Human Capital Management

By Erskine, Alan | Management Services, Spring 2012 | Go to article overview

Human Capital Management


Erskine, Alan, Management Services


By adopting the concept of 'human capital management', managers can ensure that the large workforces, on which they depend, remain motivated and productive, but this can only be achieved by facilitating closer collaboration between operations, HR and IT professionals within the organisation.

In an increasingly serviceorientated global economy, more and more organisations have large numbers of employees working in frontline roles on a 24/7 basis. For those organisations, the workforce accounts for a large proportion of costs. The way it is managed and deployed is a critical success factor and fundamental to profitability and growth.

Talk to operational managers in these companies and they will tell you that one of their biggest headaches is getting the right people working at the right time to meet customer needs. Even when people are contracted to work shifts, it can be difficult to cover certain times, such as weekends and school holidays.

Difficult balancing act

This problem certainly affects public services. For example, a recent UK Government report highlighted that, despite the demands of the job, there are more police officers on duty on a Monday morning than on a Friday night. This situation clearly illustrates how difficult it is for some organisations to balance the needs of their customers with those of their employees.

Until now, one of the main problems has been in scheduling hundreds, sometimes thousands of staff. The sheer complexity has tended to result in a 'keep it simple' approach with all staff scheduled to cover all times of the day on a rotation or roster basis.

This produces a situation where employees have different start and finish times every week. While suiting some, it causes difficulties for a great number of people, such as parents who end up requiring highly flexible childcare provision.

Even when employees are scheduled to cover the necessary work time, late notice absences (calling in sick) can impact service levels, which is a major problem in some industries. Spare resources can be scheduled to provide contingency, but it costs a lot of money to pay people just in case they are needed.

Fortunately, a new breed of workforce management applications, which enable organisations to up their game, is now available. Paper-based systems, still used by many organisations for scheduling and allocating staff, can be replaced with software that allows more complex work patterns to be managed successfully.

The workforce management software integrates seamlessly with finance and payroll systems, providing a comprehensive and data-rich picture of human resources. This enables organisations to take a more holistic approach to the way they contract with and optimise the time of their employees. This approach is often described as 'human capital management'.

Take advantage

Surprisingly, many organisations already have much of this functionality or, at least, the potential to develop it within their existing systems. However, they are not taking advantage of it and the main reason for this situation is poor internal collaboration, especially between the operations, HR and IT functions of the organisation.

Here is a typical scenario. The organisation invests in a new HR and payroll system. The project is led by finance or HR with limited involvement from operations. The emphasis is, understandably, on achieving a system that pays people accurately. The system is also developed to provide basic HR reporting, such as headcount, employee profile and turnover. Once these two objectives are achieved, the project basically ends or runs out of money.

As a result, the organisation is left with an extremely valuable but under-utilised asset: a system that contains all the information needed to optimise the workforce. However, because of the way it has been introduced, no-one in the organisation has a full understanding of what it can do.

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