Workforce Management vs. Human Capital Management: Expert HR Insights

Andrew Moran - Writer for TBR
By Andrew Moran
Nevena Radulović - Trusted Brand Reviews Editor
Edited by Nevena Radulović

Published November 21, 2022.

A business man in a suit holding out his hand with graphics of professional employee icons hovering over it

Workforce management and human capital management are generally interchangeable because they both deal with managing employees. However, when you scratch beneath the surface, you'll find that there are plenty of differences between the two management systems that should be assessed. Let's explore what they each are and how they differ.

» What about HR and talent acquisition? Learn their key differences

What Is Workforce Management?

Workforce management, or WFM, is a strategy employers use to efficiently allocate employees and resources so that companies can maximize their strengths and minimize any hiccups. This tactic typically involves tracking attendance, optimizing productivity, scheduling personnel, lowering risk, adhering to corporate governance policies, and complying with local labor laws and other government regulations pertaining to the workplace.

WFM might also incorporate other hurdles the business may need to overcome, including internal analysis, projections of workload and needed staff, and employee involvement in the scheduling process.

So, for example, when you're managing a global workforce, you need to ensure there's maximum tax compliance for where the employees are located. By doing this, you avoid financial penalties and ensure you're retaining the best of the best inside the talent pool.

» Can WFM software better your workforce management? Find out here

What Is Human Capital Management?

Human capital management (HCM) concentrates on critical administrative human resources functions within the department. HCM will address multiple obstacles today so that the firm can expect tomorrow's challenges in the following areas:

  • Administrative tasks
  • Big data
  • Data security
  • Regulatory compliance
  • Systems integration
  • User experience

From administering health benefits to staff members to maintaining employee records and facilitating payroll compliance, human capital management is all about hiring, retaining, and managing the right people so that the whole team can bolster productivity levels. HCM has transformed into an imperative feature of enhancing business value and mitigating potential HR challenges, such as employee misclassification or overtime pay.

» HCM vs. HRM: see how they differ

3 Key Differences

So, now that we know what workforce management is and how human capital management works, what are some of the crucial differences between the two systems that every company needs to know?

1. Scope of Functions

The first aspect that separates WFM and HCM is their scope of functions. While WFM maintains a specific focus on advancing business and achieving growth, HCM hones in on managing the workforce to ensure the right people are on the job.

2. Perspective on Employees

Can workforce management and human capital management complement each other? Yes, because companies can achieve a wide array of goals by combining these systems.

While HCM is terrific at monitoring the entire business and tracking employees' tenure at the firm from when they were first recruited, WFM will comb through the latest employee details, including time sheets, scheduling information for compliance purposes, and employee classification.

3. Approach to Role

Simply put, WFM is about administration and HCM focuses on economics. Both are important, but they each perform different tasks.

In other words, WFM will simplify the day-to-day tasks of paperwork, which are still critical to managing a successful company, while the purpose of HCM is to obtain a competitive advantage by optimizing and improving the economics of the organization's human capital, which can boost business value and the firm's market capitalization rate.


Businesses—large and small—can deploy a wide range of strategies and various software applications involving workforce management and human capital management. At the same time, it's important for the firm to understand the plethora of differences between WFM and HCM to make certain the company installs the correct mechanisms—like adopting payroll software—and ensures everything is optimally utilized for the benefit of higher profits and business growth.

» Looking to implement payroll software? Read TBR's payroll software reviews to find one that best suits your business.

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