Definition
Human capital management (HCM) is the set of practices, and the software that supports them, for recruiting, managing, developing, paying and retaining employees. It treats people as an investment whose value can be measured and grown, and covers the full employee lifecycle from hire to exit.
What HCM covers
HCM brings together three groups of activity. Core HR covers employee records, organisation structure, payroll, benefits, time and absence. Talent management covers recruitment, onboarding, performance, learning, succession and compensation planning. Workforce management and analytics cover scheduling, workforce planning and reporting on cost, capacity and retention.
The idea behind the name is that skills and knowledge are a form of capital. Spending on hiring, training and retention is treated as an investment with a return, not only as overhead.
HCM suites span the whole employee lifecycle; for the first round of hiring alone, springhire's first-round screening software runs skills tests, one-way video interviews and resume scoring from one link.
HCM vs HRIS vs HRMS
The three terms overlap and vendors use them loosely. An HRIS (human resource information system) is usually the system of record for employee data and core processes. An HRMS (human resource management system) typically adds payroll and time management. HCM is the widest label, adding talent management, workforce planning and analytics on top.
In practice, compare products on the modules and workflows you need, not on the label.
Human capital management vs human experience management
Human experience management (HXM) is a term some vendors use to shift the emphasis from managing people as resources to designing the experience employees have at each stage, from applying for a job to leaving. It usually means adding employee feedback, sentiment data and personalised journeys to standard HCM processes, rather than a different category of system.
Benefits and limits of HCM software
A connected HCM system means employee data is entered once and flows from recruitment to payroll to reporting, so managers and HR work from the same records. It also makes cross-cutting questions answerable, such as how training spend relates to retention in a particular team.
The limits are cost, implementation effort and the risk that a suite's weaker modules are adopted simply because they come included. Many organisations keep a specialist tool where a process is critical to them and treat the HCM suite as the system of record.
Human capital management services and choosing a system
Human capital management services is a broad label for outsourced or consulting support around HCM: payroll and benefits administration, recruitment process outsourcing, system implementation, and advisory work on workforce strategy. Smaller employers often buy these services before investing in a full HCM suite.
When choosing a system, map your processes first, check how it handles each country you employ in, confirm what data can be exported, and ask how much configuration each module needs. A single suite that covers everything adequately may suit you better than separate specialist tools, or the reverse, depending on how much each process matters to your business.
Frequently asked questions
HCM means managing everything to do with your employees, from hiring and onboarding to pay, performance, training and leaving, as one connected whole. The term describes both the approach of treating people as an investment and the software suites that run these processes in one place.
HR is the function and its day-to-day work. HCM is a broader, more strategic way of describing how an organisation acquires, develops and gets value from its people. It is also the name for software suites that combine core HR with talent management and workforce analytics.
Human experience management, or HXM, is an approach that puts the employee's experience at the centre of HR processes. In practice it adds employee feedback, sentiment tracking and more personalised journeys to standard HCM functions. It is largely a vendor term for an evolution of HCM rather than a separate system category.
Related terms
Part of the springhire HR glossary.
