March 14, 2023


Human Capital Management (HCM) has undergone significant changes over the years, with the advent of technology and big data playing a significant role in these changes.

Automation has become a buzzword in HCM, and organizations of all sizes embrace this trend to streamline their HR processes and drive business success. The latest trends in HCM automation focus on digitizing HR processes, from payroll management to performance management and employee engagement. Automated HR processes are faster, more accurate, and less prone to errors than manual processes.

The use of people analytics is also gaining traction as it offers valuable insights into employee behavior, performance, and potential, helping organizations make better-informed HR decisions.

According to the Forbes Human Resources Council, there are nine benefits of embracing big data in human resources:

  • Improving strategic workforce planning
  • Reducing costs and giving back more to employees
  • Providing hidden talent insight, which may help organizations hire from within rather than rely on external hiring
  • Unlocking powerful insights regarding employee engagement, which can help shape company culture and identify opportunities
  • Predicting hiring needs
  • Improving employee retention
  • Enabling decision-making without bias
  • Automating processes
  • Understanding the broader HR trends across multiple organizations

COVID-19 and the increased demand for remote/hybrid work created additional demand for an accelerated rate of reliance on automation, big data, and people analytics. The rise of automation and people analytics in HCM has brought about a new era that promises to revolutionize how professionals work.

Latest Trends in HCM Automation

One of the latest trends in HCM automation is artificial intelligence (AI) and machine learning. AI and machine learning algorithms can analyze large amounts of data, such as employee data, and identify critical trends and patterns. This information can then be used to make informed HR decisions. For example, AI can analyze employee performance data and identify improvement areas, helping organizations make better-informed decisions on employee training and development.

Robotic Process Automation (RPA) software will continue to help companies move towards hyper-automation to eliminate repetitive manual work and focus more on strategic work. According to Gartner, RPA software end-user spending is projected to reach $3.4 billion in 2023, representing an 18% increase compared to Gartner’s 2022 estimate.

Another trend in HCM automation is the use of cloud-based solutions. Cloud-based solutions offer many benefits, including scalability, security, and accessibility from anywhere with an internet connection. This makes it easier for organizations to manage their HR processes and provides a platform for growth as the business expands. It also makes it easier to track data across multiple sites or implement changes without needing a tech specialist.

The use of mobile technology is also growing in the HCM automation space. Many HCM solutions now offer mobile apps that allow employees to access HR information and services from their smartphones and tablets. This makes it easier for employees to manage their HR information and complete HR tasks, such as reviewing their pay stubs, updating their personal information, and submitting time off requests.

Going forward, we will likely see continued growth in the use of AI and machine learning. Specifically, more companies will adopt payroll automation and automated analytics in HR. According to the Global Payroll Management Institute, a study by Alight published in October 2021, the use of agile cloud payroll technologies exceeded that of on-premise for the first time (62% compared to only 35% in 2019). We may also see greater integration between HCM solutions and other systems, such as ERP and CRM solutions.

The Benefits of Automation

Automation has revolutionized many industries, and HCM is no exception.  Human resources automation uses software to automate and streamline repetitive and laborious HR tasks making it easier to manage employees. Examples of HR functions and duties that are being automated include payroll, benefits management, email reminders, new employee recruitment tasks, onboarding/offboarding setup tasks, training, tax forms, contracts, performance tracking, submissions, and approval of expense reports. HR teams can increase productivity by focusing on more strategic tasks utilizing the time saved from automation. Below are a few of the benefits of HR automation:

  • Increased Efficiency and Accuracy: Automated HR processes are faster and more accurate than manual processes. For example, automated performance management processes make collecting and analyzing performance data easier, helping organizations make better-informed decisions on employee development and performance. Another example is the use of automated interview scheduling, allowing employers to pre-screen job candidates without having to book appointments manually.
  • Improved Compliance: Automated HR processes help organizations to stay compliant with HR regulations and laws. For example, automated payroll processing ensures that all employees are paid correctly and on time, assisting organizations in avoiding penalties and legal disputes. Automated performance management processes also help organizations to maintain accurate records of employee performance, making it easier to defend against discrimination claims.
  • Cost Savings: Automated HR processes can help organizations to save money. Looking at the same example above, automated payroll processing eliminates the need for manual data entry and reduces the risk of errors, which can be costly to correct. Further, AI chatbots can also be implemented within internal messaging platforms, allowing employees to easily ask about payroll issues or policies without waiting for a response from HR staff members. This, in turn, reduces HR headcount needs, which saves costs.

While the benefits of automation in HCM are numerous, there are also some potential downsides. One downside is the reduction of human interaction in HR processes. Automated HR processes may not be able to provide the same level of personalization and empathy that a human HR professional can offer. Automated processes may also not be able to respond to complex HR situations, such as disputes or grievances, as effectively as a human HR professional can.

Another downside of automation in HCM is the risk of issues arising related to data privacy and security. Automated HR processes involve collecting and storing sensitive employee data, such as personal information, payroll information, and performance data. If this data is not properly secured, it can be vulnerable to hacking and other forms of cybercrime, putting employees’ privacy and security at risk.

Predictive People Analytics

Predictive people analytics is an innovative tool in HCM that utilizes big data and machine learning algorithms, enabling organizations to make informed decisions about their workforce by analyzing data and making predictions about future employee behavior and outcomes. It leverages quantitative analyses frequently used in other business functions, such as finance, marketing, sales, and IT, placing data and analytics at the center of HR. This modern technology combines sophisticated data analysis and predictive modeling, allowing HR professionals to access real-time insights that can be used to optimize the recruitment process or strengthen the organization’s workforce.

With AI-based solutions, HR teams can visualize workforce metrics to better plan for changes in the employment landscape. Using software for predictive people analytics can lead to improved and timely 1) prediction of employee needs, 2) management of key performance indicators, and 3) HR interventions with unhappy staff members.

For example, it can help organizations identify employees at risk of turnover, determine the factors contributing to high employee engagement, and predict the impact of changes to HR policies and practices. With predictive people analytics, businesses can make the best decisions regarding investing in employee development programs, DE&I, reducing costs, increasing productivity, and creating HR strategies that improve overall employee retention and engagement.

The advantages offered by predictive people analytics should be noticed by organizations of all sizes, including small businesses. A smaller organization could use this technology to gain a competitive edge over its rivals by optimizing recruiter performance and identifying potential talent sooner than its competitors would have been able to with traditional methods alone.

Managing Big Data Efficiently Is Essential for Best-In-Class HCM Practices

In conclusion, the rise of automation and people analytics in human resource management is changing how organizations manage their workforce. The benefits of automation, including improved efficiency and reduced costs, are significant, making it essential for even small businesses to embrace these technologies and ensure they are working with the right partner for their HCM software and service needs.

Whether it is payroll management, performance management, or employee engagement, HCM software provides organizations with the tools and resources they need to manage their workforce and achieve their HR goals effectively. The right integrated software platform takes care of all aspects of an organization’s payroll and HR needs. It should be able to manage an overwhelming amount of data that is easy to use, providing the business with transparent, concise reporting, which in turn helps leaders run their business effectively.

With efficient use of big data and predictive people analytics, businesses can stay ahead of the curve in an increasingly competitive and rapidly changing HR landscape.

Contact Commonwealth Payroll & HR

The professionals at Commonwealth can help you manage and streamline your business’s HR & benefits management, time & attendance management, scheduling procedures, and payroll processes, all while helping you cut unnecessary costs and increase revenue.  They will also help you not only generate the data you need to run your business but help you manage and interpret that data to become more efficient and grow your business today and as you scale. 

Contact us today to become The Employest – The Best Employer!   


*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only. This article may contain links to other third-party websites provided only for the convenience of the reader. 

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