and the rise of remote working only fueled the demand for cloud-based solutions. Hence, human capital management software solutions have seen a rise in demand over the last couple of years.

Research has shown that the global human capital management market had a valuation of $21.8 billion in 2021 and is expected to grow to $51.3 billion by 2031, at a CAGR of 9% every year. Today, HCM software does not come in a one-size-fits-all model. It is customized as per the size and industry your business is involved in. These segments include banking and financial services, IT, healthcare, retail, telecom, manufacturing, etc.

Let us examine some of the emerging trends in HCM software globally.

1. Emergence of Strategic Workforce Optimization

   Strategic workforce optimization is one of the most visible trends that have emerged with the increasing popularity of HCM software. Strategic workforce optimization provides in-depth, real-time insights into a company’s workforce. This helps businesses manage their staff better, as they can track employee performance, appraisals, monetary compensation, detect inaccurate or fraudulent company data, and identify ways to upskill their employees.

   Furthermore, strategic workforce optimization helps forecast the number of hours employees can work, whether the demand for employees will increase or decline in the future, safeguard the production timeline, and eliminate the need for contractors by upgrading existing employees with the relevant skillset.

2. Rise of Total Workforce

   Earlier, temporary or contractual staff were limited to a few selected roles, including shop floor, manufacturing, seasonal labor, administrative support, and IT staff. However, today, even the CEO or chairman of a company may be onboarded on a contractual basis. As a result, HR management and payroll processing platforms need to be updated depending on the employment status of the workforce in a company.

   Given that many payroll processing software has limited functions, the demand for HCM software rises. One of the key components of HCM platforms is payroll processing. This not only entails generating invoices and tracking payments but also classifying employees as full-time, part-time, contractors, or freelancers. Depending on their job profiles and pay scales, companies can easily create invoices, file taxes and other deductions, and determine compensation.

3. HCM for Small and Medium Businesses

   Gone are the days when small and medium-sized businesses used Excel sheets to record employee details. Today, an increasing number of SMBs are choosing to implement HCM software to automate manual, repetitive HR-related tasks. What’s more, with a large number of HCM applications available in the market, it is not difficult for small enterprises to find reasonably priced software that fulfills their needs.

Conclusion 

Implementing HCM software can help boost employee productivity, improve workforce management systems, and enhance employee satisfaction. This makes it easy to attract and retain top talents from the industry. In other words, an effective human resource management platform can help build a lasting relationship between you and your employees, which will directly impact your organization's growth.