USA - English German - Deutsch Arabic - عربي Spanish Korean - 한국어 Australia - English New Zealand - English Singapore - English
Request a demo

What is the difference between HCM and WFM?

Workforce Management VS Human Capital Management (HCM) – What’s The Difference?

What is the difference between HCM and WFM

Exploring the Key Differences Between HCM and WFM

The words Human capital Management (HCM) and workplace management (WFM) are frequently employed interchangeably, however there’s a subtle distinction in the terms. HCM encompasses all aspects and processes that are involved in managing the work force of an organization as well as WFM is an aspect of HCM that concentrates in the strategic and effective control of this workforce.

What is the difference between HCM and WFM? This article will examine the distinctions in HCM and WFM and highlight their distinct functions and the advantages they bring.

Table of Contents

The difference between HCM and WFM

What is the difference between HCM and WFM?

What is the difference between HCM and WFM? Differentialities in HCM as well as WFM include:
Human Capital Management (HCM)
  • Focus: Human Capital Management views employees as assets (capital) whose value is measurable and whose value in the future can be increased through investments. It is a combination of HRM functions, but puts a more emphasis upon strategic direction.
  • Goal: The objective for Human Capital Management is to create and manage an organization’s workforce in order to maximize the possible return from investments on human capital.
  • Scope: Human Capital Management covers the acquisition of talent, general management and optimization of the workforce. It includes managing the workforce, talent management training and development as well as succession plans.
Workforce Management (WFM)
  • Focus: Workforce Management is more focused on operational aspects and focuses on the day-to-today management of company’s employees. It is about ensuring that the appropriate number of employees with the required skills are in the proper place at the appropriate time to support the organization’s immediate operational requirements.
  • Goal: The main goal of Workforce Management is to optimize the efficiency and productivity of the workforce by taking into account the cost of labor, compliance, and satisfaction of employees.
  • Scope: Workforce Management includes employee scheduling time tracking and time-off tracking, as well as attendance management, as well as forecasting labor demand.

What is Human Capital Management (HCM)?

Human capital management is an approach to business and an array of tools that control human resource departments, such as pay, benefits and compensation as well as recruitment, learning and development, and many more. Human capital management could be used to refer to the software that HCM professionals employ to simplify HCM-related tasks.

Human capital management includes an array of tasks that are human resources. The professionals in this field search in the direction of improvements to the business strategies to attract employees, for example making a more attractive recruiting program, or providing employees with individual learning opportunities.

What is Human Capital Management (HCM)

Components of Human Capital Management

Human capital management encapsulates many strategies for companies that deal with people resources or development of the workforce. As an HCM professional, you’ll be involved in areas such as:

  • Workforce planning: Planning for the workforce involves analyzing the company’s personnel requirements and ensuring that the employees are equipped with the necessary skills to meet the company’s goals.

  • Compensation planning: The process of planning compensation decides how much people will be paid to ensure that their work is attractive to new recruits, yet is competitive enough to support the bottom line of the business.

  • Employee lifecycle: The term “employee” or lifecycle is the period of time an employee spends within a company, from onboarding and hiring to exit and retirement interviews.

  • Employee engagement: Engagement in employees is the art of finding strategies to help employees stay engaged and engaged in their work and happy with their work.

  • Learning and development: Development and learning provides your employees the opportunity to improve their abilities. It’s in line with workforce planning because you can design the training program to address any gaps in skills you discover.

Benefits of Using Human Capital Management

Human capital management has the potential to offer a wide range of advantages to companies that range from increasing the growth of their business to ensuring compliance. These are the main advantages in greater detail:

  • Gaining data to inform decisions: Human Capital Management software allows you to collect and analyze the data of employees from one location, providing an insightful report. With this data, tools inside HCM provide forecasting capabilities that help employers make better decisions regarding the scheduling of employees, engagement with employees and many more.

  • Boosting company growth: When an organization expands in terms of acquisitions, additions to locations and employees, cloud-based software will adjust and grow with the business to improve their HR processes, and help the company manage more employees and increase the amount of information.

  • Attracting and retaining talent: HCM software can help improve the ways companies draw and interact with their employees, thereby aiding in retention of staff. It provides a single platform with tools that employees are able to easily access information of their pensions, pay and benefits.

  • Increasing profits: Workflows that automatize and take over previously manual processes could cut down the cost of labor while allowing employees to concentrate in areas of growth for the business.

  • Making data more secure: HCM software is cloud built and is created to be 100% secured, and comes featuring multiple layers of security and security alerts to help in preventing data fraud and security breaches.

  • Staying compliant with regulations: Cloud based software keeps businesses updated with the most recent updates. Both worldwide and locally-based monitoring capabilities aid companies in keeping up with changing rules.

What is Workforce Management?

Management of the workforce can be described as a strategy for human capital and a set of integrated solutions which maximizes productivity, enhances efficiency, reduces risk and ensures compliance with evolving laws and regulations pertaining to labor. Sometimes, it’s referred to as WFM. As you’ll discover below, many of the tasks associated with WFM can be handled by HR and people management professionals.

Workforce management was first introduced from call center operations. It was a method to boost efficiency and increase productivity and it was successful. In fact, it worked so well it was expanded into all sectors and led to demand for a different type of technology called “workforce management software”.

Components of Workforce Management

The key components of WFM include:

  • Scheduling and forecasting: This involves scheduling and planning employee hours of work and forecasting their requirements for labor to ensure that the company is fully constantly staffed.

  • Time and attendance tracking: This involves tracking working hours and ensuring compliance with labor laws and regulations.

  • Leave and absence management: This includes managing the time of employees off work, including holidays, sick leave along with personal and family time all while ensuring that staffing levels are not lowered.

  • Labor budgeting and forecasting: It involves making estimates of labor costs, putting together a budget and forecasting future labor requirements to help control costs and maintain optimal level of staffing.

  • Performance management: This involves setting goals for performance and expectations as well as providing feedback. It also involves performing regular evaluations of performance to help employees develop their skills and realize their maximum potential.

Each of these elements are essential for effective management of the workforce, and they are all in sync to help companies optimize their workforce, and ultimately reach their objectives.

Benefits of workforce management

Workforce management can benefit companies in many ways. Here are a few of the major benefits that businesses reap when they implement WFM procedures.

  • Cost reduction: Payroll is a significant expense for many businesses. If businesses make sure they use every penny to their best utilization, they will be able to reduce unnecessary expenses. With precise employee scheduling and precise workforce forecasting companies can reduce overstaffing and unnecessary overtime, and ensure that each employee performs in the most efficient way possible.

  • Strategic planning: A good workforce management system can provide insights into trends in the business as well as performance analytics. It can serve as an opportunity to optimize strategies. With WFM it is possible for businesses to ensure they have the correct number of employees on the job at the appropriate time as well as analyze company trends that are in relation to efficiency (like revenues per employee) and draw on other data to develop lasting improvements. Additionally, companies can use WFM principles to prepare for retirements and resignations, ensuring they will always be able to draw the best talent.

  • Improved productivity: WFM principles like workforce allocation and monitoring of performance improve productivity and help ensure that employees are working in the appropriate position for their abilities. If employees aren’t performing at their best Managers can quickly find training opportunities or jobs that could be better suited to the individual. In addition, employers can evaluate the performance of their teams against similar businesses to determine if they have to modify their processes.

  • Enhanced employee satisfaction: Workforce management is a way to ensure the balance of workloads and a consistent schedule by means of processes such as forecasts for staffing, which assure that team members are given plenty of notice of their next working schedule and that there are enough employees on any given shift. This ensures predictability in the lives of employees, enabling them to have a better lifestyle and reduce the risk of burnout.

Common HCM and WFM Software Solutions

There are many HCM as well as WFM software solutions that are available. The most popular solutions are:
  • Workforce planning software: The type of software aids businesses in planning for their future workforce requirements.
  • Scheduling software: This kind of software assists businesses in creating schedules that meet the demands of the company with the ability of their employees.
  • Time and attendance tracking software: This kind of software is designed to help businesses keep track of employees’ attendance and time.
  • Human resources management software: This kind of software is designed to help businesses manage the performance of employees and their data.

HCM VS Workforce Management Software: How to Choose The Best Solution?

Making a decision among HCM Software or Workforce Management software requires a complete understanding of your business’s requirements. If you don’t have this information, don’t look! After that, you’ll determine the features that are most suitable for you. Then, you’ll look over the information about the company before you finally puff! You’ve got it, your trusted assistant in managing.

  1. HCM software, your complete solution designed to handle every aspect of an employee’s lifespan within an organization from the time of recruitment until retirement. HCM solutions typically contain modules for onboarding, recruiting and onboarding, performance management, learning and development succession planning, HR management and compensation analytics.

  2. Workforce Management software, which helps you focus on the operations of running your business’s workforce. It includes tracking work hours and scheduling, attendance absence management, job forecasting in addition to compliance monitoring. WFM systems are usually essential in businesses that have hourly-paid employees, where scheduling and compliance with labor law, and tracking time are crucial.

Both HCM as well as WFM systems are intended to streamline and improve human resource processes. But they also support you in various aspects of human resource management.

Frequently Asked Questions

Workforce Management (WFM) optimizes the scheduling of employees and improves operational efficiency as Human Resources (HR) handles recruiting, training, and employee policies. WFM is focused on day-to-day operational tasks; HR oversees broader workforce management.

Labor management is focused on maximizing the performance of workers and their tasks, such as scheduling and productivity. However, workers management is a broad and strategic approach that includes the forecasting of staffing needs, developing employees and aligning the goals of workforce management to business requirements. Labor management is an aspect of workforce management.

Request a Demo