Without the right people, your business will fail. And without the right tools in place to manage your people, meeting your goals becomes infinitely more difficult, especially when a large workforce and global considerations are in play. HCM software (Human Capital Management), which is a particular type of HR software, bridges this gap by providing capabilities that support human capital strategies and activities.

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Human capital management software (commonly called HCM software) is a type of software that can assist organizations in managing and catering to their employees’ needs. It usually helps with various HR tasks, including payroll, benefits administration, and hiring and performance management.

The worldwide human capital management market is poised for significant expansion. According to Fortune Business Insights, the HCM market will be worth $32.68 billion by 2027, with a compound annual growth rate (CAGR) of 9.3% between 2020 to 2027 — solid figures for the industry.

In today’s environment, a talented workforce has become a company’s most valuable asset. Companies with the best talent are more strongly poised to dominate their markets, putting organizations that must attract this talent at a short-term disadvantage. As a result, companies are investing in human capital strategies, with the expectation of developing and retaining employees, as opposed to having to hire and train new people.

In order to meet these expectations, you need to have processes in place for attracting professionals with the proper skills, which requires a strong emphasis on talent management. HCM and talent management go hand-in-hand because in order to successfully develop human capital and foster and expand expertise within your organization, HCM needs to draw upon candidates with the right skills and aptitudes. Proper talent management can help deliver the most suitable candidates early on in the hiring process, reducing costs and ensuring targeted training that matches employee skills with your strategic goals.

At this point, human capital management software steps in to facilitate the execution of the day-to-day tasks and planning that form the foundation of your strategy. For that reason, it’s critical to choose a system with capabilities that are sufficient to support your requirements.

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What is Human Capital Management Software?

HCM software generally indicates a suite of seamlessly connected apps that enable organizations to manage critical people-centered functions and attract skilled professionals. They capture and store employee information in a comprehensive database, generate advanced analytics, provide superior insights, and manage payroll, training and onboarding.

One of the critical objectives of HCM is to optimize the return on investment (ROI) from employees while also retaining high-performers.

Furthermore, it helps businesses anticipate future employee requirements by sharing data with other external enterprise software, such as enterprise resource planning software (ERP) software.

HCM software are also referred to as HRIS (human resource information systems) or HRMS (human resource management systems), although the terms aren’t synonymous. We’ll get to that shortly.

HCM has grown as a discipline and as an industry thanks to greater emphasis on the value of human talent as a strategic priority. Companies have become increasingly aware that their most valuable asset is their human capital, and that the combined skills, training levels and productivity of their workforce can mean the difference between success or failure. In this new reality, companies have directed additional resources to workforce development and the product suites that support it.

Software vendors have responded to this market demand. Today, businesses have a wide array of HCM solutions to choose from and can unite many aspects of HCM management, making the process as streamlined and intuitive as possible.

HCM vs. HRIS. vs HRMS

The distinction between human capital management and human resource management isn’t always extremely clear, which isn’t surprising. While many analysts would argue that the two disciplines are quite different, there’s enough overlap that the terms can be – and are – used interchangeably. So a short discussion of the differences and similarities may contribute to a better understanding of HCM in its proper context.

Human resources refers to the people who make up a workforce within an organization, which can extend to imply the workforce of a business sector or an entire economy. The word resources implies “an available source that a company can utilize when needed until it is no longer available.” It isn’t limitless.

Consequently, HRM is an organizational function that manages the existing personnel activities of a company. Its tasks are more transactional and administrative in nature — payroll, employee benefits, compliance issues, reporting and so on.

Human capital, on the other hand, builds on the concept of human resources and adds a value component. Capital can grow with investment, producing more capital, and it isn’t a finite resource. Therefore, human capital is the collective value (and replenishable source) of knowledge, skills, motivation and commitment of the organization’s workforce.

HCM provides an important strategic function for the organization, focusing on professional development, performance measurement and human resource planning for future company growth.

HCM and HRM software play a complementary role in developing and promoting human capital assets. Combining the abilities that strengthen recruitment, retention and talent cultivation with typical HRM functions that deal with the operational management of payroll, benefits and recordkeeping makes the process less fragmented, leading to greater cohesion and efficiency.

HRIS, the original technology, which began as a system for managing administrative tasks, has become less common as a term. However, it offers similar functionality to an HRMS suite and still exists in the dictionary of terms vendors use to describe their HR products.

But one thing you can bank on is that HCM is more extensive than HRIS. HCM software combines all of the elements found in HRIS plus talent management capabilities. Compensation management, succession planning, learning and development, and career planning are few examples of these.

Check out our Ultimate Guide to Human Capital Management

HCM, HRIS and HRMS software are often closely linked. At a primary level, though, HCM, HRMS and HRIS might seem to be the acronyms for the same thing, but they are not the same. For a more in-depth discussion on the capabilities of each software type, check out our article differences between HRIS, HCM and HRMS software.

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Primary Benefits

A well-functioning HCM system also provides a wide range of benefits for your organization, including:

• Engage Employees: In addition to common engagement tools like eNPS, some systems incorporate advanced technology (sentiment analysis and pulse surveys) to help determine and encourage employee engagement.
• Increase Productivity: Tools incorporated in HCM suites aid productivity by identifying production obstacles, measuring individual performance and offering goal management. Having insights into employee engagement helps pinpoint areas for improvement at the organizational level.
• Make Better Decisions: Workforce insights play a central role in HCM systems. They grant managers and executives high-level and granular data analytics in strategic areas that support smart decision-making. Hiring trends, talent gaps, employee skill sets and more are available.
• Ensure Compliance: HCM software incorporates tools that help organizations adhere to industry regulations and regional laws. These features are particularly helpful for companies that operate at a global scale and need to account for multiple jurisdictions.
• Tackle Strategies, Not Tasks: A human capital management system enables you to focus on strategy rather than getting bogged down in daily operations. Tools like workforce planning, succession management and workforce analytics enable you to zoom out to the big picture. In turn, this ensures your company is on the right trajectory to achieve lasting success.
• Acquire Insight: HCM software helps organizations attain quality improvement and create people-centered work cultures by providing data and analytics. Some of its attributes may also include data visualization, advanced reporting and predictive analytics.
• Foster Talent Development: One of the most important parts of HCM software is talent development. They provide various tools to equip, inspire and engage your workforce. HCM software often includes a Learning Management System (LMS), supporting multiple learning styles, catering to your employees’ preferences, and adding different resources and learning content in modernized formats. It can also design learning plans, orchestrate assessments, grade learners, provide certificates and access matrices to emphasize learning.

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Key Features & Capabilities

HCM solutions offer many focused applications that target and assist in critical areas, such as:

• Core HR functionalities, like applicant tracking, talent acquisition, onboarding and recruitment management
• Ongoing human capital development via continual training
• Performance management that supports setting goals and tracking progress
• Workforce management
• Continuing to focus on the employee as an individual that can offer true value to the business
• Time and expense management
• Compensation strategy and planning
• Learning and development
• Organization visualization
• Reporting and workforce analytics
• Workflow tracking
• Employee self-service
• Benefits administration

Human capital management software helps achieve these goals, allowing HCM to function as a strong partner that reinforces the comprehensive goals of an organization. HCM systems provide a broad toolset to enable and support these strategic areas. Features include:

• Workforce Management: Often a module or integrated set of tools, WFM handles operational activities including PTO, scheduling, attendance tracking, exit interviews, workflows and non-PTO absences. It also provides more strategic features like labor cost distribution and productivity analysis.
• Talent Management: This aspect of HCM software provides tools that help organizations develop a skilled workforce and position employees (and by extension, the company) to be successful. It gives insight into employee performance, aids career planning, helps executives create succession plans and visualize their impact, and facilitates employee goal setting.
• Business Intelligence: A system equipped with BI capabilities makes it possible to run analysis and track metrics. It offers dashboards that surface your most critical data points, helps spot underlying trends and more. Most importantly, BI tools make complex data user-friendly.
• HR Integrations: Some human capital management software vendors provide all-in-one suites, with separate modules to handle operational activities such as payroll or benefits administration. However, other products focus on specific areas and rely on integrations to fill the gaps.
• Core HR Operations: Some HCM vendors provide all-in-one suites, with separate modules to handle operational activities such as payroll or benefits administration. However, other products focus on specific areas and rely on integrations to fill the gaps.
• Time And Expense Management: This functionality allows your staff to post timesheets and expense requests efficiently and securely without requiring manual paperwork or authorization applications.
• Organization Visualization: Visualization modules enable you to develop and monitor your company’s strategic vision in innovative ways like modeling scenarios. Suggests cutting or expanding workforce or training staff more in preparation for a new product launch.
• Workflow Management: You can create customized HR workflows for various tasks and accomplish workflow functions automatically with minimal human intervention, thereby saving time and resources.

Challenges HCM Software Solves

• Inability to find qualified applicants
• Discovering suitable candidates
• Lack of employee enthusiasm
• Lack of real-time, HR-related information
• Cumbersome and inefficient HR operations
• Difficulty managing talent or high turnover
• Competition in the talent-scarce market

Best HCM Software Systems

With a better understanding of how HCM software is positioned to help businesses, you can begin to explore the market for products that are the most viable fit for your needs. Our analysts have compiled a list of leading products to get you started.

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Workday HCM

Workday HCM provides a full suite of capabilities that enable mid-sized and large enterprises across any sector to carry out human capital management functions. The cloud-based platform offers general employee onboarding, goal management, recruiting with configurable workflows and benefits management.

Workday’s time tracking tool integrates with its payroll, HCM and project management apps, ensuring data is accurate. It supports payroll audits via built-in analysis tools, which let you investigate alerts at a granular level. For a more in-depth look, watch our Workday review.

Global workforce data visualized in Workday HCM.

Key Benefits

• Trend Identification: With the ability to dive deep into analytics, you can identify trends within your company. These insights help you set priorities and understand the best places to invest resources.
• Big Data Analytics: The Workday Big Data Analytics feature enables you to build a more accurate picture of your organization by blending Workday data with data from other business systems. Off-the-shelf templates are provided for key HR areas such as workforce diversity and payroll-cost analysis.
• Unlimited Pay Groups: The system’s calculation engine offers unlimited groups and payroll runs. Its data retrieval mechanism lets you recalculate payroll in case of errors, and security settings support sharing the information so other departments can review before the payroll is completed.
• Succession Planning: Your company can be set up for long-term success with tools that help pinpoint employees who are well-suited to enter leadership roles and then provide the training they need to fill those positions.
• Global Compliance: If you operate globally, the system will keep you informed of regulatory changes so your organization can comply with all local laws.

Top Features

• Human Resource Management: This module supports activities throughout the employee lifecycle. You can view full-time and contingent workers, configure business processes and gain talent insights through multiple organization types, such as cost center or company. It enables collaboration on reorganization projects and lets users access org charts from any device.
• Payroll: Specifically designed for U.S. and Canadian businesses, this solution grants full control over data, costs and processes. You can run reports for groups or individuals and drill down to specific workers or time periods if needed. An auto-refresh element updates data on the compliance dashboard whenever new tax changes go into effect, removing the need to stay on top of updates manually.
• Workforce Planning and Analytics: You can tackle multiple workforce strategies with role and position segmentation, capacity and capability gap analysis, data integration from sources like CRM software or ERP software, and talent pool identification. Adaptive Insights Business Planning Cloud offers cross-functional and individual task management, workflows and collaboration tools to aid the planning process.
• Talent Management: This toolset facilitates the management of your employees from onboarding to career development. Insights reveal employee skills, performance and areas of development, while goal management helps employees achieve goals in line with personal and organizational priorities.
• Reporting and Analytics: You can analyze workforce demographics, identify risks, stay on top of trends, conduct succession planning and spot opportunities, with the option to dig deeper to see underlying causes for the data you’re tracking. The platform also helps find at-risk employees with predictive retention analysis.

Product Limitations

• There’s no ability to remove features that don’t apply to your organization.
• It doesn’t offer shift scheduling capabilities.
• The candidate grid filter doesn’t have an AND/OR feature and only supports searching with one word.

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SuccessFactors

SAP SuccessFactors, the flagship HR product from tech powerhouse SAP, consists of an interconnected suite of modules that can be deployed on an as-needed basis. This modular design allows companies of all sizes to tailor the solution to their business requirements. The cloud-based modules include core HR and payroll, talent management, and employee experience management.

The software places strong emphasis on the employee experience. To that end, it helps employers recognize and reward employees, and it combines data insights with worker feedback to understand workforce sentiment. In turn, this allows companies to enhance the experience their employees have.

One of the workforce views in SAP’s digital boardroom feature.

Key Benefits

• Live Insights: The ability to view real-time insights facilitates smart, relevant decisions.
• Automation: The self-service component incorporates automation, improving the quality of your data and ensuring HR services are delivered in a timely manner.
• Globalization: Deployed in more than 200 countries, the software supports a wide range of localization services to streamline global operations. It also provides international regulatory compliance using a proactive approach so you’re always up to date with the latest standards.
• Preconfigured Integrations: You don’t have to struggle with the complexity of setting up and maintaining complex integrations with other business applications across your company, whether they’re SAP solutions or third-party products. This capability also saves time and reduces integration costs.

Top Features

• Employee Experience Management: SAP SuccessFactors deliver tools that aid what they refer to as HXM (human experience management). To accomplish this, the module offers benefits optimization, dashboards, guided actions for managers, surveys, exit feedback to reduce attrition, reports and more. An AI tool called Text iQ provides insights into underlying issues and the reasons behind employee feedback.
• HR Analytics and Workforce Planning: With embedded intelligence, the platform provides data-based insights across HR processes. This lets you make smart decisions that produce results and improve workforce performance.
• Learning Management: Employees can gain or enhance skills via learning paths that are personalized to their specific roles or interests. This solution also lets you design training so it fits your organizational practices and needs. Measuring tools are available so managers can gauge employee progress and results.
• Core HR and Payroll: A good option for companies with a global workforce, these solutions deliver work visa management, service delivery, document management, payroll processing and more.
• Talent Management: SAP SuccessFactors helps you manage each process and stage of the employee lifecycle, from hire to exit. The talent management suite supports hiring and onboarding, compensation, performance management, employee learning and development, and more. Using it, you can track productivity, engagement and performance.

Product Limitations

• The software isn’t embedded with AI capabilities for talent sourcing.
• Users can’t view or download payment slips.
• Goals, once submitted, can only be edited, not deleted.

BambooHR

Next up, BambooHR. Targeted at small and mid-sized businesses, it offers cloud-based capabilities that enable companies to handle general HR tasks, onboarding, performance management, compensation and more.

Tools include reporting, customizations, job posting, offboarding, leave tracking, employee self-onboarding and an app marketplace. BambooHR provides enterprise-level data security, with measures in place to ensure data protection.

A native app for Android and iOS devices lets employees view and request time off as well as see how much vacation time they’ll have at any given future date. They can also access the company directory to contact coworkers via email, phone or messaging.

BambooHR’s company performance metrics.

Key Benefits

• Prebuilt Reports: The library of reports includes EEO-1, headcounts, workforce metrics and more. You can share reports with any number of people. Custom permissions ensure sensitive information is accessible only to those who should see it.
• Mobile Hiring App: Recruiters can handle a range of tasks from anywhere, thanks to this feature, available for iOS and Android. It offers auto-populated email templates, contact info, job posting, and the ability to review resumes, respond to candidate messages and collaborate with team members to share feedback and candidate ratings.
• Peer Reviews: The performance management add-on facilitates feedback and insights between company peers, such as managers. It uses questions that are short and objective to compile feedback on specific employees.
• Overtime Calculation: If you pay workers for overtime, this built-in feature takes the hassle out of calculating extra work. It accounts for regulations across all 50 states in the U.S. and automatically calculates payroll accordingly.
• Workflow Completion Bar: Helpful for monitoring workflow status, this feature lets employees and administrators see where requests stand. It shows which tasks and approvals are finished, and who made the approval.

Top Features

• Payroll Hours Report: This feature accounts for all types of pay (general, PTO, overtime) during a given pay period and syncs with the system’s time tracking component to ensure accurate data. There are also timesheet approvals baked in to simplify managers’ jobs.
• Employee Satisfaction Score: You don’t have to guess how employees feel about their jobs. The satisfaction score leverages eNPS in tandem with an intelligent feedback analysis tool to determine what factors lead to employees feeling valued. Feedback is anonymous to encourage employee participation.
• Performance Appraisal: How are your employees performing? This feature helps answer that question. Available with the performance management add-on, it lets employees and managers set and track goals. It has automated notifications so managers and employees stay up to date on progress, along with reports that measure progress over time and include any relevant notes.
• BambooHR Inbox: Part of the mobile app, this feature enables managers to manage time-off requests from their phones. Any pending requests will appear in the inbox to be approved or denied, with the option to add notes.
• Approval Workflow: You can customize workflows for data entry and approval processes to streamline tasks, with the ability to assign people to fill in information. Up to five users can be added in the workflow approvals to make sure those who need to be involved are included.

Product Limitations

• The system doesn’t offer in-house payroll management and processing.
• There’s no ability to customize templates.
• The ATS component doesn’t let you conduct keyword searches for resumes.

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ADP Workforce Now

Recognized as one of the long-time leaders in the HCM software world, ADP offers a slew of products intended to meet different human resource needs. ADP Workforce Now is the company’s all-in-one suite that delivers core HR, payroll and talent management, with the option to add on workforce management and benefits.

It also provides organizations with workforce insights, data analytics, reporting tools and market benchmarking via ADP DataCloud. ADP Workforce Now is a cloud-based solution suitable for companies of any size, across a broad spectrum of industries.

Summary of payroll data in ADP Workforce Now.

Key Benefits

• Data Visibility: The platform lets you measure metrics like workforce demographics and compensation against industry benchmarks to better understand where your company falls short and where it performs well. Equipped with machine learning, it also delivers data and highlights company-wide patterns across key areas such as payroll, benefits and talent.
• Automated Attendance Tracking: Capabilities like geolocation and calendar syncing with Microsoft Outlook reduce time spent on tracking attendance. It’s easy to view and rearrange shifts, request PTO and clock in/out. Automations for timecard approvals, alerts, overtime calculations and more further reduces task load.
• Benefits Analytics: You can run premade reports to get data on enrollment activity, eligibility status and benefit plan summaries, as well as see enrollments for employees and their dependents. A comparison tool provides deeper analysis.
• Simplified Tax Management: The system has tax tools and compliance baked in, which can handle tax deductions and filings at the local, state and federal level. A built-in error detection component ensures accuracy, and it offers reporting and analytics. Finally, no matter whether your company operates solely in the U.S. or globally, you can access expert support to ensure compliance and meet regulations.
• On-the-Go Access: With the ADP mobile app, you can take work with you wherever you go and perform tasks like printing pay statements, viewing health plan info and managing attendance.

Top Features

• Payroll: A range of tools make payroll processing easier and less stressful. To start, compliance and tax management considerations are built in, and the system will automatically inform the necessary agencies when new hires begin. The system can also detect errors, and analytics are available via dashboards.
• Workforce Management: Streamlined time tracking is possible thanks to automation and real-time analytics, so managers and employees spend less time on manual tasks. Integration with payroll ensures all data is accurate so employees are paid appropriately.
• HR Management: With this feature, you can report on workforce data, execute hiring processes, maintain an employee database, track compliance, view employee status changes and more. It comes with out-of-the-box hiring templates, a self-service portal and rigorous data protection features.
• Talent Management: You can build a career site, post content like open positions and videos to job boards, share new jobs via social media and automate the recruiting process. It offers compensation management and has tools and workflows to support employee performance. You can also run reports to determine time-to-hire and cost-to-hire.
• Benefits Enrollment: The benefits platform facilitates employee enrollment and supports admin processes to help control costs and drive greater employee retention. Capabilities include ACA audits, IRS reporting, preconfigured and custom reports, and integration with other business platforms, including ERP software. One handy element is the benefits practitioner dashboard, which provides visibility into costs and is customizable.

Product Limitations

• The system can’t generate reports that exclude terminated employees.
• There are no generic reports available for admins.

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Paycor

Positioned as a solution for small and mid-sized businesses, Paycor delivers an array of HR tools via its cloud-based suite. Payroll, core HR, benefits and learning management are a few of its offerings, and it provides a mobile app to support flexible work. There are multiple pricing tiers, but to get the most out of the system, it’s best to opt for the Essential or Complete package.

Paycor’s capabilities span the employee lifecycle, enabling companies to optimize their workforce and ease manual tasks through automation. A marketplace supports clients with industry-specific apps, access to business partners and developer tools for building custom apps.

View of a company’s employee structure in Paycor.

Key Benefits

• Tax Compliance Assistance: A team of experts is available to provide support for compliance issues, so you can rest easy knowing you’re following industry regulations. The software also facilitates full tax compliance by maintaining accurate payroll records.
• All-in-One Reporting: Because Paycor is built as a unified platform, you can pull in data from its HR, payroll and time modules into one report for greater visibility and accuracy. Reports are customizable, and sharing settings let you distribute them as needed.
• Mobile Punching: You can support a dispersed workforce by setting up location maps to verify punch-in locations. This lets you view where employees are when they punch in to ensure they’re doing so at the appropriate locations.
• Personalized Training: The system offers learning paths to provide employees with individualized training based on their roles, skills or career development interests. Admins can divide learners according to teams, departments or other groups. It offers scheduling for instructor-led training as well as course completion metrics.
• Benefits Analytics: Get the most out of your benefits with this feature. With real-time analytics, you can see the number of enrollments and view which plans employees are choosing so you can make smarter decisions about the types of benefits that are best to offer.

Top Features

• Recruiting and ATS: Features like a branded career page, customizable applications, interview scorecards, job board posting, integrated background checks, texting and more help streamline the recruiting process and support candidate engagement. Custom reports and preconfigured dashboards let you dig into data without wasting time. It also provides compliance reporting.
• Learning Management: Paycor’s LMS lets your company build and distribute on-demand courses, which learners can access via desktop or mobile devices.
• Reporting and Analytics: Using these tools, you can identify trends, compare performance against industry benchmarks and make data-driven predictions. A visualization tool makes it easy for non-technical users to gain insights.
• Payroll: The software incorporates tax calculations and can integrate with a general ledger, ensuring payroll data is accurate. You also get access to resources like reporting tools and form templates.
• Time and Attendance: A central dashboard simplifies managing time off requests, while an overtime dashboard lets you track overtime expenses for locations, managers, departments and more. You can comply with wage or hourly work laws and manage attendance exceptions. It offers several time-entry options, including mobile, clock and kiosk, and includes alerts as well as messaging capabilities.

Product Limitations

• Schedules can’t be modified after the fact. Any changes require deleting the schedule and creating a new one.
• The time tracking tool doesn’t have a break or pause setting that employees can use for things like lunch breaks.
• The 401(k) code has to be entered manually.

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How We Choose Products

Our team of writers and analysts at SelectHub is committed to giving you the best recommendations based on our data. To make our list, products had to meet two criteria:

1. Closely match the topic
2. Earn a top-5 analyst score in our selection platform

Our analyst scores are based on an in-depth research process using primary and secondary sources. This includes SelectHub Analyst Briefings, direct communication with vendors, and reviewing materials such as user reviews, product brochures, specification sheets, case studies, user manuals, and technical documentation.

Our platform’s Scoring Engine processes the research and computes the analyst score. The score also factors in platform settings such as industry and company size.

Learn more about our research methodology and editorial standards

Final Thoughts

Today, companies are investing heavily in human talent, elevating the function of human capital management. Demographic changes, technological advances, globalization and the shrinking of a talented workforce are a few contributing factors. Such a focus on the employee as an individual has been empowering, creating greater opportunities for personal and professional growth. And when executed well, it can reap great rewards.

Companies with a diverse workforce require vendors to offer solutions that merge the needs and activities of all areas of managing the employee life cycle, pushing them to invest in an HCM platform.

The rise in demand for HCM software could also be attributed to the widening skill gaps in some job markets, prompting more companies to improve their talent acquisition and employee retention operations. With a deeper understanding of the overall advantages of investment in human capital development, demand for HCM software is also increasing. According to the Prodigy Resources Hiring Guide, 75% of CEOs believe that they can’t recruit individuals for high-skill tech positions. 89% of recruiting executives said they discovered “few to no” qualified candidates for high-skill roles. These difficulties highlight the necessity for mechanisms that optimize human capital investment.

However, the shift toward HCM has also made it imperative to choose software that can support a range of complex requirements. The list of products we covered is only the tip of the iceberg. We encourage you to download our free comparison report, which will let you customize your industry, desired features and more, then compare the best-matched products.

What top features are you looking for in HCM software? Are you running into any problems with your search? Drop us a comment – we’d love to answer any questions you have!