What is HCM Software and What Does HCM Software Do?

HCM Software

Introduction of HCM Software?

HCM Software focuses on employee staffing by treating people as valuable assets (human capital) whose potential and worth can be enhanced through strategic investment and development.

What is human capital management (HCM)?

You need to identify and select talented individuals who can become valuable assets to your organization. Understanding talent gaps and leveraging HCM software will help you achieve top performance.

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Human capital management software is designed to help manage and maintain an organization’s workforce, automating processes like payroll, performance reviews, recruiting, and training.

HCM, also known as HRMS or HRIS, manages human resources.

Structures Of HCM

The structure of an HCM system requires configuration to match organizational setups and their relationships. It is divided into three main sub-structures:

  1. Enterprise Structure
  2. Personnel Structure
  3. Organizational Structure

We will discuss each above-mentioned heading concerning the configuration & generic definitions.

1. Configuration of Enterprise Structure

Enterprise Structure includes Company Code, Personnel Area, and Personnel Subarea. Before using HCM, it needs to be configured with the necessary modules as a top priority.

2. Configuration of Personnel Structure

Personnel Structure_Basically includes Employee Group, Employee Subgroups and Payroll Accounting Area. The configuration of Personnel structure means aligning your dashboard as per your requirements. It includes the Configuration of HCM module requirements with your own dashboard and personal structure.

3. Overview of Organizational Structure

The Organization Structure includes Organizational Units, Jobs, and Designations. Before using HCM software, gather detailed information about organizational needs for functionality and automation.

Personnel Administration (PA)

The Personnel Administration Section is fatherly sub-categorized into various things that you must be aware of all. Here I have discussed each of them one by one.

1. Transaction Codes and Infotype Maintenance

You must be aware of the Transaction code and info type maintenance individually and the time it’ll take for implementation. You should be aware of that, what will be the scenario of the implementation of transaction codes?

2. Configuration of Features – Default Values

Integration of features modules with the default value of HCM software. The default value of all required data and configured with a thematic assembling.

3. Configuration of Personnel Number Range and Feature NUMKR

You must know the Configuration of personnel number range and features of Human Capital management.

4. Configuration of Master Data Infotypes

All configurations with master data infotype. And how to arrange data with the help of infotypes.

5. Configuration on Evaluation Basis

Evaluation of all HCM Modules’ Configuration & their core basis requirements.

6. Configuration of Infogroups and Actions

The Configuration of all info groups and their actions, accessibility rights that you need to give them as per client’s requirements.

7. Configuration of Dynamic Action

Make sure the configuration of the dynamic action of the HCM System is on your organizational structure.

8. Configuration of Screen Modification

While configuring the dashboard of Human Capital Management System you need to configure the Screen & adjust its’ modification as per requirements.

Organizational Management (OM)

Organizational management is the most common way to manage small & modern businesses. The executive management is an approach in which the managers break down all operations into different phases.


This division gives a clear picture of organization desired goals, and the fields that need to be improved. These unambiguous portray of destiny raise the organization response time towards internal & external uncertainties.

Organizational Management includes 4 basic things that are:

  1. Planning
  2. Organization
  3. Leadership
  4. Resource Control

In the context of Human Capital Management System (HCM) structure, organizational management has its own importance that cannot be neglected.

Organizational Management (OM) is part of configuring the Enterprise Structure in HCM. Before setting up HCM, understand OM objectives, relationships, and key configuration details.

  1. Organizational Management Objects
  2. Relationships Among Organizational Management Objects
  3. Organizational Management Info types, Transaction Codes and Plan Version
  4. Configuration of Organizational Management Interfaces (Simple Maintenance, Expert Mode & Organization Staffing)
  5. Configuration of Evaluation Path
  6. Integration between Organizational Management and Personnel Administration
  7. Configuration of Number Ranges and Creation of Custom Objects

Time Management (TM)

Time Management (TM) is essential for organizational progress, helping meet project deadlines effectively. Human Capital Management (HCM) systems offer tools to track schedules and estimate the time needed for projects, supporting better time management.

With the help of Human Capital Management System (HCM) manager became capable enough to allot each employee a time slot as per their required work effort to complete a project.

Good time management (TM) provides clear the vision & target goals. Time Management (TM) tools usually include Activity Logs, To-Do Lists, Action Programs, Prioritization of Task and Task Scheduling. There are some points that belongs HCM System’ time management (TM) configuration these are:

  1. Configuration of Public Holiday Class and Holiday Calendar
  2. Configuration of Personnel Subarea Grouping for Work Schedule
  3. Configuration of Daily Work Schedule and Period Work Schedule
  4. Day Types
  5. Configuration of Work Schedule Rules and Work Schedule
  6. Infotpye 0007 and Feature SCHKZ
  7. Configuration of Time Data Recording and Administration (Absences – IT2001)
  8. Configuring Time Data Recording and Administration (Absence Quotas – IT2006)

Payroll (PY)

Payroll encompasses the total compensation paid to employees, including salaries, wages, bonuses, and taxes, managed by the accounting department.

Key points for Payroll system configuration include:

  1. Configuration of Payroll Area and their Feature
  2. Payroll Control Record and Payroll Process
  3. Payroll Period and Period Parameter
  4. Configuration of Pay Scale Structure and Features
  5. Configuration of Custom Wages types and its Tables
  6. Payroll Run and Remuneration Statement
  7. Display Payroll Result

Reporting

Human Capital Management (HCM) system is enlisted with efficient feature of accurate reports generation system. It includes:

  1. Employee Salary Reports
  2. Employee Allowances Reports
  3. Employee Deduction Reports
  4. Employee Progress Reports
  5. Employee Attendance Reports

Overview of HCM

A strong Human Capital Management System (HCM) offers considerable advantages for businesses of all sizes, from small startups to large corporations.

With its many advantages, organizations are increasingly adopting HCM to enhance their market presence.

HCM’s automated review features provide a clear overview of workforce functions, ensuring smooth information flow across various locations.

In essence, HCM software fosters growth for small and medium enterprises (SMEs). Embrace these innovations today!