What is Human Capital Management? Sometimes referred to simply as HCM, certainly, the world has changed since Gary Becker, an economist from the University of Chicago, and Jacob Mincer, from Columbia University, coined the term “Human Capital.” They were referring to the collection of knowledge, habits, and personality traits that are required to perform labor that will produce economic value. Pretty hard to get too excited about this definition.
It is kind of funny that there isn’t an agreed-upon definition as to what Human Capital Management even is. At its broadest, HCM is the software and services required for the care and feeding of your employees. Sounds administrative - and it is. Yet it is vital to our organizations. Most people describe the concept differently, not completely unlike Aesop’s tale of the seven blind men and the elephant. At a minimum, it is payroll and HR…but it could also include talent acquisition and onboarding and benefits enrollment and time & attendance and blah, blah, blah. In your business, you might have selected the greatest single system ever built, or you might have selected the best of breed apps, or you might just be setting out on the adventure with a system from a service bureau provider that is, at best, also blah, blah, blah. But you have Human Capital Management. Box checked.
What if we considered humans as assets within a firm? How is that different than acquiring a machine as an asset? At its highest level, you might think of the outputs of a human to be parallel to the outputs of a machine. The simplistic value of this approach is that we don’t treat our people as expenses on P&L…they produce what we sell…they are assets. What is missing is the dynamic element of us humans: we can learn, grow, build muscle, develop skills, and accomplish more tomorrow than we did today. What is missing? Humans are dynamic. Stay tuned.
What is it like when your employees’ capabilities define the future of your company? This is the beginning of Strategic HR. More on that another day, but just think about the multiplier effect when human dynamics are accessed. You become unstoppable. For now, let’s consider this world:
Where your future employees are selected from the very best candidates you can source.
Where these employees are carefully brought into the culture that is being created. Even before they start they feel part of something special…they are joining a journey, not thinking just about coming to work. You might reach out during that scary “in-between” time and ask if there is anything that you can do to make their first day amazing.
Where you welcome these employees and let them know how truly excited you are that they chose to pitch into what you are building. Sure, you give them training, tools, expectations about what you expect, but you do more. You share your vision, mission, and core values, not as a recitation of what was handed to you, but instead, with passion. It is your most sacred obligation – the genuine, sincere and palpable transference of the soul of your firm. Of course, you’ll provide benefits, compensation, rewards, recognition, advancement, and advice for the company you are becoming, not the company that you were. But your real job is to unlock the human potential…that is Living Human Capital Management. Your HCM system makes it possible. It is our quest…and it is endless, and it is as exciting as all hell.
I am the CEO of an amazing human capital management software company and I love HR.
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