HCM is a set of practices related to people resource management. These practices are focused on the organizational need to provide specific competencies and are implemented in three categories: workforce acquisition, workforce management and workforce optimization. Human Capital Management is important because employees, the individuals who spend much time each day working and contributing to the success of an organization, are a valuable resource that can either make or break an organization.
Thus, Human Capital Management is essential for acquiring and retaining high-performing employees. The responsibility of human resource professionals is to create and implement ways for employees to be hired, oriented, trained, motivated, and engaged. Human Capital Management plays an essential role in helping the organization’s human resources department increase the overall productivity and happiness of employees. In turn, productive and happy employees work harder and care more about the success of the organization. What Are the Problems of Human Capital Management? A few of the potential problems of Human Capital Management are poor performance management, non-strategic workforce planning, weak usage of workforce analytics, mismanagement of organizational change, and the high cost of unsolved challenges.
HCM is not very effective when managing performance if the system isn’t driven by an overall purpose and if the opportunity isn’t taken to fuse together both strategic and tactical approaches.
Sometimes, HCM is too focused on tracking headcount, turnover, and time-to-fill rather than ensuring the organization is best prepared to anticipate challenges and quickly adapting to them.
Although many HR professionals agree that strong workforce analytics are important to their organization, they also admit to not using it effectively enough with meaningful metrics such as Quality of Movement and Quality of Attrition.
HCM can function reactively, rather than proactively, when organizational change isn’t anticipated. When falling behind or trying to keep pace with sudden changes, the chance for HCM mismanagement is high.
Without recognizing challenges early, HCM will be prone to gaps between its current leadership and human capital capabilities, and the leadership and capabilities required to reach future organizational goals.