What is Human Capital Management?

Posted by Deltek on October 3, 2017

What is Human Capital Management?

Human capital management is the human aspect of your business. It is all about acquiring a workforce, managing them, developing them, and getting the most out of your human capital investment. Human capital management is especially important for services firms, like government contractors, since a services business is people-intensive. Your people are your biggest asset, but also your biggest cost. So as a government contractor, managing your human capital effectively is extremely important for profit and growth.

Human Capital Management for Government Contractors

As a government contractor you face unique challenges when it comes to human capital management. Government contractors tend to be more dependent on subcontractors and face more scrutiny on labor costs. Government contractors also compete for talent with the commercial sector and as a result, turnover rates can be higher than other industries. Furthermore, many government contractors are using outdated or manual HCM systems which puts them at a disadvantage.

Although you have unique challenges, government contractors share many of the same goals as commercial enterprises. Like those in the commercial sector, government contractors want to grow the company, diversify into new agencies, operate more efficiently, protect current contracts, control costs and be more competitive.

For you to successfully achieve these goals, your competitive advantage is closely tied to your human capital. They increase your company’s intellectual property and highlight your specific areas of expertise. The collective experience your workforce has gained from previous projects represent your company’s capabilities. It also further differentiates your company from your competitors.

Human Capital Management Strategy

Developing a good human capital strategy is critical for attracting and retaining top talent. Why is that? The top two reasons great employees leave an organization are lack of development opportunities and the sense that work is not meaningful. Millennials, in particular, are much more likely to stay with an organization if they feel they’re being developed and on a growth trajectory.  How much or little you invest in training your workforce to grow their skills and career opportunity is extremely important.  

Human capital management strategies involve other factors as well. These strategies include process involvement, learning management, competency development, organizational integration, performance evaluation and system enhancement.

To learn more about these HCM strategies, download the whitepaper “Get the Most out of Your Workforce.

Align your HCM Strategy with your Business Objectives

Similar to how product-centric businesses have patents and IP to protect, as a government contractor your workforce is the “special sauce” of your firm. It’s the knowledge and expertise of your workforce that represents who you are and enables you to deliver high quality, projects to your clients. To continue to grow a positive reputation and steer your business to more innovative and profitable projects your human capital management strategy must be closely aligned to your business objectives.

Learn how to align your HCM strategies with your business objectives. Watch this webinar “Is your Workforce Strategy aligned with your Business Objectives?

The Role of Technology in Human Capital Management

Any winning strategy needs a solid foundation, and for human capital management that foundation is technology. The right HCM technology will help you create a better experience for your employees and subcontractors and improve your bottom line.

Implementing the right HCM technology will help your organization establish an environment where people are front and center, invested in and will want to stay for a long time. Government contractors that succeed in building an environment like this will find it easier to attract and retain very skilled, very experienced people which will lead to higher billing rates, higher customer satisfaction and higher profitability for the firm.

Deltek Costpoint takes a unique project-centric, industry-specific approach to HCM with everything government contractors need to run their business and manage their human capital.