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What are the Differences between Human Resources and Human Capital Management?

What are the Differences between Human Resources and Human Capital Management?

When it comes to finding the right way to manage a company, many people are looking to implement either methodology from human resources or human capital management. Many people are familiar with the former model of employee management because it has been in place for quite some time. However, most people are not familiar with the second management style, and some people even find the title of this methodology rather offensive because it seems as if people are being equated to the amount of money they make for the company. There are many differences between human resources and human capital management, though.

Human Resources

This type of management style has been around for quite some time, as mentioned previously. There are three, major areas of consideration that a manager in this realm handles. First and foremost, there is staffing. The job of this manager is to make sure that the right people with the right qualifications and skills are employed in positions where they can benefit the company the most. Additionally, the manager oversees employee compensation, too. This task includes a salary that fits the person’s skills and job duties as well as looking at making sure they have benefits such as health insurance and paid time off options in place. Finally, the last task for this manager is to look at providing definitions and designs for what work will be done. In other words, job descriptions must be created that are accurate to the duties and qualifications needed for specific positions.

Even though this department is relegated to making sure that the company has employees who are able to focus on filling positions crucial to making the company progress in an utmost way, it sadly falls lower on the management hierarchy than most people realize. Considering this company fills a vital role in optimizing employees to provide the most effective output for the company’s production levels, it needs to be considered on a higher tier of importance. Thankfully, recognition of this department’s importance has grown over the last few years, so it is starting to receive more recognition for its hard work. Hiring the right employee can be rather difficult, and keeping up with the needs of all employee’s benefits, compensation, and continued training can be rather taxing on members of this department. At the same time, tailoring those job descriptions is also rather time-consuming, too.

There are a few principles that people in this department are required to follow. First and foremost, it looks at people as resources for the company to make use of. In short, employees are seen as assets to the company, and it is understood that people are the lifeblood of the company in many ways, meaning it cannot function without the right employees in all positions it offers. Therefore, businesses can only find success when their employees are able to find the same. This factor touches on one, crucial facet of this department’s operation that is not noticed very well, and that is making sure training takes place. This statement goes beyond just the initial training that people need to perform when they first arrive at the company. This department also needs to be able to offer continual training that reaches beyond the initial duties employees are to complete. Job descriptions are likely to change and grow as the company branches out into new ventures or perfect current offerings so that additional training is highly important.

Human Capital Management

This type of management is different from the former example in several ways. There are many similarities, though. First and foremost, it focuses on three, distinct areas of caring for the company through employee management: workforce acquisition, workforce management, and workforce optimization. These three steps are very similar to what happens in the former example as it provides administration over staff, benefits issuance and maintenance, payroll services, and portals that employees can use for self-service situations.

As suggested previously, some people find the title of this management style rather offensive. When most people think about capital, they automatically think of money because the two terms are usually considered to be interchangeable. In this case, employees are seen as a form of wealth production for the company. Alternatively, this management style makes employees seem like they are a resource, an asset to the company.

While the former focuses on making sure that people have the qualifications at the beginning of their hiring process to fill a given role, the latter looks at how to reduce the costs of constantly having to hire new people. It looks at how to retrain and retain employees more so than the former model does. It looks at labor trends in a given market and attempts to keep up along the way. The method in which this option operates is also more clearly defined and better communicated to what the department can and cannot do. Therefore, it is also given more support and falls higher on the management hierarchy than its predecessor. Many companies, hence, are looking to change over to it in the future since the methodology seems to be more promising in looking at employees in two ways: how can the company benefit from having these employees, and how can employees benefit from working for the company. In essence, the decisions made by this department are more data driven than simply looking at empty positions and figuring out how to fill them and keep benefits and payroll moving smoothly.

In the advent of this type of employee management, new technologies have come about to help with the processes. Software now exists to combine how payroll and benefits are managed across the company, whereas in the past they were often kept separate from one another. This factor helps to reduce the amount of overhead involved in running the department, and it also opens portals for employees to manage their benefits on their own.


There are many differences between the two, but they are both standing strong as management methodologies. While the latter is rather new and a little offensive in name to some people, it is slowly coming in to replace the former option. It takes the same concepts and expands on how they can be worked better than in the latter format’s offerings.