Human capital management is still a relatively new term and is often used to refer to both a company’s processes and the technology behind those processes. From a process perspective, HCM encompasses the activities associated with acquiring, developing, managing, and retaining a company’s most valuable asset—its people. It covers a broad range of activities, including identifying and recruiting the best available talent (people) and partnering with managers to develop and motivate their employees to realize their full potential. The quality and performance of an organization’s workforce will differentiate successful organizations from the others in an intensely competitive market.
From a software perspective, HCM systems are solutions that encompass functionality for recruiting, learning, training and development, performance and compensation management, succession planning, and reporting and analytics. Unlike the traditional HR systems of the past, these solutions address the full spectrum of talent management (from hire to retire, and everything in between). HCM software includes modules for recruiting, onboarding, managing talent, tracking performance, and analyzing data—among other things. By consolidating these various modules, vendors are now developing suites of products that are often available at a considerably lower cost than stand-alone solutions.
As we’ve seen in recent years, mergers and acquisitions (M&A) in human capital and talent management are changing the way vendors market their products. Many large software vendors cater to HR professionals seeking an integrated solution from a single vendor rather than different point solutions from a variety of vendors. More often than not, large vendors purchase smaller vendors, whose solutions provide the software functionality needed to “complete” the large vendors’ offerings. M&A are often seen as a means to maintain and strengthen the acquiring company’s position in the marketplace, as well as a relativey quick way for the company to expand into new markets while incorporating new technologies.
The Changing HR Landscape
The HR department has been traditionally viewed as serving an administrative—i.e., low-priority—function. HR personnel were responsible for receiving résumés, creating employee records, filing, and handling employee complaints. The HR landscape has changed dramatically, as HR has gained prominence and emerged as a strategic and vital part of a company’s business. Part of this change is due to HR’s growing role in strategic HR planning (identifying the right people with the right skills within the organization for future positions). HR personnel now take part in the decision-making processes of the company—rather than merely implementing those decisions, as in the past. Company executives are thus taking a greater interest in their people—and how employees can affect the future of the business.