Human capital management software is a must for HR professionals. Learn how to research the best HCM software for your business.
From hiring to payroll, onboarding to performance management, attendance to L&D, managing your human capital involves countless ongoing tasks for however long you're in business. The focus of HCM is to drive the business forward with highly skilled employees who are happy to be there, all the while remaining compliant with the latest federal, state, or local regulations.
Smaller businesses and startups may attempt to manage all these moving parts manually, or without defined HR workflows in place. But this ad-hoc approach can quickly result in chaos, with errors creeping into key processes, employee requests going unanswered, and the risk of non-compliance.
Human capital management, or HCM, software is your lighthouse in a storm, providing a single source of truth and streamlining all aspects of HR operations. This guide further explores how the right HCM software will free up your time and drive productivity across the business.
What is HCM software?
HCM software is a comprehensive platform or suite of tools designed to manage all aspects of human resources from one central location. This includes:
- Workforce acquisition: Use the software to attract, recruit, and onboard top talent through job postings, applicant tracking, and candidate evaluation.
- Workforce management: Handle tasks related to keeping your employees satisfied and settled in the company, such as employee benefits administration, employee engagement surveys, etc. This area also allocates talent resources by assessing leave tracking and absence management.
- Workforce optimization: Identify and manage opportunities for improvement, career development plans, performance assessments, and more.
What is the difference between HCM and HRIS?
It's common to hear the terms HCM and HRIS used interchangeably, so how can you distinguish one acronym from the other? Human capital management is a broad and all-encompassing concept that includes every practice involved in handling a company's human capital—its people. Human resource information systems (HRIS) are more limited in their scope as they only manage human resources data, such as personnel records, benefits administration, and payroll. The bottom line: HRIS is a subset of HCM.
What are the benefits of HCM software?
An effective HCM system replaces manual pen-and-paper approaches or using a patchwork of digital tools to manage the people in your organization. While HR teams will derive different benefits from specific tools, you can expect the following when you switch to a comprehensive HCM solution:
Streamlined people processes
If you’re familiar with entering employee data into multiple payroll, HRIS, and performance management tools, one of the main advantages of using a single platform is that you’ll enter this data once and watch it flow across all systems. You can also automate tasks like benefits enrollment, time tracking, and employee engagement surveys, saving your team hours of administrative work.
For example, the non-profit organization UTEC experienced problems integrating its payroll and timekeeping systems. UTEC's team had lost hours on employee record reconciliation due to manual data entry errors, a common problem when multiple systems are involved. By switching to UKG Ready®, UTEC has integrated all its core HR functions, optimized its workflows, and enhanced its payroll processing.
Enhanced employee experience
HCM platforms provide the tools to create a fulfilling work experience tailored to your workforce's diverse needs. Simply put—HCMs keep everyone happy.
With a user-friendly interface, HCM platforms allow employees to navigate various HR-related tasks with ease. Whether checking pay stubs or requesting time off, ease of use contributes to a positive work environment where technology empowers employees rather than becoming an obstacle to them.
From an HR perspective, an HCM system taps into employee sentiment by providing intel on individual and collective needs, preferences, and engagement levels. HR pros can use these insights to offer targeted learning and development opportunities, recognition programs, or wellness initiatives.
Strategic decision-making
With advanced reporting features, HCM software allows organizations to optimize workforce planning and talent management strategies. By analyzing recruitment, performance, and employee development data, HR teams can better predict future workforce management needs, identify potential succession-planning candidates, and ensure the right talent is in place to meet business goals.
Beyond workforce insights, HCM systems offer valuable data for financial decision-making. Compensation management tools, for example, help HR and finance teams develop competitive yet sustainable compensation strategies that attract and retain talent while maintaining budgetary compliance. Analyzing the financial implications of HR decisions in real time supports a strategic approach to managing human capital.
Compliance with labor laws
Compliance with labor laws is a critical concern for organizations worldwide, and HCM software plays a pivotal role in navigating this complex landscape. With built-in compliance features, HCM systems help organizations adhere to the latest federal, state, or local regulations, from wage and hour laws to health and safety standards.
10 features of best HCM software
While each HCM solution will offer its own functionality, expect the following core and advanced features in a quality solution.
Employee management
Starting with the essentials, your HCM will handle key talent management tasks, including:
- Absence tracking
- Attendance management
- Time tracking and scheduling
Compensation management
Payroll and compensation management enables your team to manage base salaries, bonuses, benefits, tax withholdings, and more within a single system. Whether matching 401(k) contributions or calculating overtime, your HCM solution can serve as the single source of truth for all things compensation.
Talent acquisition
Talent acquisition features enable recruiters to craft compelling job ads, store applicant data, and shortlist promising candidates throughout the hiring process. Once you’ve extended job offers, the next step is onboarding employees using a set of tried-and-tested workflows that simplify the process.
Performance management
Employee performance reviews are an opportunity to host regular check-ins with your workers. Your HCM solution should support performance management by enabling employee self-evaluation, collecting and presenting feedback from managers and peers, and suggesting performance objectives based on your company's goals.
Employee development
An HCM tool with talent development features enables you to identify skill gaps, and plan employee learning management sessions or career development plans for individual workers. The right HCM solution provides opportunities for modern continuous learning and professional development.
Employee benefits administration
Benefits administration capabilities enable you to enroll new employees, update employee benefits, and offer open enrollment during the year. Your team can also monitor benefits eligibility and provide employees with access to online resources that explain their benefit plans.
Reporting and analytics capabilities
Advanced analytics and reporting tools allow HR professionals to make data-driven decisions about their workforce. With customizable reports and dashboards, you can track key performance indicators (KPIs) in real time, identify trends, and forecast future workforce needs.
Employee self-service features
Employee self-service portals save HR teams time and effort by allowing employees to access their personal information, submit requests for leave or schedule changes, and view pay stubs. This empowers employees to manage their own HR-related tasks and reduces the workload for the HR team.
Integrations with other core systems
While some HCM platforms are designed to be all-in-one solutions, there may be times when you need to integrate your system with other key tools such as payroll solutions, financial management systems, or CRMs in your tech stack. Integration capabilities ensure that data flows smoothly from one system to another and enables you to set up simple automations between them. For example, you may wish to send a Gmail notification to an HR team member if a new hire’s employee record is updated.
Accessibility
A quality HCM solution will meet accessibility standards to ensure all employees can use it effectively. Inclusive features such as screen readers, keyboard navigation, and color contrast options are vital for individuals with disabilities. Similarly, mobile accessibility should ensure your HCM solution is available and fully responsive on a range of tablets, smartphones, and other devices.
8 questions to ask when researching HCM software vendors
Ask the right questions as you create a shortlist of the best HCM software. The suggestions below will help you anticipate how well the platform will adapt to your business processes and whether it will suit you both now and in the future. Ask:
What pricing model is available?
Pay attention to how different vendors price their solutions. These might include:
- Headcount: Using a per employee per month pricing model
- Features: Offering different pricing tiers based on the number of features or modules included
- Customization: Pricing that takes into account any customization needed for your specific business processes
- Contract length: Whether you’re locked into a discount-based annual contract or can pay monthly for flexibility
- Additional costs: Vendors may charge setup and implementation fees and training costs
Is it a scalable solution?
As your headcount increases or if your business undergoes a merger or acquisition, you’ll want to know whether or not your HCM solution will be a good fit for an increased number of employees. Some HCMs are aimed at small businesses and others at enterprise-level organizations, so it's important to establish the focus of each platform. Pricing will likely be impacted as you scale, and different features may become available or more complex to use.
Is cloud-based or on-premise the right fit?
Cloud-based HCM solutions offer anytime access from anywhere, while on-premise platforms are housed in your company's IT department. In most cases, cloud-based solutions are the most convenient solution, but always make sure your provider adheres to your business’s security standards.
Is the HCM software user-friendly?
Even tech-savvy users will need to become familiar with brand-new HCM software, which can take time. Ensure your HCM system is intuitive and easy to navigate, or you may find that your team defaults to old-school data-management methods. Ask for a demonstration and take advantage of free trials and demos before making an informed decision.
What security features are built-in?
Perhaps the most important part of selecting an HCM solution is ensuring it's secure. Your system will house a ton of confidential information, including your employees' dates of birth, home addresses, medical details, dependents, Social Security information, and much more. To ensure these personal details remain secure and private, ask what security measures are in place and whether sensitive data is encrypted or stored off-site. Use the following regulations as a starting point to ensure your HCM is fit for purpose:
- General Data Protection Regulation (GDPR): This data protection law applies to any organization dealing with EU residents’ data.
- Health Insurance Portability and Accountability Act (HIPAA): This regulation protects the privacy and security of certain health information.
- California Consumer Privacy Act (CCPA): This grants California residents new rights regarding their personal information and imposes data protection obligations on certain businesses.
Does the software align with our business strategy?
An HCM solution may be top of the range with all the bells and whistles, but it's only a worthwhile investment if it aligns with your specific business needs. To pinpoint what you need from your HCM, ask:
- What features are crucial for our HR processes?
- How does the HCM solution integrate with other business systems and software?
- Does it have customizable options to fit our unique company needs?
How does the HCM software use AI?
Artificial intelligence promises to make light work of repetitive tasks. In HCM software, AI might automate onboarding, provide employee training recommendations, or assist with performance evaluations. Find out if your HCM software includes AI capabilities and how they can benefit your business processes.
Example: UKG Bryte™ is a generative AI assistant that provides quick, practical HR advice, uncovers new trends, and empowers employees to learn new skills essential to their roles.
What customer success stories are available?
Learning how other customers have experienced a particular platform can be incredibly revealing when choosing your own solution. Ask vendors to provide customer stories, case studies, or references of people you can speak with directly. This will give you an honest and transparent view of the platform's capabilities and potential drawbacks. Additionally, check out online reviews and ratings using communities like G2 or TrustRadius to better understand the platform's performance.
How to maximize your HCM software
Once you’ve selected and completed the implementation process for your chosen HCM solution, follow the tips below to extract the most value from the platform:
Use accurate data
Your human resource management will only be improved if your HCM solution contains accurate data. To ensure data integrity, especially when transferring existing records over from a legacy system, take the time to clean and organize your data before inputting it into the new HCM system. This step will avoid future discrepancies, errors, or duplicate entries.
Customize your HCM platform
Your HCM platform needs to fit your processes and workflows, so get to know the platform’s configuration options that can be matched to your specific payroll cycle, time-off policies, and other unique company culture needs. This will save time and help you make sure your HCM solution is working for you, not the other way around.
Track key HR metrics and trends
Regularly tracking and analyzing your HR data can pinpoint trends, spot potential issues, and help you make informed business decisions. For example, you might notice a high turnover rate in a specific business area, allowing you to investigate further and possibly offer conflict resolution training programs for managers in that department.
Update your platform
Keeping your HCM solution updated with the latest features and security updates prevents potential vulnerabilities in the system while ensuring compliance with regulations. Quality software will have options for automated updates, so take advantage of this feature to save time and effort.
Train your team
Ensure your HR team is well-trained on the key features and functions of your HCM software. This will increase their efficiency in using the platform and ensure they can handle any issues that may arise. While initial training is important, regular updates will keep your team up-to-date on new features and improve their overall understanding of the system.
Access vendor support
Don't hesitate to contact your HCM vendor's support team if you encounter any challenges or have questions about the software. A reliable vendor will offer responsive customer support and can assist with troubleshooting, setting up new features, and answering any concerns.
Gather feedback and improve
The bottom line: Your HCM solution will only ever be a hit if your HR team members are comfortable using it. Collect feedback using regular surveys or 1:1 interviews to understand if the platform supports their work or if any issues prevent them from incorporating it into their processes.
UKG: Intuitive, versatile HCM software
UKG offers two software solutions, each packed with a wide range of features based on your company size and goals.
UKG Pro® is a complete HR solution that manages the entire employee lifecycle from end to end. Our platform enables strategic workforce planning, exceptional communication and collaboration, and streamlined scheduling from a central location.
UKG Pro scores 4.2 out of 5 with the G2 software community, with one Enterprise user describing how UKG Pro has vastly improved their non-profit organization’s HR:
“Our HR world has made a complete 180 in the right direction. UKG Pro is seamless. Coming from a system that lacked usability and compatibility, UKG Pro has changed the way we do business in HR. The mere fact that our users now have access to manage their data at any given time is a huge win for us. Our day-to-day operations have improved tremendously. We are four years in with using UKG Pro and have absolutely no regrets. UKG Pro continues to check all the boxes as a great HCM vendor/platform.”
UKG Ready is a great solution for leaner teams in small to mid-sized organizations. Our platform comprises the core features your business needs to provide a consistent user experience, with purpose-built talent management, payroll, and time-tracking solutions.
Scoring 4.1 out of 5 with the G2 software community, Robin F., a Corporate Talent & Culture Manager, speaks positively about switching to UKG Ready:
“Everything being in one place is the #1 thing I like about UKG Ready. We are about a week out from Go Live with UKG and the entire process has been nothing short of a great experience. In our previous software system, you had to navigate away to different functions, and having a business with multiple divisions made it even more complicated. In UKG, all of our divisions are easily navigable, the system can be set up exactly how you want it, and the customer service is 100% top notch.”
Ready to elevate your people strategy? Book a product tour of our human capital management software today.
