ERP HCM software functions as the core employee record, which details personnel actions, benefits administration and payroll, position management and compliance with government regulations.
"A company needs to know on a cost level how many employees they have and what it's costing them, along with turnover rates and analytics to help them make decisions and understand the essential talent that makes the organization successful," said Paul Hamerman, vice president of enterprise applications at Forrester Research.
Core components of ERP human capital management include modules for three employment management processes:
- Workforce management, including time capture, forecasting and absence management
- Human capital management, including employee records, benefits administration, payroll, position management and HR compliance
- Performance and compensation, including succession planning and career development
- Learning management, including training administration and content management
- Staffing and recruiting, including workforce planning, requisitions, applicant tracking and new hires
- Employee and manager processes
- Management reporting and analysis
Key ERP HCM functions
"Personnel management around the employee lifecycle, from hiring to promotions, transfers, and terminations, is the basic employee transaction that any system should be able to manage," Hamerman said.
Other key functional areas include compensation, bonuses and long-term executive compensation functions like stock plans, organizational and position structures, and compliance to government regulations around diversity.
Some ERP HCM modules will also handle nonemployees, such as contractors, as part of a personnel management component.
Beyond standard compensation structures, including salary grades and benefits programs, ERP HCM applications can also be set up to manage eligibility determinations for flexible spending accounts and time off programs.
"It's important to develop people in a way that is aligned with the objectives of the business," said Hamerman. "That's the strategic aspect of it, which is of critical importance. Companies that get that tend to be more successful."
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About the author: Catherine LaCroix is a freelance writer based in Portland, Ore. She covers technology used in business, education and healthcare.