January 27, 2021 | Time and Attendance | Posted by Ascentis
The Shared Future for HCM and Workforce Management
To people outside of human resources, the terms “human capital management” and “workforce management” might sound interchangeable. Within the HR industry, though, there is a subtle but important distinction between the two. To put it simply, workforce management (WFM) often refers to the utilitarian side of operations — managing time and attendance, building employee schedules, enforcing company policies, etc. — while human capital management (HCM) takes a more holistic view of the workplace — measuring employee engagement, analyzing data, tracking turnover and retention, etc. While these two areas are obviously closely related, for many businesses they end up separated and siloed.
What is Human Capital Management?In broad terms, HCM is a high-level set of solutions focused on areas like recruiting, performance management, payroll and benefits, and other important day-to-day functions. HCM systems often also help employers ensure compliance with state, local, and federal workplace regulations, including the Affordable Care Act (ACA), Family and Medical Leave Act (FMLA), and Fair Labor Standards Act (FLSA).
In its earliest form, HCM software was aimed at corporations and other large businesses with a high concentration of non-exempt workers. As the employment landscape has evolved and diversified over the past decade, so have HCM solutions. Today there are many HCM options built to serve the specific employee management needs of mid-sized and small businesses as well.
What is Workforce Management?Some people think of workforce management as a branch or offshoot of HCM. Others use the two terms as interchangeable synonyms. And still others regard them as separate, essential functions within the employee management sphere. For many companies, the most accurate definition of WFM falls somewhere between those three notions. While workforce management does encompass many of an employers’ “nuts and bolts” functions — most WFM software covers areas like time and attendance, HR and benefits administration, and payroll tools — it often also touches on more nuanced areas like performance management and learning management.
Bringing HCM and WFM TogetherEven in organizations where HCM and WFM are treated as separate systems, there has always been a large overlap between their core functions. As employers have rethought their approach to employee management over the past decade, they have increasingly begun to look at HCM and WFM systems as a joint purchase with many key functions integrated across both.
This is partially a reflection of the changing nature of the American workforce, as more and more organizations of all sizes employ a mix of salaried employees, hourly employees, contingent workers, freelancers, and contractors. The workforce adaptations brought on by the COVID-19 pandemic have also made many businesses reconsider their scheduling structures, creating more roles for part-time employees, remote workers, and those who require flexible or non-traditional schedules. With such a diverse range of needs, it no longer makes sense for most companies to silo their approaches to workforce and human capital management.
Fortunately, bringing those two orbits together does not generally require a tremendous amount of effort or retooling. WFM and HCM are intertwined at multiple levels. For example, an HCM manager assembling a report on reducing employee turnover would likely find it necessary to review workforce management data like time and attendance patterns, differences in scheduling, and payroll records. On the other side of the equation, understanding higher-level HCM concepts like employee engagement and productivity can play a key role in setting WFM strategies for everything from scheduling to learning management to benefits administration.
Organizations have plenty of options today for both HCM and WFM software individually, but considering the close link between the two fields, employers should look closely at software solutions that include both WFM and HCM tools that can be easily integrated with each other. Keeping both aspects of management tied together makes it much easier for your team to identify potential problem areas and key performance indicators, draw relevant conclusions from workplace data, and set policies and practices that better serve your organization’s overall goals.
The future of the American workplace includes a diverse range of roles, responsibilities, and goals. Investing in workforce and human capital management solutions that encompass the needs of a multitude of different workers can help your business develop a stronger understanding of the way you work best. Find out more about Ascentis’ integrated suite of WFM and time and attendance software for organizations of all sizes.