Podcasts

Human Capital Management Software

This podcast was recorded at Connect & Simplify™ HQ in Wisconsin. We help hundreds of businesses (nationwide) with their Human Capital Management Software needs. For many businesses in the 50-250 employee range, Connect & Simplify™ is a profitable or more effective alternative to full-time employees dedicating all or some of their time to managing the chaotic and complex problems of Human Capital Management.

How integrated HCM software helps your business.

Welcome to the latest episode of Inside Connect and Simplify™. I'm Roger, a human capital management consultant with The Benefit Companies. What does human capital management mean? When I say human capital management consultant, what does that mean?

What is human capital management software?

That's a great question. One we get a lot, even if somebody doesn't ask the question. When I'm talking to somebody and I say HCM system, or HCI, or human capital management software, I can tell that they have a question just by the look on their face. So I always start there. And frankly, I didn't know what it was in the beginning, either. When we first started understanding the system capabilities, I had to kind of stop and learn what this terminology was. So human capital management, also known as HCM is the integration between payroll management, time labor management, and human resource management. And it's the systems that run payroll, time labor management, and HR management in the coordination to the integration that makes it human capital management software.

How integrated HCM software improves payroll.

So with most companies, most employers have a system that they use for payroll. And it might be QuickBooks or it might be a big payroll company like National ADP for example. It might be their local accountants, but they're using some type of system to pay their employees. So payroll is an important component of human capital management. 

Time and labor management is the second piece. Companies are tracking time worked by their employees in a multitude of ways. They might have time clocks, they might just have paper timesheets, where they're asking employees to record their hours, or they might be using very sophisticated technology that has biometric readers and face scanners now with COVID, which allow employees to punch in and punch out. But time labor management goes far beyond just punching in and out. It's also systems per time. Labor management drives ultimately, the paycheck. 

HCM software helps manage complex tasks.

So you might have shift differentials, maybe you run multiple shifts in your organization, and you pay people differently. But you have somebody who works the morning shift and also picks up a shift in the evening. And so you have to pay them differently. There's complexity there. Time and labor management systems also are used to manage paid time off in an organization. So whether somebody's hourly, or whether their salary, you might have all of your employees actually going into some type of system and requesting time off, and having that time off then process with payroll. 

Automation with human capital management software

Then the last component is the newest. And it's really what makes up human capital management software. And that is the human resource management aspect of the human capital management system. At first, I had to think, what does that even mean? How can you take HR as a responsibility and automate it right? And then I learned that really what that module is, is it's a series of administrative processes around things like applicant tracking and recruitment, electronic new hire, onboarding, benefits, enrollment, performance review, management, compensation management, in something that we call core HR management.

So the HR piece then is really broad, obviously, very broad. When I first became familiar with it, I was thinking of just a very narrow space. And we think of it here in our world as the entire life of the employee and tracking them from beginning to the time they retire. And when we're talking about human capital management, now we're talking about integrating that with these other modules or other management systems. So as I hear it from folks, they don't have this integration going on. So what do you think their top reasons for looking at an HCM service or system might be? What do you think is driving them to have that discovery conversation?

Why should you consider human capital management software?

What’s driving the implementation of an HCM system is improved efficiency and accuracy. And I like what you just said a moment ago. The intent of these systems it’s really to track the lifecycle of an employee, from the time they’re recruited into your organization through each cycle until the time they leave your organization. And it is the core technology that is going to fuel the future for businesses large and small.

I want to spend a few more minutes talking about the human resource module piece because we hit sort of the tops of the trees that I'd like to just spend another minute there. What we're learning is administrative processes are existing for businesses. Let's say you're a manufacturer who has 50 employees. And right now everyone's experiencing this, a recruiting and retention issue in the workforce. Every business is looking for people and losing people and hiring people. It's a bit of a, I like to call it musical chairs. But when that happens, you've got a lot of administrative things that have to take place when you're off-boarding somebody and then likely when you're hiring them as well. 

Applicant tracking software

So let's talk about applicant tracking and recruiting for a minute, what human capital management software allows an employer to do is create a job requisition. And that job requisition can sit on a company website or be posted to an electronic job board like indeed, LinkedIn, or Milwaukee jobs.com. And then when the applicant comes in to apply for a position, they're coming into this human capital management software. The system has processes built into it which allow the flow of that applicant through the recruiting process. What's going to happen is they're going to apply for a position. The system can be configured to ask certain questions of that new hire, maybe, you know, do you like the color yellow? No, I don't like the color yellow. We build a knockout question then. So that person gets knocked out of the recruitment process because they don't like the color yellow. There are automated messages that can be sent to the applicant and even reports. This all becomes important for when you do hire or don't hire somebody; it can document the reasons for that, which can become important down the road for an employer. It helps improve the process of managing recruitment.

That recruit, once hired, will already be in the system. So that makes it nice because the next piece for HR is onboarding a new hire. What does onboarding mean? Onboarding is that moment in time when an employer has to do all the paperwork for the new hire. They have to complete a W4, their I9, direct deposit and sign off on your handbook. All of those things can be set up in the system for the new hire to do before they even come to work on the first day. 

HCM software keeps your records all in one place.

The advantage for the employer is that that information now syncs automatically with the payroll system. You don’t have to remember to go back into the payroll side and enter in the withholding information, federal and state for that new hire. It makes that whole process easier. 

There's a Benefits Enrollment piece inside that HR Management module. And that benefits enrollment is cool for new hires when they first become eligible as new hires into the organization. But also if any of your employees experience a life change event throughout the year or for annual open enrollment, it allows employees to go into a select their benefits wave, which is nice for an employer because you're documenting waivers. And if you have life insurance, the employee can select their beneficiaries. All of that information then also syncs with payroll so that the right deductions for employee benefits are coming out at the right time. 

Managing insurance deductions and employee compensation with HCM software

This is another huge pain point for companies on what they have to remember. I hired Roger three months ago and now he's on health insurance and I've got to remember to go into payroll and make sure your deductions are coming out three months later. The Benefits Enrollment piece also has carrier connections where the employer wouldn't in this case have to facilitate the communication to the various health insurance and dental vision carriers, who are enrolled, who are terminating, and who's making changes. So this is a great administrative burden taken from the employer. 

There's a performance review management piece, which allows the employers to automate the review process, which is nice. There's a compensation management piece, which helps forecast raises and measures employees COPPA ratios, for purposes of salary ranges, and how much of an increase somebody might get based on whether they're at the minimum midpoint or the maximum of their salary range. A lot of financial people love that information. 

Core HR within HCM software

And then there's the core HR piece, which is taking your employee paper files, and now turning them into electronic files. So we're able to house all kinds of information, such as who's got company vehicles, who's got keys to the building licenses, performance information, like awards, incidences, workers compensation, and even OSHA all can be recorded in those virtual electronic employee files. So it's a really powerful addition to payroll and time labor management that makes the software a human capital management system.

What to look for when choosing human capital management software?

You just described how ours works. But of course, not all HCM vendors and systems are the same. They're all different. What should people be looking for when they're vetting out an ATM service or a technology provider? What are some of the keys?

I would give people four things to look for. The first thing that I would suggest people look for is a single database. A single database is going to allow real-time integration between the modules that I just described.

Software allowing real-time integration within a single database

Real-time integration is the ability for information to be applied seamlessly across these modules. So let me give you an example. Let's say you have an employee who moves and they have a new address, typically, that employee would write down their address on a sticky note and come over to the HR department or the office manager or whomever and drop off this piece of information. And then that person would have to go into the payroll software and update it. And then they might have to go out to the benefits carriers and update their address there. In this system, the employee can go in and update their address, it automatically sends a notification to the carriers on the benefit side that the address has changed. And it also updates the payroll system as well as their employee file.

Real-time means as soon as they push the button, it's happened on all those levels.

So having that single database is important. I think what we sometimes see in the marketplace of HCM vendors is they'll be using a different system behind the scenes, I like to call it “MacGyvering”. For those of you who remember that show, sometimes you have to use paper clips and gum to get all of those systems to talk to each other. Really, in a perfect world, what you want is a system that's already built, so that these things are integrated.

So you said there were four things. That's one. What else?

One software. One version of the truth.

The second thing is I would look for a single version of the truth. And what do I mean by that? What I mean is software where every employee in the organization has their own login and password. And even though you might wear different hats in the organization, you might be the person that processes payroll, but you also are an employee of the company. Sometimes systems will require you to come out and go back into the software as the payroll person and then come out and go back in as the employee. You want to look for a system that can be built with securities so that you're going in with one user ID and password and you have access to run the payroll as well as deal with things for yourself as an employee.

Alright, so there are two: a single database and the single version of the truth, or the single login and password scenario.

Employees engaging through software

The other thing that I think is important is engaging your workforce. Have software that allows for the employees to be engaged. What we're seeing out in the work environment right now is a multi-generational workforce. But what's unique about right now versus other times in our history is technology. I'm a Gen X, or I need my kid's help when it comes to phones and technology, but I also use it every day. I use my phone for a lot of things. I like technology, I want to use technology. But I'm not a digital native. What we're seeing now with the Gen Z's and the millennials certainly is they were brought up with technology. So they have an expectation when they come into the workforce that technology exists. 

This is a really interesting conversation I have a lot with our clients and our prospects are that the younger generations are pushing companies to engage in technology advancement. They want this, those employees when they come to work for you for that first day, will look at you like you're crazy when you hand them a pack of papers that they have to fill out. They want to do that stuff digitally. So a system that allows the employees to be readily engaged is really important.

Choose an HCM Software with integrated cloud-based technology.

I think the fourth one segues with what employee engagement is. And that is it should be an easy-to-use application. These systems are getting to the spot. It's all cloud-based technology. What does that mean? I used to think there was a cloud for real and then I found out there wasn't a cloud, which made me sad. But anyway, the systems themselves should be colorful, and engaging. 

One of the things I like to see in systems is when people employees are working their way through the new hire onboarding, for example, or the benefits enrollment. It's giving them a little hurray and good job throughout the checklist process so that they know that they're moving, and navigating through the system, and doing it correctly. Cloud-based technology is the ability for the core software updates to that software to be pushed virtually, as opposed to residing on a company server. So gone are the days where an employer would need to buy a piece of software, install it on their own server, and then have to purchase updates, and maybe get somebody to come and run the update for them. All of that's gone. And really what's replaced it is this cloud-based technology, where the updates are pushed virtually. And you can access it from any internet connection. So whether it's a phone, or whether it's an iPad or a desktop computer, you're able to get into the system.

Alright, so I follow all of that. And that's some great pointers on what to look for, as you're vetting out for potential providers and what they have to offer. But that's only part of the puzzle because of course, technology is great. But you also need to know how to use it, be trained on it, and have service available to you. So what type of service and support should they be looking for? What do they ask for?

Get support with HCM software.

That’s an important conversation to have. And I think the advice I would offer people is as you start to look into human capital management platforms, what you're going to want is consultants or companies that you're working with to have consultants that can help you navigate through their system. I don't know if you guys have seen on TV, I always smile, there's this home security commercial, that airs a lot where they say, oh, it's really easy, just order this home security system, and they show the box being delivered to the front door. And I always think to myself that would be me. I would order the system and the box would be dropped off at my front door, and then I'd open the box, and I wouldn't know what to do with it, and it would never get set up. And there's that moment between the box getting dropped off and the final commercial image, where the whole system is all set up and working beautifully in this person's house. And I'm thinking yeah, there's a big gap in between there, which I would fail at.

So I think what's important is making sure you have a support system to help you with this technology. And what do I mean by that? You want people who are knowledgeable about the technology, but current about practices and policies around payroll, time, and labor management along with HR. Because the most successful companies that we work with who use this type of technology use this as a moment in time to say, “Okay, we're going to upgrade to this technology, it makes a ton of sense, we're going to get a lot of ROI on our administrative functions that we're spending a lot of time on internally.”

Great HCM software is nothing without support.

But this is a good time for us to know our policies, make some changes, and have experts guiding you through helping to configure the system to match your policies. And make sure that your policies are up to date, ensure the things you should be doing, including changes you've wanted to make in the organization, but just haven't. This is a great time to do that. So again, working with people who understand not only the technology, but also the application of the technology, what those policies are, and what you need to store at your company is important.

So we talked about what is HCM and what to look for. We talked about the technology side, the service side, and that's where we're going to end this conversation for today. But when we come back next time and have a conversation, we're going to talk about the marketplace as a whole and what's going on out there because again, I mentioned somewhere along the way here every HCM system is going to be different. I'm talking about the technology side. So we're are going to dive into that a little bit, describe what's available, and what might be the things to look for and stay away from, as you're looking and vetting out the HCM systems you're looking to put in.

Inside Connect and Simplify™ is sponsored by The Benefit Companies and our trademarked human capital management platform Connect and Simplify™. Connect and Simplify™ integrates payroll time, labor management, human resources, retirement plans, and employee benefits in one single sign cloud-based platform.