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The Difference Between HCM and HRM

Though often used interchangeably with no universal consensus, there are differences between HCM and HRM from an historical evolution perspective.

What is HCM?

HCM is the more all-encompassing term, describing functions that are part of the strategic management of human capital in an organization from talent and applicant tracking to time and attendance and analytics. It also includes budgeting, performance management, and onboarding as well as .

How HCM Works

difference between hcm and hrmManaging the implications of a distributed workforce includes state and county specific, jurisdictional, and legal requirements. Each critical area of the business is managed and analyzed along with core HR data that is collected and provided to management to sustain effective decision making.

What is HRM?

HRM systems encompass the elements known historically in human resources information systems focusing on the core payroll (originally and oftentimes called HRIS or Human Resources Information Systems.) Additional technology systems used to manage HR functions are included under this umbrella such as benefits administration, employee self-service, and management reporting.

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Benefits of an HCM Solution

HCM is critical for organizations that want to maximize the impact of their human capital to help realize their overall goals and objectives. Choosing a vendor that supports your HCM strategy both philosophically and technically is key to an organization’s success. Integrated HCM provides all-encompassing tools over single function HRM solutions.

Consolidation of HR with Business Strategies

Human Resources has well moved beyond transactional processes and procedures. Human capital both in terms of the employment relationship as well as intellect capital has become the broader focus for organizations, consolidating Human Resources with overall business strategy. HCM vendors play a critical role in partnering with organizations to understand their human capital mission and achieve their overarching goals.

Now that you know the difference between HCM and HRM, you can determine which is ideal for your business based on your needs, whether you’re looking for something simpler like HRM or something all-encompassing like an HCM solution.

Summary:

1. 1.Human Capital Management has an ambiguous meaning but many associations, while Human Resource Management Systems has a definite meaning.

2. 2.Human Capital Management is more of an approach and a strategy compared to Human Resource Management Systems, which is the specific tool to Human Capital Management.

3. 3.Human Capital Management can refer to the approach as well as the tool (which is also a computer program like HRMS), while Human Resource Management Systems only refers to the tool being used.

4. 4.Human Capital Management is bigger and more involved in all aspects of Human Resource compared to Human Resource Management Systems.

5. 5.Human Resource Management Systems is more related to the computer side of Human Resources. Human Capital Management is more related to “how to do things.”