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Lead Your Team Managing

HR Evolves Into 'Human Capital Management'

HR Evolves Into 'Human Capital Management'
Credit: Dean Drobot/Shutterstock

What do you think of when you hear the phrase "human resources?" Years ago, this function was most commonly associated with the person on staff who handled employee paperwork and personnel files. He or she served a primarily administrative purpose — HR made sure everyone got their paychecks and benefits, processed performance reviews, and handled conflicts that were too big for managers to deal with themselves.

Today, the role of HR has become a much more complex and dynamic one for many businesses. Some companies even refer to HR's activities as "human capital management" (HCM) to reflect the more strategic, leadership-oriented nature of the department. According to Gartner, HCM is a "set of practices related to people resource management," specifically in the categories of workforce acquisition, management and optimization. In addition to the traditional administrative tasks, HR includes workforce planning and strategy, recruitment/onboarding, employee training, and reporting and analytics.

But what does successful HCM actually look like in the modern world? Sanjay Sathe, president and CEO of RiseSmart, a provider of contemporary career transition services, said the key is to treat employees like a true investment.

"Acknowledging that your talent is more than big data — that they are actual people — can help you choose, implement and manage HCM systems that provide both your people and your organization with value," Sathe told Business News Daily. "When you approach HCM from the mind-set not of, 'What can I get?' but 'What can I give?' you create an environment in which both you and the employee reap rewards."

HR experts shared their insights for companies looking to provide the best human capital management for their workforce. [Supply and Demand, Marketing, Design: HR's New Role]

When it comes to talent management, some companies are so focused on hiring new people that they end up ignoring the ones they already have. But smart HR professionals know that employee engagement must extend well beyond the recruiting and onboarding processes.

"Keeping employees happy and engaged in your company now depends very heavily on how you approach the entire employee life cycle," Sathe said. "[Ask yourself,] do our recognition, review and learning processes actually engage with our employees, or are they tokens so we can say we have a process? Does our offboarding process match our onboarding process in terms of engaging our employees with our brand and our company?"

"Instead of just focusing on the top performers, think of everyone as talent," added Deb Cupp, senior vice president and general manager for HR line of business at enterprise software company SAP. "Focus on the individual [and his or her] ability to progress. Look at their long-term options — [HR] should be open and communicative about ... career paths in the organization."

In addition to viewing employees as individuals regarding their progress at the company, it's important to take a personalized approach to the day-to-day management of employees. Melissa Moore, chief people officer at enterprise behavioral analytics company Mattersight, noted the importance of taking your staff's personalities and preferences into account when managing and communicating with them. To a certain extent, this can be determined by personality assessment like the popular Myers-Briggs Type Indicator, Truity's TypeFinder Personality Test, or Mattersight's own Personality Pattern Inventory. 

"Learn more about how a person is wired," Moore said. "An emotions-based person needs you to check in [and] create a personal relationship ... to engage fully. If a person is thoughts-based, you need to regularly ask for feedback and progress on a task and recognize him or her."

However, personality is only one component to consider when interacting with employees. As the generational groups in the workforce become more equally divided, employers may need to adjust their approach to make sure each of them is receiving the kind of solutions and opportunities it needs to succeed. Moore cautioned HR professionals not to be misled, however; generational groups are indeed different, but not in the ways you might think.

"Millennials ... want the same things — the core basics are important," Moore said. "I see differences in generations, but not in what they want from us as a company. We just [need to] change how we give it to them."

More information about managing employees according to their personality and generation can be found in this Business News Daily article.

The reason HR's status has become so elevated in today's business world is that technology has made it possible to manage employee data — and, therefore, gain much deeper insights — than was ever possible before. If you want to make your HCM processes as efficient and helpful as possible, it's critical to implement the right tech tools for your company, said Claire Bissot, a certified senior professional of human resources (SPHR) and HR consulting manager at business services provider CBIZ.

"Almost every aspect of human capital management can be enhanced and further strengthened through technology," Bissot said. "HR professionals [should] begin investing their time to build automated processes, utilizing technology, so that they can begin to get out from behind the desk piled with paper and get out to get to know the people."

When HR professionals get to know the company's employees, they can then try to understand the insights they've gained in order to improve the organization.

"You can identify future leaders and help management invest in them," Bissot said. "You can identify a common need of the masses that can be easily addressed and fulfilled. You can identify the gaps within the personnel and build trainings that teach beyond the functions of the job but show your investment in your people as people."

Sathe said that, when you're choosing software for HCM, the most important factors to consider are whether the software or process makes it easier for people to do their jobs, and whether it truly provides value to either the employees or the company.

All companies will have to deal with changes and transitions that affect their employees. Moore said HR professionals should keep open communication with the entire organization at the forefront — not only during transitional periods, but all of the time.

"Change is scary for everyone, and the unknown causes fear," Moore said. "Communicate not only what is happening [in this situation], but also the day-to-day. Have open communication as much as possible so people know what's going on, whether it's relevant or not."

Sathe agreed, adding that situations like layoffs or budget cuts, which are viewed as negative and threatening, should be reframed in a positive and constructive way when they're communicated to employees. For example, offering outplacement services to your employees can provide tangible support to employees whose roles have been affected, he said. This not only helps those employees quickly move into new roles, but also reminds the remaining staff members that your organization has their best interests in mind.

"During times of transition, it's our job to provide ... hope for the future, instead of creating situations that allow employees — both impacted and remaining — to dwell on the past," Sathe said. "Acknowledging that today's work environment is often subject to change as transparently as possible from the outset can also go a long way toward creating a more positive work environment before, during and after a restructuring event."

HCM has become very important to today's organizations, but it's also challenging. By definition, it requires staying up-to-date with the ever-evolving needs of your company's human capital. HR professionals should never think their processes are "good enough" to stop improving them.

"We have a whole new generation entering our workforce and challenging us every day to adapt," Bissot said. "We must stop looking at the workforce as the same one unit that we can continue serving on our usual course, but instead begin to get creative, try new things and challenge ourselves to solve the puzzles of the new HCM of today."

Nicole Fallon Taylor

Nicole received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the managing editor. Reach her by email, or follow her on Twitter.