The evolution of human capital

Von Lawrence D.

As organizations recognize more the value of their employees as company assets, the value of human resources is likewise becoming more important. For the more progressive companies, the job of the HR director is not anymore relegated to the department level; he or she now has a more important role to play in the corporate boardroom.

The HR department in any company is traditionally transactional in nature ? processing personnel 201 files, payroll and other employee-related processes. But as companies realize that a significant amount of money is being spent on developing their "human capital", the HR department is becoming more than just a mechanical record-keeper, and the HR director is forced to become more creative in developing schemes along the lines of human capital management or HCM.

Software companies are recognizing this evolution of HR into a more protracted concept that is HCM and have been peddling solutions that aim to automate tasks that go beyond mere record or payroll processing. These solutions aid the HR director in doing tasks such as setting performance metrics. Overall, the goal is to align HR programs with the organization goals. The message? HR has a direct effect on the company"s bottom line.

But while HCM has evolved into an industry buzzword, the larger portion of local companies is slow to adapt. Rommel Tiongco, solutions architect for SAP, laments the fact the HR is usually the last priority in a company"s IT strategy.

"Unless you come across organization where the HR head is forward-thinking, these types of HR directors are the likely champions for HCM in the organization. They will justify to the board and take ownership in the initiative," Tiongco says in an interview.


Tiongco, who has years of experience as an HR consultant, adds that most local companies aren"t even in that "transactional" phase and are still doing their HR processes manually. There are companies that have purchased point solutions to automate basic HR tasks like payroll and record-keeping.

Integration is the basic step in moving to HCM and this is a likely problem, though, for users that have "islands" of solutions in place already. The bigger software companies are trying to leverage their products to address this problem by offering not point solutions, but an entire family of applications running on a single platform. SAP, for example, carries and entire suite of HR modules within its mySAP ERP core product.

"We tell our clients that one of the first things they should do is get an integrated HR system going such that you have a single data store that feeds the entire system," Tiongco explains. "From there move along the lines where you add value to your HR practitioners from being transactional and encouraged them to do more and be more creative with their inputs."

From simple transactional processes, software allows the HR department to move into tasks like performance management which, according to Tiongco, is very popular among companies trying to move into HCM. "There is actually a law which mandates government organizations to measure the performance of their employees," he points out.

More complex

As HR becomes more complex in nature, technology is likewise adapting to these changes. HCM is now part of the bigger software family tree along with other fields like supply chain management (SCM), customer relationship management (CRM), financial information management, and even enterprise resource planning (ERP).

Nilo Poso, president of local software company Infostructure, says HCM can be essentially subdivided into three areas; talent management, workforce management and knowledge management. Talent management covers functions like leave management, recruitment and training.

Infostructure sells a suite of HR solutions called Digital HCM, which has modules that address these three areas. Among the company"s clients are Del Monte Philippines, Inc., PhilamLife and Texas Instruments, Inc..

"Workforce management is about optimizing the capabilities your people. Knowledge management is translating the tacit knowledge of your people into something explicit and allowing them to harness this knowledge through collaboration tools," he explains.

Poso adds that the rise of enterprise-wide systems have contributed indirectly to the development of HCM. "These systems provide end-to-end solutions and cuts across many processes. To allow CEOs to understand their nature, vendors like SAP and Oracle have dissected this into specific business processes like HCM, SCM and CRM," he says.