Organizational Wellness

Engage Your Workforce With Effective Human Capital Management (HCM)

Last Updated Jul 23, 2025

Time to read: 8 minutes
Discover how human capital management drives recruitment, talent management, and workforce optimization. Unlock the full potential of your workforce today.

Right now, HR teams juggle recruiting, onboarding, development, compliance, scheduling, and performance — often with disconnected systems and shifting priorities. It’s overwhelming. And worse, it can lead to wasted time, misaligned goals, and missed opportunities to develop your people.

But it doesn’t have to stay that way.

With a strong human capital management (HCM) strategy, HR leaders can streamline operations, improve employee experience, and turn their workforce into a true competitive advantage. From talent acquisition to workforce optimization, HCM connects every people practice to your bigger business goals.

Transform your office with an approach that puts people — and strategy — at the center of everything you do.

What Is Human Capital Management (HCM)?

Human Capital Management (HCM) is the strategic approach to acquiring, managing, and developing a workforce in ways that maximize employee performance and drive business success.

It goes beyond simple personnel management. HCM is about investing in your people — and ensuring that investment delivers real value for both employees and the organization. That includes everything from recruiting and onboarding to performance management, learning and development, and succession planning.

Let’s put this in perspective: Every new hire is an investment. According to SHRM, the average cost per hire is just under $4,700. But that number balloons once you factor in training, onboarding time, and equipment. HCM strategies help companies offset those costs by accelerating onboarding, increasing engagement, and improving retention — which ultimately drives a better return on investment (ROI) from every employee.

HCM vs. HRM: Key Differences

Wait a second; human capital management sounds a lot like human resource management. And isn’t capital synonymous with resource anyway? Yup; at least according to Thesaurus.com. But that doesn’t mean that human capital management and human resource management are the same thing.

Then what’s the difference? It’s really a question of focus and scale. 

Human resource management (HRM) is all about the day-to-day operations. If you have an HR manager or an entire HR department within your organization then this is probably not a difficult concept to wrap your head around. HRM is a resource — ideally always available — to provide help to employees when needed. It likewise takes responsibility for the administrative functions associated with HR. Examples of HRM tasks and responsibilities would include ensuring compliance with labor laws, resolving workplace conflict, assisting with employee recruitment and onboarding, maintaining employee records, etc.

Human capital management is quite a bit more comprehensive, encompassing all of the functions and responsibilities traditionally attributed to HRM while also directing and overseeing the strategic operations relevant to people management. These functions include analytics and reporting and opportunities for employee learning and development. Of course, that’s only the beginning. 

What Does Human Capital Management Do?

With a clearer eye on the big picture, human capital management can move beyond the topical concerns and issues that face day-to-day business operations and start optimizing the performance, efficiency, and effectiveness of an entire workforce. 

Far from being just capital, the human employees become the central focus of strategic initiatives designed to more consistently attract top talent, more effectively onboard those new recruits, and more competently guide employees (both new and established) toward better development along their chosen career paths. As such, the core functions of HCM are generally categorized as follows:

Recruitment and Talent Acquisition

People want to work, right? Short answer: Yes. Long answer: Yes, but on their terms. 

If the Great Resignation has taught us anything it’s that people want to find the right job instead of just any job. Recruitment, therefore, is about implementing strategies to help ensure that the right jobs are being filled by the right people. The processes involved in identifying, attracting, interviewing, selecting, hiring, and onboarding employees need to be fully refined and centric to the goals of the business. 

Given that employees who receive an exceptional onboarding experience are nearly 3 times as likely to say they have the best possible job, these processes also need to be tailored toward meeting the expectations of the people on the other side of the interview table.

Hiring for quality and talent while also meeting the needs of the interviewee can be a big undertaking. Knowing how to recognize and interview for quality of hire takes on even greater significance in human capital management, and must deliver certain elements at the most opportune times to bring top talent into the workplace. This has a lot to do with the efficiency and strategy of the structure of the recruiting process itself, as well as any additional employment benefits that can help spark enthusiasm in even the stoniest of candidates. 

Talent Management and Development

Bringing in capable new talent is all well and good, but what about the talent that you already have on your payroll? Those who have committed themselves to your business have more that they’d like to be bringing to the table. If you don’t give them the opportunity to grow in your organization, they’ll find opportunities to grow away from it. Only 29% of organizations report that their employees have clear learning and development plans in place. This is a statistic that needs to change — starting in your own organization.

Talent management in HCM applies business objectives to help promote and optimize training and development opportunities within your organization. This increases the value of the employees you already have as it also aligns their roles and skills with the future needs of your business. 

Workforce Optimization and Performance

A big part of managing your human capital is managing your employees’ time and labor requirements. Budgets and schedules are a natural part of doing business, and even the best employees can create major problems if they’re not maintaining expenses or properly managing their time. 

Workforce optimization in human capital management places these factors under a microscope, providing reliable insight into how your business works. You can then apply these insights to create more comprehensive employee scheduling, forecast staffing needs, and ensure that the right skills are being applied to the right jobs and projects. And given that McKinsey reports that 58% of workers currently have the opportunity to work from home at least one day per week (and 87% would take that opportunity if it were presented), the need for effective workforce optimization and management is only going to continue growing. 

Strategy Alignment

Finally, human capital management exists to keep business goals and company vision top of mind — not only for executives and managers, but for every employee in your organization. By aligning everyone with the same, all-encompassing vision, HCM ensures that every action, process, and initiative moves the company and its people closer to success. After all, lone agents who play by their own rules are fantastic for hard-boiled detective movies, but not so much for teams who are trying to meet business goals. 

Benefits of Effective Human Capital Management

The functions listed above can help break down and categorize the responsibilities of human capital management, but the truth is that there aren’t very many (or any) aspects of HR or people management that fall outside of the HCM mandate. An effective human capital management solution brings together all relevant processes — from payroll and time tracking to talent management and global HR — to improve and inform organizational decision-making while creating the best possible employee experience. 

This makes for some fairly impressive benefits:

  • Correctly applied, HCM touches upon and coordinates every aspect of your business relevant to your employees. Which, let’s face it, is probably every aspect of your business. By making strategy and mission a key driver in employee action, your organization will enjoy the success that comes from a unified and intentional workforce.
     
  • Take a look at your business right now. Is it the same business it was three years ago? What about your employees and workforce demographics? The reality is that things change. HCM empowers your business to keep up with these changes dynamically while still ensuring that the work is being done effectively and within time and budget constraints.
     
  • Your organization is only as capable as the people you hire. Human capital management plays key roles in talent acquisition, so you can operate securely in the knowledge that you have the right employees in the right positions to help your business achieve success.
     
  • There’s not much point in hiring the best people if you can’t hold onto them. 27% of workers say work does not allow them to take time for their wellbeing during the work day, so there are a lot of reasons for someone to pack up and start looking elsewhere. HCM ensures that employees have the resources, support, direction, and opportunities they need to feel valued and get the most out of their time with the company. 

Human capital management places your employees and the strategy that surrounds their responsibilities, activities, and initiatives at the head (or capital) of your business, making their success central and fundamental to yours. 

Support HCM With a Wellbeing Program That Powers Performance

HCM systems help you recruit the right people and guide them toward success, but without support for personal wellbeing, even the best strategies can fall short. Employees can't thrive if they’re burnt out, disconnected, or overwhelmed by stress. That makes talent retention, engagement, and long-term productivity hard to sustain.

An employee wellbeing program adds vital support to your HCM efforts. It empowers people to take care of their mental, emotional, and physical health—so they can show up ready to grow. That creates real business impact. Companies that invest in wellbeing see turnover drop by up to 40% and healthcare costs fall by as much as 35%. That’s a powerful ROI for any HCM strategy.

Speak with a Wellhub Wellbeing Specialist to strengthen your HCM efforts and help your workforce thrive.

Company healthcare costs drop by up to 35% with Wellhub*

Company healthcare costs drop by up to 35% with Wellhub*

See how we can help you reduce your healthcare spending.

[*] Based on proprietary research comparing healthcare costs of active Wellhub users to non-users.

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Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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