For a long time, I thought HOA was a type of insurance. I had no idea it meant “Homeowners Association.” Then again, I thought it was a limebacker, not a linebacker, until 2016 (I was 21).
If you don't understand what HCM means, you have no reason to be embarrassed (unlike me). When I first started my job at Whirks, it sounded like everyone in the office was speaking a different language. HCM, WOTC, ERC, PPP… excuse me?
But fear not. HCM is simple: it stands for human capital management. But let’s break this down because it still sounds corporate-y.
What is HCM?
- Human capital: the value of your skills as an employee
- Management: managing and improving these skills
You hire someone based on their intangible qualities: their experience and their skillset. This is their “human capital.”
As an employer, it’s your responsibility to invest in these skills. If you’re a veterinarian, you may want to pay for your best techs to become licensed. Or maybe you own a restaurant and want to train up your bartender to become a manager.
An HCM software helps you manage these skills, improve your turnover, and encourage a healthy work culture. If you’re growing your business and searching for a better way to manage your team, research an HCM partner who fits your needs.
HCM is an industry term and the software appears confusing, so we like to compare an HCM platform to a house and your employees to guests. What do you want your guests to think about you? How do you want to treat them? Do you want them to feel welcome?
Because we want you to have a deep understanding of what an HCM platform is, we compare HCM to a house. It's one platform but it has several features that live under the same roof.
We know that understanding complicated corporate terms and additional software are not ideal ways to spend your time. But learning them can actually help you save time, money, and get back to focusing on what you love.
This article will help you understand what an HCM platform is, what features it offers, and why you may (or may not) want it for you and your team.
So why is HCM like a house?
When you're shopping for a house, there are several things you have to consider. If you plan on having a family, you need to look for a house with more bedrooms. Or maybe you have four dogs, and you want a large backyard.
You have specific needs and wants when you're on the search for your dream home. It wouldn't make sense to buy a condo without a backyard for your four dogs. It also doesn't make sense to buy HCM services that don't fit your needs as a business.
We're going to dive into the features and modules of an HCM software and compare them to parts of a house, so you have a better idea of what it is and if you need it or not.
Payroll: The Kitchen
You wouldn't consider buying a home without a kitchen. This is where you feed yourself, your family, and your friends.
Similarly, you can't run a business and not pay your employees. Paying your team accurately and on time is vital for your survival as a company.
According to the Workforce Institute, payroll errors have forced over one-third (37 percent) of American workers to make a late payment on a bill such as their car loan, credit card, mortgage, or apartment/home rent.
Why would an employee want to work for you if you don't hold up your end of the bargain? Why would your guests wish to make a long drive to your house for dinner, only to sit down at an empty table?
The APA (American Payroll Association) states that companies that lack automated timekeeping have up to an eight percent error rate on their payroll. A couple of errors can cost you more than just money - they cost you hardworking employees and your reputation.
Time & Attendance: The Driveway
To get to the lovely dinner you're making, your guests have to travel down the driveway. And before you pay your employees, you have to track and log their time.
Do you have salaried employees, contractors, or hourly workers? Is your team mainly on a job site and needs to clock in on their phones? Are there complicated shift differentials or overtime based on the type of job your employee works?
Your driveway should be able to accommodate whatever type of vehicle your guest is driving. Paving a smooth way for your employees to get paid easily and accurately is crucial for retaining a good team of people (and staying compliant).
You don't want logging time to be a bumpy drive. Making it easy and integrating it with your payroll functionality will save you time and make it a breeze for your employees.
Onboarding: The Front Porch
Down in the south, the front porch is the highlight of your home. It's a visitor's first impression of you and your hospitality. Some porches can look outright terrifying, and others entice you to sip sweet tea on the swing.
Onboarding is a new employee's first impression of you. Instead of burying them under a pile of paperwork on their first day, you can focus on helping them meet the team and begin training if you integrate electronic onboarding.
Your guests want to enter a house with a beautiful front porch - and not one that's straight out of a horror movie. In the same way, impressions count with your employees. Integrating electronic onboarding eliminates data re-entry and allows more time for a warm welcome and training.
Benefits Administration: The Living Room
Once you've served dinner, you may ask your guests into the living room so everyone can make themselves at home and relax. This is a cozy place after a good meal and gives your guests the chance to get to know and trust you.
The living room is akin to benefits administration because it's where your employees find peace of mind for themselves and their families. Offering them health insurance is like the comfy couch or warm fire that entices them to stay longer and rest easy in their jobs.
According to the Aflac Workforces Report in 2020, 29% of employees report having left a job or rejecting a job offer due to the benefits offered.
It may not be necessary to ask your guests to sit down and stay awhile, but it does make you a better host.
HR: The Gate
A well-built gate keeps unwanted visitors out and cordially invites your friends and families inside. You also don't want your kids to run out into the street or your dogs to run away from home.
Think of Human Resources as what protects you from the outside world. With an excellent HR system in place, you can stay compliant with state and federal regulations while avoiding uncomfortable situations like wrongful termination or sexual harassment.
Like a strong gate and a security system, a robust HCM platform will help you track mandated certifications, disciplinary actions and review reports on an executive dashboard. It allows you to monitor your team closely while staying safe and compliant.
If your house is gated and has a security system in place, it empowers you to stay on top of potential threats while protecting your loved ones. One sinister visitor can threaten your home - just like one sticky HR situation can bring down your business.
Learning Management System: The Garden
Your guests will gather a lot about who you are when they see your garden or the plants around the house. If you have healthy herbs and blooming buds, they'll know that you take time to water your plants and pull the weeds because you want them to thrive and grow.
But if your plants are mostly dead or lifeless, your guests may wonder why you bought them in the first place if you aren't going to tend to them properly.
Taking time to train your employees communicates that you care about their success at your company. Offering courses and paths that help them navigate your business and excel in their role motivates them to grow.
According to LinkedIn, 76% of Gen Z learners believe learning is the key to a successful career. Whether it's a state-mandated course (think OSHA) or a class on using specific software, your team will appreciate the chance to learn more and blossom in their roles.
Performance Management System: The Hallway Wall
We are all familiar with the "hallway wall" -- the place where our embarrassing high school pictures hang next to our great-grandparent's wedding photos.
As you walk through that hallway, you get an idea of the people who live in the house, who they love, and what they value.
A Performance Management System helps employers track goals, monitor top performers, and integrate performance reviews.
It may not seem like a priority for your business right now, but LinkedIn confirmed that 69% of employees would work harder if they felt better recognized for their efforts. It's encouraging to see your picture on the wall and be applauded for your hard work.
Make your HCM house a home.
When you buy a house (or an HCM platform), you have an idea of what you need. You may be a growing family that wants three bedrooms and a large backyard, similar to a business owner hiring several people quickly and needing to accommodate them.
HCM software covers the employee lifecycle from hire to retirement. When you hire a new team member, HCM software helps you collect their information, log their time, pay, and manage them.
When you buy a new house, your guests travel to see you, eat dinner, and hang out. If you're a great host, they're going to keep visiting and speaking highly of who you are. In turn, they will want to invite friends and family to meet you and visit your home.
In the same way, your key to success is taking care of your employees and investing in their time at your company. Your reputation will grow as a business owner, employee retention will improve, and your business will thrive.
HCM software doesn't only track time and pay your employees. It creates opportunities for your team to grow, gauges their performance, and gives you insight into how to get one step better every day.
If this article was helpful, check out the five crucial questions you should ask a potential payroll provider to help you continue your research for the perfect fit.
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