human capital management (HCM)

This definition is part of our Essential Guide: Talent management system essential guide
Contributor(s): David Essex

Human capital management (HCM) is an approach to employee staffing that perceives people as assets (human capital) whose current value can be measured and whose future value can be enhanced through investment.

An organization that supports HCM provides employees with clearly defined and consistently communicated performance expectations. Managers are responsible for rating, rewarding and holding employees accountable for achieving specific business goals, creating innovation and supporting continuous improvement.

In the back office, HCM is either a component of an enterprise resource planning (ERP) system or a separate suite that is typically integrated with the ERP. In recent years, the term HCM system has begun to displace human resource management system (HRMS) and HR system as an umbrella term for integrated software for both employee records and talent management processes. The records component provides managers with the information they need to make decisions that are based on data. Talent management can include dedicated modules for recruitment, performance management, learning, and compensation management, and other applications related to attracting, developing and retaining employees.

Like HRMS, HCM software streamlines and automates many of the day-to-day record-keeping processes and provides a framework for HR staff to manage benefits administration and payroll, map out succession planning and document such things as personnel actions and compliance with industry and/or government regulations. While now nearly synonymous with HRMS, HCM systems usually go beyond these basic HR functions by adding integrated talent-management features.

This was last updated in April 2015

Next Steps

Read expert Mary E. Shacklett's in-depth explanation of the three categories of HCM tools and how they can benefit your organization. Then read her HR software purchasing considerations advice to help determine what your organization requires from an HR tool and learn how to choose the best HR software tool to suit your organization's needs.

HR duties evolve due to human capital management software

Human capital management software gets endorsement from Oracle CEO

Choosing the best ERP software for your organization


HCM vendors launch cloud-based stores for HR apps


HCM marketplace spurs choice and eases integration of applications

Continue Reading About human capital management (HCM)



Find more PRO+ content and other member only offers, here.

Join the conversation


Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

How often does compliance and productivity clash? Do we have any notable examples?
What software does your organization use for human capital management?


File Extensions and File Formats

Powered by: