The Benefits of HCM Software: New Year, New HCM Solutions
6 min. Read
Last Updated: 01/06/2021
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As the current year wraps up and preparations for the new one begins, businesses should ensure that human capital management (HCM) software is on their agenda. Why? The benefits of HCM software can influence every aspect of your business as you look to drive efficiency and growth.
A successful HCM strategy has many components, but a strong and impactful HCM software system is the foundation. It could be the key to helping your HR team fulfill their potential and reach goals in the year ahead. While older HCM software can help with many perennial HR challenges, the pandemic, growing mobile workforces, and increased attention to diversity and inclusion in the workplace have put a new emphasis on business efficiency and information access. Here's a closer look at why new software should be in your budget and strategic plans for 2021.
What is HCM software and what are the HR software benefits?
HCM provides a framework that helps businesses use the latest data, improve business processes, and focus on recruiting and retaining the right people to optimize a healthy, engaged workforce. When understanding what is HCM software, think of it as the engine the powers the HCM tools and operations a business uses to implement certain tasks such as recruiting, hiring, managing people, and analyzing workforce trends. The right software allows a business to streamline tasks, improve overall efficiency, provide on-demand access to HR-related information, increase employee benefits, reduce human errors on critical recordkeeping, and get the right data analysis to leadership so they can use it for important decision-making.
Human capital management industry trends in 2020-2021
HCM has become an essential tool for businesses, providing them a methodology and technical framework to stay organized through the numerous and dramatic changes experienced in the workplace this year. HCM trends include improvements in existing HCM software capabilities and addressing new challenges.
Opening fragmented systems
Businesses today rely on systems to help with payroll, benefits administration, taxation issues, time and attendance management, recruiting and hiring, and much more. While each of these systems can help gain efficiencies and control costs in their respective areas, there are limitations businesses face when relying on unconnected systems that don't communicate with each other. Technology siloes lead to fragmented information that can be hard to retrieve and coordinate across multiple departments.
Often, companies struggle with risk, complexity, and lower productivity because of the lack of system integration. Duplicate data entry, information inconsistencies, and an increase in rote administrative work are all consequences of fragmented systems. In fact, in the absence of HCM technology, HR leaders reported spending a full four weeks per year on more manual tasks, according to the 2020 Paychex Pulse of HR Survey. One of the ongoing trends that companies continue to embrace is moving toward integrated HCM solutions that provide better control over data and the ability to access centralized information and comprehensive single employee records from one dashboard.
Businesses continue to embrace the cloud
The continuing trend of businesses embracing cloud-based solutions has been underway for some time, but in the past few years it has begun to accelerate. Businesses that move away from in-house systems often find that infrastructure and staffing costs are lower and there may be less risk of data loss. Additionally, cloud-based systems may be a better fit for the mobility needs of companies with a dispersed and/or remote workforce, satellite offices, or traveling client support teams.
Increased need for on-demand information
The volume of data that businesses collect today is staggering. They need help with rapidly accessing the most relevant and critical details through the mountain of information without getting frustrated. Being empowered to do so is one of the highly desired HCM benefits. Businesses are focusing on human capital management systems that allow them to retrieve the right data quickly and efficiently, while at the same time formulate reports that help leadership teams make data-driven decisions. Today's HCM software integrates across functions, provides real-time access to data, and uses the cloud for efficiency and mobility. Whether it's information needed to optimize workforce scheduling in a complex, hybrid/remote work environment, identifying the demographics of different departments, or last-minute reporting essential to executives launching a new initiative or staying compliant with health mandates, HCM systems are constantly improving their abilities to provide clients with these key capabilities. Understanding the direction the human capital management industry is taking while simultaneously identifying your own needs and challenges can better assist you in your efforts to select an HCM system that grows with your business for years to come.
HCM benefits diversity and inclusion
With public discussion of racial inequality gaining traction in 2020, many businesses have renewed their efforts to address diversity and inclusion in the workplace. HCM software with advanced reporting capabilities can provide easy-to-access data on employee demographics across departments, teams, candidate pools, and management levels. This information can help a business identify gaps in diversity so they can be resolved.
Adapting to a pandemic work environment and beyond
The pandemic has forced businesses to meet health and social distancing mandates or shut their doors. In response, remote workforces proliferated quickly. Businesses are finding that incorporating an increased remote workforce is benefiting both employers and employees. Many employees value the flexibility of working from home and their satisfaction is translating into increased levels of productivity. Cloud-based HCM software is essential for HR to successfully manage a remote workforce. A powerful HCM solution can give HR managers the ability to track payroll, benefits, time and attendance, recruiting and hiring, and other essential HR functions. Businesses should consider solutions that give them uninterrupted access to this type of information, even during a major disruption such as a public health emergency.
How can an HCM system help manage my data?
The best business decisions are backed up by accurate data. In today's data-driven world, analytics and big data are normal parts of corporate conversations. The reality for many companies, however, is that managers still struggle to access real-time, accurate data when they need it. Managers may have to spend hours finding, organizing, and analyzing information that lives in outdated and fragmented HR systems, which increases the likelihood of data errors. Different systems may not communicate across programs, requiring duplicate data entry between platforms. Investing in the right system can ensure that managers and staff have access to streamlined and accurate data at their convenience from any location that can connect to the internet. This can enable employees and managers to eliminate time-consuming and unnecessary tasks while being empowered to better support smart business decisions.
How can an HCM system create efficiencies?
A truly integrated HCM system enables a single employee record across multiple areas of the business and allows employers to customize how they use the system based on their specific needs. Businesses should be able to use only the modules that make sense with their unique situations, such as recruiting applications, benefits administration, or time and attendance. HCM software customization lets companies invest in their priorities, helping make their most important processes more efficient and getting managers and employers the insights they need from a potentially overwhelming volume of material (e.g. employee contact information, security clearances, benefits, vacation days or paid time off, taxes, etc.) without having to go through HR. In the new COVID-19-era work environment, this accessibility becomes critical for staff as they work from remote locations. An integrated, modular HCM program makes it possible for a business to scale its technology when its needs demand more (or less) HR technology support.
Supporting mobility is a must: the benefits of HCM
Many of today's employees must be productive and fulfill their work roles from outside the office. While the pandemic expedited the transformation to a remote or hybrid workforce, it's expected that many of these work environment changes are here to stay. Companies need flexible, cloud-based systems to allow staff to work whenever and wherever they need to. Not only does this empower a business's current workforce to be more productive, it allows that business to gain a competitive advantage by opening up the candidate pool to individuals who don't live near a physical, central, or satellite office. Forward-thinking HCM technology provides capabilities that accommodate a geographically diverse staff. For instance, time and attendance systems let workers report their time on mobile devices and use GPS features to provide time and location verification for accuracy, if applicable. Cloud-based systems also let managers access critical data when needed, whether they are preparing for a video conference meeting, working from home, on-site with a client, or responding to an urgent situation.
In today's rapidly changing and demanding world, businesses face numerous challenges and a great deal of unpredictability, as the pandemic has proven. HCM benefits businesses by giving them the ability to make critical decisions based on reliable, accurate, and timely information. HCM systems help businesses integrate data into a single employee record, support mobility, and help increase efficiencies for the entire workforce. Of course, these benefits need to be weighed against upfront costs and potential security issues, but these may be initial, short-term drawbacks. Ultimately, HCM software's power lies in improving the work experience for employees and facilitating a more cost-efficient business model for long-term success.