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Human Capital Management Is Crucial and Here Is Why

Human Capital Management Is Crucial and Here Is Why

Human Capital Management

All companies know that employee satisfaction and engagement improve productivity levels and strengthen work performance. Therefore, it is crucial to help workers have a positive employee experience. However, organisations face challenges, like bad performance management, poor workforce management, analysis. As a result, leaders, managers, and human resources are working to improve workforce management and performance through different solutions. For instance, Human Capital Management.

Human Capital Management (HCM) is a set of different strategies and processes that considers workers as assets (human capital), not just a cost to business. It includes goal setting, active communication, employee performance tracking/measurement and ongoing employee development. These strategies are directly linked to human resources management. HCM has many similarities to Human Resources Management (HRM) but they are two different things. HRM systems relate only to workforce management, employee benefits, and compensations. Their main goal is to improve productivity.

As we can imagine, HCM has many benefits and can be implemented at all career levels. It is a faster and more effective way to recruit candidates and attract/retain talents. Also, HCM includes onboarding processes, training, and coaching, motivation approaches, etc, which are crucial for improving employees’ abilities/skills/knowledge. It allows them to strengthen their value and career.

Performance tracking and management is another key feature of HCM. It is a way to improve communication and align workers and organisations needs/expectations. With 5 different generations working alongside, these strategies seem to be a good solution for improving work performance, teamwork and working relationships.

But HCM benefits not only workers but also employers. As the main goal is to develop employees’ skills and talents, it strengthens companies’ competitiveness and success. Companies use HCM software to properly collect, store and interpret data 24/7. They can monitor working hours, productivity, keep information about candidates and employees (best skills, talents, etc), track expenses (salary, bonus, rewards, etc), among other things. Essentially, they are a way to optimise HCM systems.

The HR department plays a very important role in introducing and implementing these strategies. However, they should be applied by all areas. For instance, leaders and managers must analyse the results of HCM strategies to understand if they are working. IT and business analysts must work and analyse the data and software.

Companies need to understand that even if hiring the best employees is crucial, it is not the end of the line. Human Capital Management solutions must be used to benefit both employees and employers.


  1. The Complete Guide on Human Capital Management (HCM), December 2019, TECH FUNNEL
  2. What is Human Capital Management (HCM)? Definition, Process, Platforms (tools) with Examples, June 2019, HR Technologist