Human Capital Management: A necessity in a volatile world
These are testing times for businesses of all sizes across the globe, with inflation and the energy crisis putting pressure on businesses. Of course, if we look back at recent history, this isn’t the first time we’ve had to endure global business challenges – nor will it be the last. Covid was a challenge that definitively changed HR practices and talent expectations for economies around the world, and was compounded by the Great Resignation. Before this came Brexit, and before that the 2008 financial crash, all of which remind us of the consistent volatility of the modern economic landscape and the need to always be prepared.
Large businesses are typically able to weather most storms, relying on their size and infrastructure to absorb temporary rises in costs or falls in revenue. But it is not so simple for small and medium-sized-businesses (SMBs), who are the backbone of many economies. For instance, SMBs make up a staggering 99.8% of all companies in the EU. For these sized businesses, core to riding out global waves will be to have a stable, yet agile workforce management structure, where people’s potential can be maximised. Technology plays a crucial role here, allowing SMBs to build a landscape where everyone can thrive. Through our Cornerstone People Research Lab’s 2023 Trends Report, we found that even though 90% of CEOs globally expect digital transformation to disrupt their company, only 30% believe their workforce is ready with the right skills.
Looking to the future, it is essential that human capital management is not overlooked, and companies need to ensure that they are one step ahead. By predicting future skills that they will need, they can ensure they have the right talent to meet the market.
HCM – a holistic view of your workforce
Human Capital Management (HCM) is the process of building the right teams and managing them as effectively as possible. It involves a combination of systems and processes that are applied to a range of administrative and strategic considerations. There are numerous benefits, particularly if SMBs harness an integrated HCM solution.
A standardised, centralised and easy-to-use interface provides HR and leaders with a complete, holistic view of their workforce – allowing them to assess performance and skills gaps. In 2022, 55% of employees globally said that they had confidence in their organisation’s skills development as a priority, and there is a growing gap between how organisations view their ability to deliver on skills development and how employees experience it. To combat this, they can implement targeted and effective training or hiring practices in order to place talent in the right place according to their needs. This facilitates quicker decision making and reaction times, allowing SMBs to better keep up with rapidly evolving external factors.
Additionally, onboarding processes for new staff can be much more effectively implemented with an integrated HCM approach. Why? Because it takes away the need for HR teams to complete mundane, repetitive tasks to onboard an individual – speeding up the process significantly and freeing up time to focus on the more important elements of onboarding, such as progress check-ins. Research has shown that companies that prioritise onboarding increase retention by 82%, so getting this right is key. 96% cite employee experience as the top lever for HR’s future successes, further highlighting the strong connection between a streamlined onboarding process, employee experience and retention.
Too much information. Not enough people and time.
Cost savings are also a crucial benefit of effective HCM. It is estimated that one-third of the average worker’s time in a year is spent doing repetitive admin tasks – taking key time away from activity that could be driving business success. An effective HCM system can automate many of these tasks, streamlining processes and freeing up large swathes of time. This helps create a workforce that is both flexible and adaptable, and a business that can far better absorb any external shocks.
In times of economic downturn, HR procedures should be highly efficient, as should how employees work, to maximise productivity and engagement. The problem for SMBs is that their size often means they can’t allocate entire departments to the task of HR management. Often, this leads to ‘ad hoc’ HR managers, who take on the task in addition to other responsibilities. This can lead to those responsible being spread too thin to work effectively.
Often, this is compounded by systems not being fit for purpose. A common pain point includes having many disparate systems or platforms that are used, meaning it is difficult to streamline information and provide actionable solutions, making reacting in a more agile manner challenging. The impact this can have on people management is significant, and poor management can lead to higher turnover of staff which is costly.
The bottom line
It is crucial that businesses and especially SMBs fully embrace the potential benefits that can come from having agile, scalable, efficient and well-structured HR systems. Furthermore, taking advantage of the many technological solutions that complement any human effort is also increasingly becoming important to streamline processes. By having a single system for core data as well as talent and skills development processes, firms are able to leverage the masses of data that is available to them. This will allow companies to be more robust, but also will ensure they are dynamic enough to be able to respond to pressures and continue to grow.
Chief International Officer, Cornerstone