Reasons to Use an HCM or HRM Software

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Do you use a human capital management system (HCM)? If not, perhaps you’re wondering whether the benefits are worth the costs. What are the reasons to use an HCM or an HRMS?

What is an HCM system?

First, let’s start by outlining what an HCM is. It is an integrated system providing information used by HR management in decision making. It allows a company to keep track of all of its employees and information about them—whatever information the company chooses to store there, such as employee demographics, benefits tracking, and performance information. It is usually created in a database or, more often, in a series of interrelated databases.

Why Use an HCM System?

Here are some of the most common reasons for using an HRMS:

  1. Improved data management. An HCM can manage all employee data as well as information on benefits, such as enrollment and status changes.
  2. Employee self service. An HCM enables employees to update personal data without having to involve HR for simple tasks. This frees up the time of HR professionals for more strategic functions.
  3. Central storage. Because data is stored in one place, this means reporting can be more efficient. It makes access of compliance records simple. It also means there is a central location for documents such as employee handbooks, procedures and safety guidelines.
  4. Fewer systems to manage. Many companies choose to create complete HCM integration with payroll, other company financial software, accounting systems, ERP systems, company intranets, and other online programs.
  5. Employee development. HCM systems can be used to implement and track employee development programs.
  6. On-demand reporting. Customized executive and management reporting can be done “on the fly.” For example, a manager might want to look up employment data by location, and could do so without having to contact HR. Managers can access the information timely as it pertains to employee development, performance improvement, and wage detail (as appropriate).
  7. Measuring program effectiveness. “People are a big part of the organization’s operating costs . . . so [HCM is] how are we measuring our effectiveness of turnover, new hires, compensation, management, benefit costs, all those kinds of things.” Letke explained.
  8. Management and tracking of recruiting data. Many HRMS systems include recruitment components such as applicant and resume management.

In general, all of these benefits lead to improved HR function and ability to act more strategically instead of being bogged down in minutiae. ” Human capital management systems are important [because] they really help us set forth and deploy strategy in our business.” 

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