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Human Capital Management (HCM): Purpose & Functions

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There’s no doubt that human capital is one of the valuable assets of an organisation. In other words, it is one of the crucial factors behind an organisation’s success. An organisation that values and manages its employees effectively is likely to achieve its goals and sustain itself for the long term.

So, how does an organisation make it possible to manage its workforce effectively? Well, it’s the human capital management (HCM) process that an organisation implements to achieve its workforce management goals. This blog will discuss HCM, its purpose, and HCM software functions to help you better understand an organisation’s workforce management process. Let’s begin,

Understanding Human Capital Management (HCM) 

An organisation needs to manage its workforce strategically and efficiently to bring out the best in every employee. Thus, Human Capital Management (HCM) is the process through which an organisation develops and implements strategies to manage and maximise the value of its workforce. 

Human Capital Management (HCM) involves various HR functions such as recruitment, talent management, employee engagement, and development. The ultimate goal of HCM is to develop an engaged and high-performing workforce that drives toward organisational success. 

Human Capital Management Software

Human capital management software is a solution that encompasses features and tools designed to perform human capital management functions. It streamlines an organisation’s HR processes, centralises data, and provides insights to optimise its HR strategy.

Human Capital Management solutions have several features that help effectively manage an organisation’s workforce. Standard HCM software functions include recruitment, onboarding, training and development, workforce engagement, and planning. In addition, it is also possible to integrate HCM software solutions with ERP, a popular software for business operations. 

Purpose of Human Capital Management 

Moving ahead, let’s now find out why human capital management is necessary by diving into the purpose of HCM. While the ultimate purpose of human capital management is to achieve organisational success through workforce management, it has several other purposes, as follows.

Building a performing workforce through workforce optimisation

Human capital management’s first and primary purpose is to build an efficient workforce for an organisation. Human capital management involves building up strategies, implementing them, and measuring outcomes from the strategies implemented.

Similarly, it involves maximising the efficiency and effectiveness of an organisation’s workforce through workforce optimisation. Workforce optimisation is achieved by matching the right people to the right jobs and providing the right tools and resources to enhance productivity.

Workforce planning and development 

Workforce planning is essential for carrying out an organisation’s different functions in a timely and efficient manner. Processes such as succession planning can be crucial for achieving an entire organisation’s goals. 

Similarly, workforce development is essential for enhancing employees’ potential to achieve organisational targets. Human Capital Management (HCM) aims to properly plan and develop the workforce to carry out day-to-day operations and achieve goals. 

Talent acquisition, retention, and engagement 

Acquisition of the right person for the right job, retention of them, and engagement within the organization can be a hectic task. However, it is essential for an organisation’s growth and success. 

Another essential purpose of human capital management includes talent acquisition, retention, and engagement. HCM aims to strengthen an organisation’s workforce through investment in employee acquisition, retention, and management. 

Cost reduction and increased return on investment (ROI)

Investment in human capital can be costly, especially if it does not bring any outcomes to an organisation. From investment in human capital processes to technologies, an organisation uses ample resources to bring out the best in its workforce.

The other purpose of human capital management is to reduce costs and increase ROI from its investment in the workforce. This involves discontinuing ineffective HR processes, analysing outcomes of HR implementations, and streamlining HR processes. 

Functions of Human Capital Management 

After reviewing the purposes of human capital management, let’s examine its functions. This includes the overall function of human capital management, including the functions of HCM software that modern-day HCM solutions offer.

Core HR Functions  

Human capital management’s primary function is performing core HR functions. These include recruitment and onboarding, application tracking and screening, payroll and benefits management, and employee data management. 

Workforce Management and Development 

The other important functions of human capital management are workforce management and development. HCM involves all the necessary steps to manage an organization’s workforce properly and develop its capacity. This might be done through training and development and performance management.

Analytics and Reporting

Analytics and reporting are functions of HCM software. If used properly, they can provide valuable insights into an organization’s workforce. This function in human capital management provides data and insights into HR metrics such as employee turnover, performance, and recruitment effectiveness. 


Human capital management’s other function is ensuring that an organisation properly complies with labour laws and regulations. The use of HCM software to keep records of employees, their working hours, pay, and benefits provides support in handling grievances and compliance with HR policies. 

Ensaan Technologies: The Trusted Choice for Modern HCM Solutions

Here at Ensaantech, we believe in the power of HCM to transform businesses. That’s why we provide access to industry-leading HCM software solutions like Adrenalin and Talentoz.

These tools aren’t just about automating tasks (although they do that beautifully!). They provide insightful analytics and reporting, helping you make data-driven decisions that fuel a high-performing workforce.

Serving the Entire GCC Region:

We understand the importance of regional expertise. Ensaantech is proud to offer our HCM solutions and services across the entire GCC region, including major cities like:

  • UAE: Dubai, Abu Dhabi
  • KSA (Kingdom of Saudi Arabia): Riyadh, Jeddah, Dammam, Khobar
  • Qatar: Doha
  • Kuwait: Kuwait City

By providing local support and leveraging our in-depth knowledge of regional regulations, we ensure a smooth implementation and ongoing success for your HCM strategy.


Imagine a world where your employees walk through the door each day energised, valued, and ready to tackle any obstacle that comes their way. This empowered workforce is the key to unlocking your organisation’s true potential. And that’s the power of a robust human capital strategy backed by the right tools.

HCM is more than policies and procedures; it’s about fostering a vibrant human ecosystem. Attracting incredible talent, nurturing their potential, and sparking their passion is how you build a workforce that thrives and drives your organization’s success.

Think of Ensaantech as your partner in building an HCM strategy that gets results. Free up your HR team and save money, all while unleashing the full potential of your workforce. 

Ready to take your human capital management to the next level? Let’s have a conversation.

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