The Power of HCM Systems
How can HR gear up for the challenges of scaling up every aspect of workforce management whilst aligning with business goals? Learn the enabling role technology has to play in transforming HR into strategic partners.
This article examines 3 key considerations – the challenges faced by HR today, the status of Human Capital Management (HCM) technology and the value proposition presented by deploying HCM technology.
Key Challenges
HR faces the constant challenge of showing it can support business growth, both in terms of cost effective support for business process and strategic thought leadership. Transform Strategic Processes for Talent Management and Employee Engagement from Forrester Research reports the change occurring in the role of HR, requiring very strategic shifts on how the function operates. The role of HR is not just tactical. It expands into looking at how to streamline and automate processes, as well as views talent management holistically and a key differentiator versus the siloed process it once was.
Expanding even further, the priorities, as identified by an Aberdeen Group Survey shows the following:
- 41% of respondents identify the need to operate more efficiently, improve processes to continuously outperform competitors. HR processes are at the heart of business performing effectively.
- 32% of providers identify organic growth, enabling the organisation to grow. This references talent acquisition, retention and development. Related to this, the third most frequently identified challenge is the scarcity of key skills. Within talent management, the report also identifies performance management and succession planning as being priorities.
Technology is a key contributor to enabling HR to deliver against these priorities. When we consider what great HCM technology deployment looks like, strategic HR teams are looking at using technology to improve talent acquisition success, talent management and employee engagement and reduce absence rates, reduce administrative process cycles and staff turnover.
Current State of HCM
The Brandon Hall HCM Technology Trends survey (345 organisation globally, 2015 reveals a consistent pattern across all aspects of HCM with around 50% of organisations employing manual or standalone solutions with only 4% to 16% deploying HCM as part of an integrated ERP solution and 13% to 24% deploying a HCM as a suite-based . The implication is that there is significant scope for investment in HCM to enable HR to meet its strategic challenges
The survey identifies around a third of companies are looking to deploy HCM with the following priorities 3 priorities for automation within the next 12 months:
- Talent acquisition (35%)
- Learning and development (28%)
- HR information (28%)
In terms of selection criteria organisations cite security and reliability, ease of use, user experience and self service capability as being most critical factors for HR team to have addressed with a technology solution. Although, HR teams are not typically given priority for technology investment compared with sales and marketing and finance, they tend to lack resources and confidence to deliver effective change.
Certainly, when there are only 3 to 4 professionals within the HR function, many heads of HR are concerned that the time they need to invest will be a barrier to delivering their day job.
The overall picture for HCM deployment as identified by the International Data Corporation is a Compound Annual Growth Rate (CAGR) from 2012-2017 of 8.2% given an overall global market of $15.4 billion. HR functions will be wondering how to leverage their piece of that market. Given the increased competitiveness for talent, the hard financial facts of a bad hire to company results and employee engagement, and the need to retain top talent there is no reason HR teams should not be aggressively looking to leverage HCM technology to enable their organizations with a competitive talent advantage.
HCM Value Proposition
The value proposition for HCM is clear. There are both tangible and intangible aspects to the business case. The specific ROI will be different for each organisation but there are common elements.
Tangible Aspects include the following aspects
- Fewer HR resources are required to deliver HCM than manual options
- Reallocation of resources to high return work allows HR teams to shift to more strategic and transformational activities.
- Improved talent acquisition results through more effective processes around recruitment, including reduced time commitment by management and increased ratios of candidates moving through the process, lower dropout rates of top candidates through the process
- Reduced early tenure turnover through well managed on boarding so improving new recruit experience.
- Absence rate reduction is also a tangible measure that can be measured both on time, revenue and cost metrics. All relevant studies show that absence rates reduce when absence is more closely managed. Employees take fewer occasional single day absences and come back more quickly to effectively working.
Intangible Aspects include:
- More integrated systems, mobile application and real-time performance tracking contribute to a positive employee experience.
- Consequentially, higher levels of employee engagement that means higher levels of performance.
- There is also a direct correlation between happy employees and happy customers that ultimately drives the companies top and bottom – in fact according to one Harvard Business School Report, 71% of companies report high level of employee engagement is more likely to bring success to an organisation.
There are a number of prerequisites that are important to help realise ROI. It is not just tangible and intangible results but the ability to make a technology solution effective. So often we see organizations purchase technology thinking it will magically deliver on their dreams. Critical in any ROI or assessment of future success is a review of administrative processes and structures. The old process for a manual or dated technology is not always the best future state process leveraging best in class technology. Effective performance management can only be realised if it is an optimal process that is automated. Furthermore, as I mentioned above an effective HCM solution opens doors for opportunity for the HR Team and it is highly recommended that the HR roles and responsibilities be reviewed for the new future state. A new accountability and responsibility matrix will confirm how HR responsibilities need to change to enable it to take advantage of HCM and deliver transformational input to the business.
Conclusion
The opportunities that HCM technology provides is clear both tangibly and intangibly for an organization to gain a competitive advantage. Ultimately, for growing businesses, HCM provides the infrastructure that provides effective process, better collaboration, better talent acquisition and development to provide a strong foundation for growth.
I firmly believe companies that are still using excel or force fitting into old solutions to manage their talent are falling behind their competitors. Organizations using technology are able to keep up to speed with their business and move ahead of their competitors.
What are your thoughts as it relates to HCM Technology? What measures has your organisation put in place to drive transformation? Let us know in the comments section below!
