In today’s competitive business ecosystem, it can be difficult to maintain a productive and motivated workforce. As companies grow and evolve, they are at risk of outgrowing their human resources departments, creating a chaotic and unpredictable workplace. Human capital management (HCM) systems take advantage of digital technology to improve employee satisfaction and productivity.


What Is HCM Software?

Human capital management software, or HCM software, is a new digital solution designed to improve the strategies and operations of human resources (HR) professionals and managers.

HCM solutions such as Zoho People allow HR to manage workforce planning and attendance tracking and offer a variety of tools. Any organization implementing HCM software solutions should expect an increase in productivity, retention rates and employee engagement.


What Is the Difference Between HCM and HRM Software?

The difference between human capital management (HCM) and human resource management (HRM) is in the roles they perform. HRM is a set of strategies based on hiring and managing employees, while HCM aims to increase human capital value and employee satisfaction.

A human resource management software solution focuses on day-to-day HR activities, while a human capital management solution goes further and aims to maximize the return on investment (ROI) of a company’s workforce.


Who Uses HCM Software?

The main users of HCM software are companies that want to enhance their human capital. Companies implementing this software in their workplace operations include Apple, IBM, Toyota, AT&T, Adobe and Google.

Although HCM solutions are primarily used by companies with more than 1,000 employees, they are also beneficial to companies with smaller workforces. A company with 20 employees can benefit from HCM systems just as much as a multinational corporation. If you are not sure whether a HCM solution is the best choice for you, you can consult with Zoho experts.


When Do You Need HCM Software?

The implementation of HCM software becomes necessary when a company starts performing expansion operations. The larger a company grows, the more useful workforce management software becomes.

For example, a start-up with two employees that suddenly has 20 employees cannot expect its previous management strategies to work the same way. Moreover, human resource needs and responsibilities increase exponentially as new branches open and new employees are brought into the business.


What Are the Benefits of the HCM Software?

Benefits of the GCH software:

  • Improve employee satisfaction
  • Assess employees’ performance
  • Create training and development opportunities
  • Better time management
  • Profitability
  • Compliance with rules and regulations
  • Increased data security

1. Improve Employee Satisfaction

Employee retention is one of the biggest challenges facing HR in the hiring market. In fact, the Microsoft 2021 World Trend Index report recognizes that more than one-third of employees are considering leaving or changing professions (source).

Acquiring and retaining talented employees is becoming a higher priority, and improving the quality of employee engagement with their work is the primary workforce retention strategy.

HCM software can provide tools to monitor employee engagement. Tools such as point-in-time surveys and employee recognition programs can help HR better understand worker’s needs. Also, incentive programs can be put in place to help employees improve their abilities, while adding to their personal skills.

Retention of top employees can also be improved by HCM systems such as Zoho People. Employee data can be monitored by HCM solutions to look for signs of employee discontent, giving companies a chance to improve the situation before moving on.

2. Assess Employees’ Performance

The data collection and analysis abilities of HCM software allow a company to perform a comprehensive analysis of all employee data. Organizations can use HCM solutions to perform productivity analysis of all areas of their business, while being able to access detailed information about a particular department, team or individual.

The use of analyzed data allows business leaders to design new workforce planning strategies and make more accurate decisions on critical processes such as succession planning. Also, attendance management can be improved with the software’s attendance tracking functionality.

3. Create Training and Development Opportunities

Growth opportunities are very important for today’s employees. If workers are not engaged, they will eventually become unhappy, which will eventually lead to their resignation. Training and development options are a great way to get workers more involved in their work and increase the value of a company’s human capital.

A HCM solution can be used to provide employees with opportunities to develop their personal and professional skills. It can provide workers with information about opportunities for improvement while tracking individual employee performance. Some HCM systems also come with apps designed to access the software from smart devices.

4. Better Data and Time Management

HCM software provides an integrated solution for many underlying business processes. Adopting them can help automate tasks and organize employee data and productivity. Relieving HR teams of mundane manual processes allows them to improve workforce growth and tackle other issues.

If a company does not implement HCM software, all employee data is likely stored in spreadsheet software. Performance reviews are probably maintained by managers without a centralized database. In addition, payroll processing that does not use the payroll systems functionality of HCM software may not be properly connected to time tracking software.

GCH technology allows all of this information to be accessed from one place and updated automatically. This approach allows for a faster and more accurate information system, which translates into a more efficient use of time and resources. Tasks such as compensation management become much easier with the use of a centralized database.

5. Profitability

HCM systems are not only useful for HR professionals, but also for IT teams. There is no need to create, update and maintain on-site proprietary software or other IT infrastructure, as the HCM software can perform these tasks. Software updates and enhancements are provided by the software vendors, without the need for a company to use its resources to manage the expansion.

Learn more about Zoho People

6. Compliance with Rules and Regulations

Municipal, provincial and federal governments regularly change public policy, which can affect the way HR operations work. Due to the cloud-based nature of HCM systems, updates can be deployed instantly and seamlessly. This helps companies who adopt HCM solutions to remain legally compliant simply by implementing the software.

7. Increase Data Security

Data is a company’s most valuable asset. It must be handled with care. Security should be a major concern for any company that decides to digitize its operations. When working with HCM systems, individuals within a company should only be allowed access to data that is relevant to them in order to keep the information safe from prying eyes.

Critical information, such as employee social security numbers, is kept secure in HCM solutions. While a CEO may be able to access salary and performance information for everyone in the company, managers can only review data for their departments.

Modern HCM software is powered by dynamic dashboards and other data visualization tools. Executive dashboards provide managers with critical workforce information they can use to identify developing trends in the workplace and make more informed decisions.

Business Intelligence Guide


How to Choose the Best HCM Software?

To choose the best HCM software, there are 4 key factors to consider and evaluate:

  • Usefulness
  • Features
  • Adaptability
  • Integration


Digital solutions are good as long as they are useful. If software doesn’t provide an intuitive user experience, any benefits it offers will be obsolete. A HCM solution may claim to have great functionality, but if the interface is so complex that employees have trouble using it, it becomes a downside rather than a benefit.

The best HCM solutions offer constant updates to improve user experience. These include user interface changes to evolve with design trends and access to new features. In addition, technical support should be available to assist in the implementation of new features and benefits.


The smart choice of HCM software may be limited to the features it offers the company. Vendors may choose to innovate in different ways, but buyers should still look for the following core features:

  • Workforce Management
  • Resource management
  • Performance Management
  • Training and Development
  • Simplified Employee Experience
  • Compensation Management
  • Automation
  • Workforce Analysis


HCM software must be able to adapt to change. While it can handle most of a company’s information for them, the storage space can be easily increased or decreased at the company’s request.

When managing expansion operations, physical and digital storage can be a major concern. The cloud-based nature of HCM solutions can lighten the load and space occupied by information by making it independent of any physical document or database.


It is extremely important to ensure that the chosen HCM solution can be integrated with other business critical systems. This is essential not only for HCM systems, but also for any other software solution that a company may implement. Apps that should be able to partner with HCM systems include ERP systems and payroll software.

IT support is usually able to answer questions about compatibility issues, but any other questions can also be handled by the software vendors. When acquiring a new HCM solution, buyers should consult the vendor’s list of out-of-the-box implementations, as it can provide useful information about what can be achieved by that particular software.


Zoho People

Your company needs HCM software? Zoho People is an app in the Zoho suite that allows companies of all sizes to manage, record and monitor the behavior of their human capital. If you have any questions about Zoho People, feel free to contact our Zoho software experts.

Book a consultation