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What are the Differences between HCM and Talent Management?


People are a company's most important assets. HR directors often take responsibility for those assets through strategy as well as administrative activities intended to maximize their business' human capital. At the strategic level, many must work to implement the complementary but unique insights gained from Human Capital Management (HCM) and Talent Management (TM). While Talent Management is part of broader Human Capital Management initiatives, it's helpful to understand what each term means and how their specific focuses support achieving business goals.

Let's take a closer look at what HCM and Talent Management are and how companies can benefit from each one.

Human Capital Management

Human Capital Management (HCM) combines business intelligence and workforce management activities to make the most of a company's human capital. By taking a human capital management approach, companies can make the most of their people and ideas to achieve business goals, from growing market share to reducing costs. Ultimately, HCM also often involves focusing on increased productivity and better business processes.

Human Capital Management also embraces the use of technology such as time and attendance reporting and applicant tracking systems, payroll and benefits administration, and employee review software to support this approach. Integrated systems can provide managers with data needed to make strategic business decisions and can serve as the basis for developing, implementing or updating human capital strategies.

Talent Management

Talent Management is one component of a company's HCM strategy. TM concentrates on a company's people, but it's more focused on the day-to-day activities needed to ensure the success of a company's HCM strategy. Specific activities may include recruiting, leadership development, succession planning, compensation management, and performance management. The underlying question of talent management is how to recruit, retain, promote, and train a company's most talented workers.

Each area of talent management is focused solving a specific problem. What are you doing to manage performance reviews? Who is the best fit for this sales manager role and how do you locate that candidate? How do you improve your overall recruiting process? What kind of training do your leaders need? Ultimately, talent management requires a system that reveals and nurtures the most talented people throughout the company's hierarchy and across departments.

TM and HCM: Supporting a Company's Growth

Focusing on HCM and TM allows companies create an environment where there's an end-to-end cycle that makes the most of your company's talent. There's a focus on recruiting the best people for the job, training them, being clear about expectations and performance, and finding long-term opportunities for them to grow. When this process is supported by advanced technology and a strategic focus within the company, employees are more likely to have a great career experience and the business is more likely to reap the rewards of their ongoing investments in human resources.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.