It's Time to Question the Intelligence of Your Human Capital Management System
If human capital management (HCM) systems aren't intelligent, businesses may experience reduced employee engagement, decreased productivity and increased resource use. The solution? HCM systems that are intelligent by design, leveraging artificial intelligence and machine learning to learn as they go and deliver actionable, accurate results.
How intelligent is your human capital management (HCM) solution?
While this may not be the first question that comes to mind when HR teams think about HCM tools, the answer has profound implications for business operations, employee satisfaction and staff retention. Consider recent poll data from Gallup, which found that just 30 percent of workers were "fully engaged" in Q1 2024 — down 3 percent from the end of 2023. Without strategies to address ebbing engagement, organizations risk losing key staff at critical moments.
Intelligent human capital management tools offer new paths to improving the employee experience and streamlining HR processes. Meanwhile, typical, less intuitive systems can leave teams feeling frustrated as they navigate the evolving nature of work. In the second piece of our modern HCM series, we'll look at five signs your HCM solution may be falling behind, address the business impacts of less intelligent systems and explore the future of HCM.
Three signs your HCM solution could be smarter
When it comes to HCM solutions, what's "intelligent" may not be immediately apparent. For example, your systems could offer some integration with existing IT stacks, provide limited self-service options for staff and allow HR teams to access basic employment and benefits data on demand. The result is a system that gets the job done but leaves significant room for improvement.
Still trying to figure out if your HCM platform gets a passing grade? Here are three signs your system may not be smart enough.
1. Lack of personalization
Traditional HCM system menus and workflows are often built around a fixed template. Despite having varying needs depending on their personal and professional information, every employee is presented with the same experience with the same options. navigate rigid, prefixed menus that require understanding and remembering options and paths rather than organically finding the services or solutions they need. Both leaders (and employees) should be provided with information personalized to their roles and needs – within the systems they're already working in – not requiring them to seek it out.
Consider an HR manager who needs to ensure a new hire onboarding plan is put in place. Rather than having to navigate their system to finish completing the necessary steps, an intelligent system could prompt the manager upon logging in and provide them with personalized reminders and "To-Do's" right on their home screen that quickly guide them to the proper documents and workflow.
When evaluating the intelligence of an HCM solution, "The evidence to look for is the inability to provide personalized recommendations, limited predictive analytics capabilities, and difficulty in automating repetitive tasks," said Yesh Chandrasekhar, senior vice president of product development for ADP.
2. Absent actionable analytics
HCM solutions create and store significant amounts of data. However, not only is the amount of data important, but how effectively it can be used to support employees and business needs is what makes all the difference. Standard tools may offer only limited predictive analytics capabilities. If your HCM platform feels like a repository of information, rather than a sophisticated system that helps employees make decisions, it might be time to evaluate your solution's intelligence.
Internal organizational data, and external workforce data, can become more meaningful within an HCM system that can take this information to intelligent enough to drive workflows and offer timely suggestions for those using it. Beyond that, it can help improve current practices and inform future policies by aiding leaders in connecting the dots and discovering emerging trends.
For example, increased overtime might be connected to challenges with a specific system used across business departments. Without a big-picture view, however, businesses could lack this actionable insight.
3. Limited automation
Managing human capital has become increasingly complex. From navigating customized work schedules to helping facilitate compliance with local, state, national, and international labor and payroll laws, even newer systems may struggle to keep pace. Automation and integration help ensure critical tasks are completed accurately and on time. Less intelligent systems, however, may include limited automation capabilities or can't integrate automation application programming interfaces (APIs) or applications.
From fixed to flexible — check out the first article in our three-part series about modern HCM.
The business impacts of absent intelligence
Traditional HCM systems, primarily designed for record-keeping, are no longer sufficient.
"The lack of intelligence in HCM tools can significantly impact business operations," said Chandrasekhar. "It can lead to inefficient decision-making due to limited insights, higher expenditure of time and resources on routine tasks, and reduced employee productivity and engagement."
Examples of common business impacts include:
Inefficient decision-making
Without combining current and historical data from multiple sources, the view is limited. While leaders can see what's happening across HR operations, they don't know why. This limitation can lead to scattershot or stopgap methods that may address obvious symptoms but don't identify or resolve root causes. Businesses can risk missing valuable insights if the data they collect isn't adequately evaluated and used to drive decisions.
User frustration
Rigid, static processes can frustrate users. For example, if employees must navigate multiple menu layers each time they want simple answers to HR questions, they may start avoiding the platform. And if the answers they find aren't accurate or specific, the result may be reduced employee performance as they look to fill knowledge gaps using other sources.
Managing multiple disconnected systems
If a single, full-suite tool can't keep pace with the speed of business development, organizations are forced to look at multiple solutions and vendors, and ultimately have to manage more complexity than expected. For example, they may consider hiring more HR staff to help employees navigate cumbersome processes. They may also investigate purchasing additional apps or services capable of collecting data from current HCM systems and analyzing them for actionable insight.
Intelligence by design: The future of HCM
The future of intelligent human capital management isn't a plug-and-play solution. It's not a new connector or a redesign of existing systems. Instead, it's moving toward a single, all-in-one solution that's intelligent by design, with artificial intelligence (AI) and machine learning (ML) engaged. While these terms are related, they're not the same.
AI speaks to the method, while ML takes care of the means. ML, without intelligent AI, won't have the impact you might think. ML algorithms underpin the larger goal of AI. ML specifies the targeted datasets and lays out the rules AI will use to arrive at conclusions. The result is a necessary duality: Alone, ML lacks focus, while AI lacks function. Together with the right data, these technologies can help deliver a modern, more intelligent HCM experience.
When an AI-driven system has a foundation of trusted benchmarks and is attuned to your organization's data, it can collect and analyze inputs from multiple sources to create a custom-built plan. Sources may include employment records, earned certifications, performance reviews, completed projects, and expressed career interests.
By combining this data, for example, secure, AI-empowered HCM tools can create custom-built career plans that offer specific recommendations for advancement. Or the HCM system could offer chatbots to enable employee self-service, improving decision-making with predictive analytics or automating routine tasks to let HR teams focus on strategic initiatives.
Next steps toward intelligent HCM
"Organizations can transition from current solutions to more intelligent alternatives by first assessing their existing HCM capabilities and identifying gaps," says Chandrasekhar.
"They should then develop a phased implementation plan, invest in change management and employee training, and gradually introduce AI-powered features while gathering feedback. Continuous refinement and optimization of the new system are crucial for success."
The future of human capital management has arrived, and it's intelligent.
