Analyst Perspectives

Human capital management (HCM) offers a prime opportunity for organizations and their human resource professionals to make employee-related processes effective in engaging and retaining the workforce. Manual administrative processes often hampered HR in focusing on the workplace experience and employee satisfaction. Modern HCM applications can help them manage members of the workforce as critical assets and make continuous investment in people-related processes, deriving insights on issue such as health and benefits through analytics applied to HR information. This year we will examine attitudes and changes in how organizations approach HCM through a new research endeavor using our latest research product. We will further deepen the knowledge across six essential aspects of HCM as discussed below and outlined in our HCM agenda for 2017.

Human Resources Management Systems

Effective use of a human resources management system (HRMS) can help optimize employee productivity and workforce performance. Our research indicates that employee engagement has drastically improved through proper use of the next-generation HRMS, leading to increased satisfaction and retention of the workforce. By using mobile technology and accelerating the simplicity of self-service an HRMS can help raise the level of productivity. Our benchmark research on the next-generation HRMS finds that the dominant motivations for changing these systems are to improve business processes (for 89% of organizations) and increase workforce productivity (68%). Next-generation HRMS can address these and other issues. It also can help organizations simplify onboarding processes to reduce the time to optimal productivity for a person in a new position, whether newly hired or internally transferred. Our research finds that using an HRMS effectively can contribute to business benefits and ensure that full potential of investments in people is realized. It is a best practice is to measure your organization’s performance in human resources management. In 2017 we will develop a Value Index to compare and rate HRMS vendors and products so users can assess the value of their existing approaches and determine whether new technology is needed for their future success.

Learning Management Systems

The learning management system (LMS) provides education digitally to workers in both formal and informal methods, encouraging collaboration and engagement across the workforce. Our research agenda for 2017 will track the evolution of the LMS to support collaborative and video-based learning to help the lines of business maximize performance. Social collaboration technology enables the LMS to become a learning center that makes it easier to engage the workforce and assess the effectiveness of learning. Our latest benchmark research in next-generation learning management systems finds that the purpose of investments in learning management is to create effective workers. To prepare for such investments organizations should assess the extent of collaboration and how it can supplement learning. We will extend our existing research by conducting new research gathering continuous insights into the evolution of social media for learning in organizations. We also will conduct a Value Index on the LMS in 2017 to assess the abilities of vendors and products to meet these needs and help organizations make the selection best for them.

Payroll Management Optimization

Payroll of course is of great importance to employees, and organizations can benefit from optimizing the processes through proper use of information and technology. We believe that payroll management is vital to HCM and can be increased by unifying processes and systems that ensure it operates at maximum efficiency. Software now available makes it easier to use cloud computing that streamlines the interconnectivity of payroll with other essential systems such as HRMS, talent management and workforce management. Our most recent benchmark research in payroll management finds that organizations want payroll systems to help improve employee productivity, which they can do by providing complete information to employees. The research also recommends that organizations consider employee self-service capabilities to improve payroll efficiency. This year we will assess changes in payroll optimization through new benchmark research that will uncover key insights and best practices following the shift to the cloud computing and other advanced technological approaches. We will also assess the vendors and their products through a new Value Index.

Compensation Management

Our firm has focused for more than a decade on the importance of compensation management, examining the processes and underlying systems to that handle all forms of compensation including administration, integration and consumption of it. The value of compensation management is obvious. It is critical to the recruiting and hiring processes in determining and presenting the proper salary and increases as well as addressing gaps in equal pay for equal work and experience. Organizations must have the right level of support for not just administration but all aspects of compensation, which we call total compensation management. New applications unify compensation with processes  in finance, HRMS, talent management and workforce management for both salaried and hourly paid employees. Our benchmark research finds that few organizations (17%) have it integrated compensation management. Advances in the utilization of big data and analytics increase visibility into compensation effectiveness and can centralize these efforts. Proper investments into dedicated compensation management also can help diversity compliance, recruiting and retention of the workforce. Our research finds that the most important benefit of effective compensation is aligning the workforce to goals. The full range of compensation, including benefits, incentives and rewards, can influence the workforce behavior of an organization. One of the best practices we prescribe is to focus on outcomes for improving workforce performance. We will undertake new benchmark research on compensation management in 2017 and recently delivered an updated assessment of vendors in our 2016 Value Index for Compensation Management.

Work and Resource Management

Today’s organizations are feeling pressure to prioritize and align workers and tasks to individuals’ expected performance. It is complicated by informal activity and project management and the increasingly perceived necessity of collaboration among resources and the demand to most effectively utilize assets. We defined “work and resource management” as a systematic approach to prioritizing work and optimizing resources. It uses an integrated set of dedicated applications designed to continuously monitor and streamline processes and activities. We assert that it is imperative for organizations to streamline tasks and activities and utilize resources optimally. Assigning and managing work to perform is simplified through access to mobile technologies; the ability to immediately notify and interact with workers is well worth the investment. It can enable organizations to unify their focus on asset management, project management, portfolio management and task and activity management and improve worker self-service interactions with their assigned roles and priorities. Determining how to use the new class of applications designed for work and resource management is essential to increase worker productivity. our research makes it clear that organizations are concerned about how they manage their workforces. To improve that, a best practice is to make sure that tools’ capabilities suit the roles of users. We plan to provide new insights on work and resource management in 2017 focus on the critical issue of worker productivity. Learn more on this exciting new effort in our community.

Workforce Management

Managing hourly workers, from the shifts they desire and work to compliance with regulations across localities, challenges today’s organizations, which typically expend significant effort to manage the time and attendance of labor. Ventana Research defines “workforce management” as the set of activities and processes organizations use to manage their hourly and some salaried workforce for maximal productivity. This might sound simple, but balancing scheduling and absence management to the desires of each individual is not easy. Advances in time and labor management use digital technologies to make it easier for workers to check into work through mobile devices and proximity methods, bypassing the traditional time clock that can be a bottleneck for shift changes. New methods in using wearable computing and devices attached to the Internet of Things will introduce further innovations in ensuring the readiness and well-being of people to conduct work and avoid fatigue. Workforce management if applied properly can help optimize workforce processes through integration with HCM processes and systems. Unfortunately, our benchmark research finds that most organizations use inadequate software for workforce management. In contrast a best practice is to develop a strategy for collaboration in workforce management in which individuals can interact and optimize their efforts with other workers and managers. We will release new benchmark research in workforce management in 2017 and uncover more best practices that can guide organizations on investments to their processes and technology. Already we have released our 2017 Value Index on Workforce Management to help buyers properly assess and select vendors that best meet their organization’s needs.

Human capital management is changing rapidly through the adoption and integration of digital technology innovations that make applications more effective. Analytics continues to be ranked as the top priority for HCM for three-quarters (77%) of organizations in our next-generation HRMS benchmark research. Analytics for HCM provides insights on workers and the workforce to determine the state of operations and actions needed to be taken to ensure effective process improvement. However, the continued use of spreadsheets for HR data hampers productivity as three-quarters (76%) of organizations in our research admitted. We will further assess workforce analytics and planning  in 2017. Ranked second among technology priorities for HCM is big data. Being able to centralize and process data about employees and work to support analytics can help optimize HCM processes and also ensure efficient data preparation and integration of applications across cloud computing and on-premises systems.

Another priority for HCM is digital and social collaboration among workers to increase the engagement and value of the entire workforce. Making applications smarter is critical as just operating faster is insufficient for a competitive advantage. Applying machine learning and cognitive computing can help realize the vision of artificial intelligence. Automated learning through the processing of data and its context can increase understanding of how workers can be more effective. Supporting workers and managers in ways they want to interact with applications includes self-service and even chatbots, and taking advantage of mobile technology like smartphones and tablets to HRMS and LMS can help increase productivity. Finally wearable computing that can be used for notification and other actions is changing how resources are utilized to optimize employee engagement and ensure their productivity and wellness, which in turn can create a sense of commitment. Our research and insights in digital technology are highlighted at our community for further investigation.

These technological shifts are rapidly changing the HRMS, talent management and workforce management software categories. Though I barely mentioned cloud computing, it has changed the ways that software providers develop and deploy their applications, making it easier to acquire and use them. In addition many of the vendors are providing methods to not just configure but extend the applications through what is called platform as a service (PaaS), which enables organizations to fit systems to their unique industry or regulatory requirements. We will assess in 2017 the state of talent management to help determine where organizations are in unifying these processes and integrating them into the rest of HCM efforts.

Determining the next steps and prioritization of HCM is not easy for HR and business leaders, but the need for improvement is evident. Our research and expertise – instead of merely opinions – can help in this area by providing best practices and practical perspectives that augment our in-depth knowledge of the technologies, vendors and products.

Regards,

Mark Smith

CEO and Chief Research Officer