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Human Capital Management vs. Human Resource Management

The terms Human Capital Management (HCM) and Human Resource Management (HRM) are often used interchangeably by marketing professionals. However, there are some important differences between HCM and HRM that you should know about to make sure you are getting the best payroll and HR services from an accounting firm in Malaysia.


In this post, we are going to discuss the differences between HCM and HRM. Let’s get started:

What is Human Capital Management?

Human Capital Management (HCM) refers to all the essential functions involved in the management of human capital in a business. A variety of functions are included in HCM, such as applicant tracking, budgeting, performance management, employee attendance, financial analytics, and many other important business processes. 


The term HCM is much more than just human resources. It consists of all the practices and processes that an organization must-have for the management of the employee life cycle. These practices and processes vary greatly from company to company, as every organization tends to have its own business model. As a result, the definition of HCM can also vary in different organizations.

Working of HCM

HCM is an essential part of payroll services because it ensures proper management of the workforce and making sure that the company is operating within jurisdictional and legal requirements.


Moreover, the critical sector of a business is thoroughly managed and analyzed in HCM, and the HR data is used to improve business processes.

Advantages of HCM Services

Accounting firms in Malaysia offer a variety of HCM services because HCM is vital for the organization that wants to maximize the benefits of their human capital to achieve their business goals and objectives.


It is important to hire professional payroll services to ensure both the short- and long-term success of the companies.

businesswoman sitting in office

What is Human Resources Management?

Human Resources Management (HRM) systems typically include the systems that have always been used in the human resources department. However, technological advancements have greatly changed the way HRM systems work. A number of modern tools and technologies are used in the HR department nowadays to provide important payroll services like benefits administration, management reporting, and other such functions.


It is also important to note that human resources departments have also evolved in terms of their procedures and using modern tools. Most organizations now focus on human capital to build strong employment relationships and improve the performance of their staff. All of these processes are important to improve the overall business strategy.


The importance of reliable payroll and HR services cannot be understated in any type of business. Payroll services have a significant impact on every business process and department. Some of the most important processes of HRM include recruitment and onboarding, payroll management, conflict resolution, risk management, analyzing the performance of the employees, and many other important functions that are needed to smoothly run a business.


A major difference between HCM and HRM is that most experts believe that the term human resources has actually become outdated and should be replaced by human capital. The primary reason behind this is that human capital is viewed as something different and usually more important than HR. Resources are limited in some stages while capital is not. At the same time, some people and experts believe that the term ‘human capital’ is derogatory.


It shows that there is no universal consciousness on the definition of HCM and HRM. Generally, it can be said that the differences between these two terms are much more about the image that an organization is projecting rather than what is actually happening inside the business. The goal of both HCM and HR is to manage the staff, finances, payroll, and other such business functions to ensure the success of your business.

businesswoman presenting

In a Nutshell

Hence, by knowing these important differences between HCM and HRM, you will be in a good position to choose the kind of services that you need for your business as per your requirements.

Generally, if you are looking for simpler services, you should consider HRM, while an all-encompassing solution would be HCM.

Whatever your choice might be, you should always consider hiring a professional accounting firm in Malaysia to get payroll and HR services because such firms have experts who can keep up with the changing business trends.

As a result, you will not have to worry about these everyday processes and have more time to focus on other business functions.

For more information, feel free to get in touch with us.