10 Key Features to Look for in an HCM Systems

Discover the essential elements for success in human capital management with our guide on '10 Key Features to Look for in an HCM System

Brett Ungashick
OutSail HRIS Advisor
July 4, 2023
user comparing HRIS systems

Human Capital Management (HCM) systems are becoming increasingly important for businesses of all sizes, as they provide a centralized platform for managing all aspects of the employee lifecycle. From recruiting and onboarding to performance management and payroll, an HCM system can streamline HR processes and improve overall efficiency. However, with so many HCM systems on the market, it can be overwhelming to determine which features are essential for your business. In this post, we'll highlight 10 key features to look for when evaluating an HCM system for your organization.

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1.) Core HR Functionality

An HCM system should provide a comprehensive and integrated solution for managing employee records, benefits administration, payroll and tax management, and time and attendance tracking. Employee records should include all relevant information, such as contact details, job title, department, and compensation. Benefits administration should include the management of employee benefits, open enrollment, and compliance reporting. Payroll and tax management should integrate with other systems and automate the payroll process, including tax calculations and deductions. Time and attendance tracking should allow for the management of employee schedules, time off, and attendance records.

2.) Recruiting and Onboarding

An HCM system should make it easy to manage the recruiting and onboarding process. Applicant tracking should include resume parsing, candidate screening, and interview scheduling. Background checks and compliance management should be built-in to ensure compliance with local and federal regulations. Electronic signature and forms should be available for new hire paperwork, and onboarding tasks and checklists should be available to ensure that new hires are set up for success.

3.) Performance Management

An HCM system should provide a robust solution for managing employee performance, including goal setting, employee appraisals, succession planning, and professional development tracking. Goal setting should allow employees to set and track their goals, while employee appraisals should provide managers with the tools they need to evaluate employee performance. Succession planning should enable managers to identify and prepare key employees for leadership roles. Professional development tracking should allow employees to track their progress and identify areas for improvement.

4.) Time off and Leave Management

An HCM system should provide an automated solution for tracking and managing time off and leave, including vacation, sick, and personal time. Request and approval workflow should be built-in, and compliance with local and federal regulations should be ensured. More advanced workforce management features could be included in your HCM system's time & attendance module to support things like scheduling, shift swapping, shift differentials and job costing.

5.) Reporting and Analytics

An HCM system should provide real-time data and reporting that is essential for making informed business decisions. Dashboards and key performance indicators (KPIs) should be available, and customizable reporting and data export should be supported. Compliance reporting should be built-in to ensure that businesses are meeting their legal obligations. Advanced Human Capital Management platforms should have the ability to offer predictive analysis related to turnover and employee flight risks.

6.) Collaboration and Communication

An HCM system should provide employees and managers with a self-service portal that allows them to access information, request time off, and communicate with HR. Employee and manager portals should provide employees with access to their HR-related information, such as benefits, time off, and pay information, and should also include a messaging system for communication between employees and managers. An HCM system should provide mobile access to its features, with a mobile-responsive design that ensures compatibility across all devices. A mobile app for employees and managers should be available.

7.) Compliance and Learning Management

Compliance is a critical aspect of HR management, especially for companies that operate across multiple states or countries. An HCM system should provide built-in compliance tracking to ensure that your company is adhering to legal regulations and industry standards. This should include compliance reporting, tracking of employee certifications and training, and automated notifications to renew or update compliance-related records.

8.) Integrations

A Human Capital Management should also offer an open architecture and modern integration capabilities allowing the system to integrate with many 3rd party applications. The most common integrations an HCM system will need to support are integrations with accounting platforms (ERP systems or general ledgers) and integrations with insurance carriers for medical, dental, 401K and more. Additionally, most buyers want to integrate with some of their existing 3rd party HR tools, such as a standalone Applicant Tracking System or a background check vendor.

9.) Security and Compliance

An HCM system should provide robust security and compliance features to protect sensitive employee data. Data encryption should be used to protect data, and role-based access should be implemented to ensure that only authorized users have access to sensitive information. Compliance with data protection laws, such as GDPR and HIPAA, should be ensured, and auditing and reporting should be built-in to monitor access and detect potential breaches.

10.) Technical Support and Implementation

An HCM system should provide comprehensive technical support, training, implementation and project management, upgrades, and maintenance. Technical support should be available to assist with system setup, troubleshooting, and maintenance. Training should be provided to ensure that employees and managers are able to use the system effectively. Implementation and project management should be available to ensure that the system is implemented on time and within budget. Upgrades and maintenance should be performed on a regular basis to ensure that the system stays up to date with the latest features and security updates.

In conclusion, an HCM system can provide a comprehensive and integrated solution for managing all aspects of the employee lifecycle. When evaluating an HCM system, it's essential to look for key features such as core HR functionality, recruiting and onboarding, performance management, time off and leave management, reporting and analytics, collaboration and communication, mobile access and integration, security and compliance, technical support and implementation. It's also important to ensure that the system fits the specific needs of your business. Be sure to research and evaluate different HCM systems to determine which system is the best fit for your organization.

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Meet the Author

Brett Ungashick
OutSail HRIS Advisor
Brett Ungashick, the friendly face behind OutSail, started his career at LinkedIn, selling HR software. This experience sparked an idea, leading him to create OutSail in 2018. Based in Denver, OutSail simplifies the HR software selection process, and Brett's hands-on approach has already helped over 1,000 companies, including SalesLoft, Hudl and DoorDash. He's a go-to guy for all things HR Tech, supporting companies in every industry and across 20+ countries. When he's not demystifying HR tech, you'll find Brett enjoying a round of golf or skiing down Colorado's slopes, always happy to chat about work or play.


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