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A How-To Guide on Human Capital Management

Successful business owners have had to shrewdly manage their assets from the earliest days of commerce. Finding and keeping skilled labor has always been important, but in recent years, business owners have begun to recognize that one of an organization’s most important assets is its employees.

Today, employees with their unique knowledge and individual skills are considered human capital, and a company’s ability to effectively manage that asset is more critical than ever.

For decades, businesses have implemented human resource management strategies that focus on core HR functions, such as payroll, benefits administration, and compliance. With human capital management, business owners understand that investing in their employees – one of their most important assets – will optimize the value those employees contribute to the organization.

What is human capital management

Many companies invest in human resources management systems to help automate tasks such as payroll and scheduling. However, human capital management (HCM) moves beyond supporting functions that help employees perform their jobs. HCM is the practice of optimizing workforce productivity and individual performance by investing in strategic talent management through recruiting, learning and development, and performance management.

HCM begins with strategic recruiting. With effective strategies – such as writing accurate job descriptions, establishing realistic job goals, and objectively assessing candidates’ skills – companies are more likely to recruit and hire applicants who can meet the job’s demands and quickly contribute value to the organization. Finding the right candidate also increases productivity and improves employee retention.

Training positively impacts an employee’s level of job satisfaction, employee engagement, and overall commitment. Learning and development programs help bridge gaps between an employee’s skills and job competencies that still need to be developed. By providing targeted learning opportunities and leadership development for employees, companies can increase productivity and improve employee performance.

Successful human capital management also involves an effective performance management process that tracks employees’ achievements, holds them accountable for meeting goals, and provides an opportunity for constructive feedback through performance reviews. A performance management program also helps companies recognize and reward key performers, which in turn, helps motivate and retain existing talent.

HCM challenges for small businesses

To remain competitive in an often-brutal business environment, large companies practice human capital management, investing significant financial and intellectual resources to develop technology to support their initiatives. These advanced systems streamline and automate recruiting and onboarding processes, enhance instructor-led and electronic learning and development opportunities, and simplify performance evaluation procedures.

For smaller companies, human capital management systems can be cost prohibitive and difficult to implement and administer effectively. However, professional employee organizations and human resource service providers offer an alternative.

PEOs and HR service providers often provide services that extend beyond administrative and tactical HR support to include human capital management best practices and the systems to support them. This provides small and mid-sized business owners access to the same advanced recruiting and talent management platforms used by large companies, allowing smaller companies to optimize their workforce and HR processes to enhance employee performance and improve productivity.

The impact for business owners can be significant: increased exposure and streamlined workflows for recruiting and hiring; targeted training for employees; and performance management designed to measure what matters most to you.

What HCM looks like through a PEO

Suppose you own a small company and decide to invest in the human capital management system offered by your professional employer organization or HR service provider. Advanced recruiting and applicant tracking software could immediately elevate your company’s recruiting efforts.

By allowing you to establish a branded career website and quickly and easily post openings to the most popular job boards, a PEO can help bring more qualified applicants to your company as they pound the electronic pavement for work.

That same platform will allow those applicants to link to your website and easily populate online applications from their LinkedIn profiles. Customized filtering tools can help identify the most qualified candidates, and those candidates can complete a preemployment assessment online to further narrow the field.

After the interview process, the recruiting system can electronically deliver a formal offer and employment documents to your selected candidate. Your new hire can easily complete onboarding by filling out forms online and even executing an employment contract with an electronic signature.

A smart, streamlined recruiting process helps your company look and operate like a major player, so you will attract top-notch talent and seamlessly move that talent from applicant to candidate to employee before they pursue another opportunity.

Once you have that top-notch talent on board, your advanced learning platform can deliver targeted training to ensure new employees hit the ground running and scale the learning curve quickly, so they are making meaningful contributions within weeks rather than months. Continued opportunities may provide training such as leadership development courses that will help your employee grow.

Finally, your performance management platform lets you measure your employees’ performance relative to defined evaluation criteria that focuses on behaviors, attributes, and technical skills you determine are most important to sustaining your company’s success. Will your performance reviews focus on speed and accuracy or teamwork and creativity? If you aren’t sure, you can pull applicable elements from existing evaluations designed and used by other companies in your industry.

Your employees, along with their supervisors, can establish individual goals and track their progress relative to selected criteria. Employees’ colleagues and internal client groups can also provide regular feedback by completing convenient online evaluations.

A constructive performance review process can improve employee engagement and highlight the potential for their careers, so they are motivated to work hard for themselves and the company.

Introducing the strategic human capital management practices and technology used by the most admired global companies can propel your recruiting, learning and development, and performance management processes and ensure your employees are aligned and engaged, so your business can achieve optimum returns on its greatest asset. Your human capital is worth the investment.

About Us

G&A Partners is a leading professional employer organization that offers world-class HR services and a team of experts who can help you navigate employment issues, safety initiatives, and more—during (and after) the pandemic. To learn more, schedule a consultation with one of our knowledgeable business advisors.