What is an HCMS?
An HCMS is a human capital management system, a software solution that helps HR professionals manage the human capital in their organizations and derive the best results out of them. As a result, an HCMS not only boosts the efficiency of HR processes but also increases their effectiveness.
The Difference Between HRIS & HCMS Explained
In the HR digital solutions world, you will find the two terms being used interchangeably. However, regardless of the interchangeable usage by clients and vendors alike, the two terms, are not exactly the same. An HRIS or HCMS would both provide you with digital solutions to your human resources processes. However, there is a significant difference in scope between the two– a difference that reflects the chronological development of the software solutions.
Human Resource Information System (HRIS)
HRIS stands for a human resource information system. It is basically a software system where employee data can be gathered, organized, and maintained. As such, it enables the easy retrieval of data and immediate access to it, thereby boosting the HR team and organizational productivity. Simply put, an HRIS is all about data. It is a data entry, tracking, and retrieval system – HR technology at its most basic level. An HRIS would usually help you with functions such as attendance tracking, payroll, benefits management, training, employee database management, and employee acquisition. The goal of an HRIS is to improve the productivity, accuracy, and efficiency of HR processes.
Human Capital Management System (HCMS)
Chronologically, this term was coined after ‘HRIS’, reflecting a much broader scope. An HCMS is a human capital management system. It takes the use of technology in HR a little bit further by not only stopping at generating data but by integrating data to assist in decision-making. An HCMS is primarily designed to help HR professionals manage talent and achieve organizational competency, rather than simply automate processes and generate reports. As such, an HCMS will usually include an HRIS as well as talent acquisition, management, and optimization components. The goal of an HCMS is to improve both the efficiency and effectiveness of HR processes.
Why Do I Need an HCMS?
You need an HCMS because a quick look at your HR processes will leave you surprised at what the HR team is actually doing. Studies have shown tedious administrative tasks take up about 73.2% of HR’s time. A CareerBuilder survey, conducted in 2017, illustrates that HR managers lose an average of 14 hours a week manually completing tasks that could be automated. A quick look at the tasks that make up the workday of an HR professional would drive you fast to the conclusion that HR teams are spending more time with paper than with people.
Adopting an HCMS would free up the time of HR professionals to do what they are actually hired for– managing people.
The Different Components of an HCMS
As explained earlier, an effective HCMS would usually include an HRIS as well as talent acquisition, management, and optimization components. Here is what these components would usually help you do:
The HRIS component of an HCMS helps you automate activities such as:
- Attendance management
- Database management
- Time and labor management
- Payroll functions
- Benefits administration
- Training & development
- Talent Acquisition
The talent acquisition component of an HCMS helps you attract and retain the right talent by providing you with these systems and capabilities:
- Recruitment / eRecruitment
- ATS (application tracking system)
- Talent Management
The talent management component of an HCMS helps you maximize the output currently gained from human capital by providing digital solutions for:
- Time and attendance
- Performance management
- Talent Optimization
The talent optimization component of an HCMS helps you maximize the output gained in the future from your organization’s human capital. It helps you invest today in the people of your organization by providing digital solutions for:
- Career pathing
- Competency mapping
- Succession planning
- Learning and development
How to Select the Right HCMS
There are many HCMS solutions out there. And the truth is any HCMS that has more than 100 clients in its portfolio will have a working HCMS solution. With the myriad of options out there, how do you know which is the right HCMS solution for you?
Factors to Look for When Selecting an HCMS
When attempting to select an HCMS, there are several factors that you must bear into consideration to select the right HCMS for you.
- Track Record
You want an HCMS provider with a track record of success, someone who has served many big clients. If some of them are from your same industry, that will be a big plus.
- Business Understanding
This is a continuation of the plus point above. An HCMS provider with knowledge of your sector and industry will have an excellent understanding of your business– an understanding that will enable you to save time on miscommunication, ship off already-made solutions, customize with ease, and build a consultative partnership.
When selecting an HCMS, it is crucial that you keep in mind that you will not be using it for the current time only. Although you can switch HCMSs, the process is often long, costly, disrupting, and confusing to all stakeholders. This is why, when selecting an HCMS, you must aim for an HCMS solution that can grow as your company grows and that can accommodate right-sizing when necessary.
An ideal HCMS provider should never be a hit-and-run company. On the contrary, you want an HCMS provider that will be able to provide support and customization along the way. You need a partner, not simply a supplier.
One of the huge benefits of working with an HCMS provider with a good portfolio of clients is that they can inform you of the best practices in your industry, sector, or region. They can pinpoint when processes are inefficient and can be optimized and when results can be achieved in a better way.
As explained earlier, an HCMS relationship is not a one-off; it is a business relationship that is expected to last for as long as you are using the HCMS solution. Throughout this partnership, you want an HCMS provider that can respond fast, efficiently, and effectively. Make sure to ask about service level agreements before you commit to a provider.
- Client Lifecycle
What is a better way to get a true rating of a company’s service than from its customers? This is why the length of the client lifecycle of an HCMS provider can serve as a great proxy indicator of their level of service. Do they have clients lasting for 10 years+? Great, you have hit the jackpot. Does the average client cancel the service in less than a year? No, steer away from that. Moreover, do not be afraid to pick up the phone and actually ask fellow HR professionals working with your potential HCMS provider about their feedback. They would love to help and their perspective can end up saving you a lot of time and money wasted on a solution that does not suit your needs.
Tips for a Smooth HCMS Adoption Process
Once you have selected the right HCMS for you, it is time to agree on your requirements and adopt the solution. This treacherous process is laden with stories of unprecedented glory and tales of irredeemable failure– with the failure tales significantly winning over. In fact, according to a 2018 research by McKinsey, less than 30% of digital transformation initiatives succeed. To have better chances, we have compiled a list of advice, derived from our 25 years of experience in the market working with clients from all kinds of industries, to help you in your HCMS adoption journey.
- Only purchase what you need
Most HCMS solutions are not a one bundled take-it-or-leave-it offer. On the contrary, HCMS solutions come with several component modules, covering many of the aspects of your HR processes. Choose only the modules that you need. You can always expand later when your HR operations expand. Not only that but also make sure that your HR digitalization needs are aligned with the company objectives. Which components of the HCMS will help you achieve the company objectives? Anything beyond that may present you with difficulties garnering approvals and securing budgets.
- Make a big impact with small changes at first
HCMS adoption is a long and sometimes costly process. The length and cost of the process may discourage senior leadership and drive them to shun away. For this specific reason, it is best practice to start with the modules that will make the biggest impact, deploy them, use them, achieve great results, and build your business case towards full adoption. Remember, it is best to introduce change gradually.
- Garner leadership commitment
If you work in a company where senior leadership is not interested in digitizing the HR processes, do not waste your time fighting for an HCMS. Remember, HCMS deployment is not only about buying the service but is also about using the service, which involves a great deal of training and commitment from everyone involved. So, if leadership is not fully ready to make this commitment, maybe it is not the right time for you. In this case, you are better off making small digitization success stories and working little by little to build the HCMS business case.
- Have your HR processes in shape
It is essential you know that no level of technology can make up for long, inefficient, unclear, and unstreamlined processes. What an HCMS does is that it digitizes your manual processes to save you time, effort, and money. Before you attempt to migrate to an HCMS, make sure you have clear, efficient processes in place that can be actually migrated.
- Train your employees
What is worse than adopting the wrong HCMS solution? Adopting the right HCMS solution but not using it. This mistake, although seemingly ridiculous, is a mistake that companies fall into all the more often. There might be a great focus on deploying the HCMS that once it is deployed, companies get shocked at the level of resistance to using it or the simple technological illiteracy that makes using it challenging. A successful HCMS adoption will include a significant amount of people training and change management to smoothly onboard everyone on the new system.
Select the right HCMS for you and keep these tips in mind to adopt it successfully and you will, hopefully, get the best out of your company’s most important asset. Now, your HR team can spend time on what really matters– people.
Who Are We?
CivilSoft is an enterprise software company specialized in Strategy Execution and Human Capital Management. We provide you with innovative HCMS software solutions to make managing your HR processes simple, fast, and easy. Contact us at firstname.lastname@example.org for more information.
How Can We Help?
If you’re an organization that is struggling with how to upgrade your HR processes and provide world-class HR services, at CivilSoft, we can bring forth our 25 years of expertise to help you source, acquire, develop, retain, and reward employees using digital solutions.