What Is Human Capital Management? A Career Guide

Human capital management (HCM) refers to business processes that empower workers, connect workflows, and streamline daily operations within an organization. Human capital management encompasses employee productivity strategies and HCM teams' technology to organize data. Think of it as a framework to help organizations hire the right talent and manage the workforce in ways that help maximize productivity and support business objectives. 

Explore HCM jobs, how to start a career in the field, and the benefits of a robust HCM system and its components in the employee lifecycle. 

What is human capital management?

Human capital management is both a business strategy and a suite of tools to manage human resources departments like payroll, compensation and benefits, recruitment, learning and development, and more. Human capital management can also refer to the HCM software professionals use to streamline HCM tasks. 

Human capital management encompasses a broader range of activities than human resources. Professionals in this field look for ways to improve business strategies surrounding employees, like creating a more enticing recruitment program or providing employees with personalized learning opportunities. 

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Benefits of human capital management

An HCM team or manager can benefit an organization in several ways, including the following: 

• Creating a positive workplace culture

• Increasing productivity among employees

• Inspiring more innovation

• Retaining employees and keeping them engaged 

• Improving employee morale and satisfaction

• Managing employee data 

• Ensuring compliance with laws and regulations

• Enabling business growth 

• Saving costs over the long term

Defining human capital management

The definition of human capital management is a set of practices that approach human resources policies as an opportunity to improve company performance and effectively meet company goals. Human capital management goes beyond traditional human resource activities by including elements like rewarding the workforce and implementing talent management.

Human capital management is becoming increasingly important, especially as many roles are digitized and automated. With more employees working remotely and increased demand for specialized skills and workforce data, HCM teams and managers can offer comprehensive support across an organization and bring out the best in everyone. 

Components of human capital management

Human capital management draws from several company strategies involving human resources or workforce development. As an HCM professional, you will work with areas like: 

• Workforce planning: Workforce planning requires analyzing the company’s staffing needs and ensuring that the staff has the right skills to accomplish company goals. 

• Compensation planning: Compensation planning determines how much to pay people so that the work is attractive to recruits but competitive enough for the company’s bottom line. 

• Employee lifecycle: The employee lifecycle refers to the entire span of an employee’s time at a company, from hiring and onboarding to retirement and exit interviews. 

• Employee engagement: Employee engagement refers to identifying ways to keep employees motivated, interested in their work, and satisfied with their jobs. 

• Learning and development: Learning and development offers your employees opportunities to grow their skills. It aligns with workforce planning, as you can plan training to coincide with any skill gaps you uncover. 

What is the difference between HRM and HCM?

While researching human capital management, you may have come across similar terms, including human resource management (HRM). Some organizations may use these terms interchangeably, given their degree of overlap. Keep these essential similarities and differences in mind as you consider career options: 

Read more: What Is Human Resources And HR Management?

What are the pillars of human capital management?

The pillars of HCM refer to the best practices professionals follow for success. They include the following:

- Aligning strategies with organizational objectives for impactful strategic planning

- Investing in suitable technologies to streamline processes and support productivity

- Providing personalized opportunities for workforce development 

- Building a culture based on open communication and trust

HCM jobs 

To pursue a career in this field, consider a few job titles to see what aligns with your interests and experience. Below, explore three potential positions: human capital manager, human capital consultant, and human capital analyst careers.

Human capital manager

Average annual salary in the US (Glassdoor): $91,286 [1]

Job outlook (projected growth from 2022 to 2032): 5 percent [2]

As a human capital manager, you will provide employees with professional development opportunities, offer services like counseling or mentoring, create job descriptions, and find ways to support and train employees. You will help mediate employee conflicts and oversee the employee benefits program in this role. You may also provide direct guidance to employees about company policies and procedures. 

Human capital consultant 

Average annual salary in the US (Glassdoor): $112,891 [3]

Job outlook (projected growth from 2022 to 2032): 6 percent [4]

As a human capital consultant, you will advise organizations on improving their culture, leadership, compensation structures, and employee professional development. You will analyze current workforce needs and trends and use your research to determine your company's recruitment strategies. In this role, you will work with training managers and supervisors to create leadership and employee engagement strategies and conduct exit interviews with employees who leave the company. 

Human capital analyst

Average annual salary in the US (Glassdoor): $87,076 [5]

Job outlook (projected growth from 2022 to 2032): 10 percent [6]

As a human capital analyst, you will analyze an organization's current human capital management strategies, along with current market trends and management strategies. You will recommend how organizations can implement new HCM systems and help them implement changes. After gaining experience in this role, you may find opportunities to fill more advanced positions, such as director or vice president of human capital. 

Read more: How to Become an HR Consultant: Jobs, Salaries, Courses

How to start your HCM career 

If you are ready to begin this career path, follow the steps below to streamline your process:  

1. Obtain an HR education and experience.

For HCM positions, you’ll typically need at least a bachelor’s degree. Depending on your role, you may be able to find work with an associate-level degree or with certification. Degrees in human resources or human resource management are more common than those focusing solely on human capital management. In your job search, you may also find that some employers are open to hiring candidates with degrees in other disciplines, such as business or psychology. 

Taking courses or getting a credential in human capital management, such as the SPHR,  SHRM, or the ADP Entry-Level Payroll Specialist Professional Certificate, can boost your HR resume and show employers your commitment to a vibrant career in HR. Gaining entry-level experience in an HR role can introduce you to the latest HR department strategies and the HR needs of today's organizations.

2. Become proficient with human capital management software.

HCM software, sometimes called a human resource information system (HRIS) or human resource management system (HRMS), is a big part of how HCM teams operate. The software streamlines and simplifies many processes, including payroll, time tracking and attendance, performance management, record keeping, and more. 

Learning how these systems work can help you prepare for an HCM role. Examples of software that you can investigate include: 

• Dayforce HCM: includes continuous payroll, workforce management, talent intelligence, advanced HR analytics, and benefits intelligence.

• Oracle Fusion Cloud HCM: includes workforce modeling, strategic workforce planning, HR help desk, benefits, employment, career development, recruiting, performance management, and more.

• Paychex: includes payroll services, HR tools, time and attendance, retirement, health, and benefits.

• Workday HCM: includes HR management, payroll, workforce management, talent management, skills cloud, employee experience, help center, case management, and more.

Which HCM system is best?

Human capital management software is sometimes called HRIS (human resources information systems), HRMS (human resources management system), or HCM (human capital management). 

The best software for your company’s goals will depend on the functionality you need and your business objectives. HCM software like Oracle Cloud HCM boasts a wide range of features, while options like Paychex or Paycor are more specialized to a specific HCM task. 

3. Build workplace skills for HR.

In addition to learning the technical skills of human capital management, you’ll also need solid workplace skills. As you take courses and gain experience, hone your ability to collaborate with others, lead teams, mentor new hires, solve problems, and develop rapport with coworkers.  

When searching for jobs online, find out which skills employees require for various HR roles. One helpful resource is ZipRecruiter's Career Keyword Mapper, which analyzes thousands of job postings and resumes to identify frequently-mentioned skills. For example, the top skills appearing on HCM consultant resumes include [7]:

• Consulting experience

• Innovation

• Collaboration

• HCM

• HR experience

• Analysis

• Technical

• Data analytics

• Recruiting

• Auto-delivery

Having these and other in-demand HCM skills can enable you to perform key HCM functions with success, including: 

• Hiring the right talent

• Monitoring performance

• Offering training and professional development opportunities 

• Delivering a superior employee experience 

Read more: Resume Keywords: How to Find the Right Words to Beat the ATS

Improve your human capital management skills with Coursera  

Human capital management can help you create a more positive and uplifting work environment for your employees while improving business outcomes and helping your company achieve its goals. Taking online courses can be a great way to build skills related to human capital management and discover career opportunities. Explore the options below: