Human Capital Management

What is human capital management?

Human capital management is the complete set of organizational practices to help optimize all employee-based processes. That includes recruiting, onboarding, managing and developing employees with the goal of maximizing their value to the business.

Human capital management is a concept directly linked to human resource management, but with a consistent focus on employees – with the view that employees are assets that need investment in order to maximize their value.

The practices subsumed by human capital management are focused on the need to improve specific, organizational competencies. These can be split into three separate categories: acquisition, management and development.

But how does any of this help you understand human capital management? It’s such a nebulous, all-encompassing and holistic term. Human resource management can be better understood as a decision science rather than a holistic term for generic organizational process. Think of it has, where, when and how to invest people to best support organizational needs and development.

You can view human capital management through two different processes: administrative processes and strategic/tactical.

Administrative processes

  • Benefits
  • Payroll
  • Personnel
  • Employee Portal
  • Employee information and Service center
  • Employee Self-service
  • Rules and procedures

The challenge of recruiting and retaining qualified candidates, and helping new employees fit into an organization.

Strategic/Technical Processes

  • Recruitment
  • Hiring
  • Onboarding
  • Mentoring
  • Education
  • Training
  • Performance Management
  • Workforce Management
  • Contingency Planning
  • Data, reporting and analytics
  • Expenses Management
  • Compensation
  • Disciplinary and grievance

Why is human capital management important?

Human capital management is integral in an organization’s success. As workforces and everything that surrounds them (laws, recruitment, management, retention and so on) become more sophisticated it is important that HR managers utilize human capital management bring HR functions together, making HR more efficient, effective and productive.

HCM Functions

Core HR

These are the classic aspects of any HR role. Payroll, benefits administration, storing, maintaining and updating employee data, onboarding and compliance.

Service delivery

Intranet portals, information and notice boards, employee and manager self-service and help desks.

Workforce management

Time and attendance management, onboarding, budgets and expenses management, data, reporting and analytics, workforce planning and so on.

Talent Management

A collective term for recruitment, performance management, education, training and development, contingency planning.


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