What HR is
HR stands for Human Resources. It names the function of working with people inside a company: hiring, onboarding, training, review, employment records and departures.
HR is about people and process before it is about software. In a small company the owner or the accountant usually carries the function themselves.
What HRM is
HRM stands for Human Resource Management. In practice the term is used more often for the software system that carries out that management.
An HRM system pulls HR processes into one place: employee records, working time, payroll, tasks, leave requests, training and hiring. The goal is single: that data never gets copied between those processes by hand.
The HRIS and HCM labels
Two more acronyms circulate in the market, and they add to the confusion.
HRIS stands for Human Resource Information System. It is aimed mainly at storing records and reporting on them: the employee database, documents, history.
HCM stands for Human Capital Management. It is a broad label usually attached to systems built for large corporations: strategic planning, career paths, talent management.
In practice vendors use these terms interchangeably. So compare by the feature list, never by the label.
The difference in brief
Placed side by side, the terms separate easily.
- HR: a profession and a function. Working with people
- HRIS: a system that stores records. Database and reporting
- HRM: a system that runs the process. Attendance, payroll, tasks, leave, training, hiring
- HCM: the strategic tier, built for large organisations
What a smaller company needs
In a company of twenty to a hundred people an HCM-tier system is overkill: most of what it can do goes unused, and the price reflects the whole of it.
What is actually needed is the core of an HRM system. And the module needed first is almost always attendance, because pay, discipline and workload all follow from it.
So the logic is straightforward: take a system where attendance and payroll work, then add tasks, leave and hiring. Going the other way, buying a system with a hiring module but weak attendance, usually ends in buying a second product.
What to look at
When comparing software, ignore the label and ask three questions.
First, how is working time captured. Typed in by hand, or written automatically by a device and an app.
Second, does pay follow from attendance automatically, or is it entered separately.
Third, can modules be switched on in stages. Rolling everything out at once fails in a lot of companies.
In short
- HR is the function, HRM is the system that runs it
- HRIS stores records, HRM runs the process
- HCM is for large organisations and is overkill for small business
- Compare by feature list, not by the label on the box
- A system with weak attendance will need a second product later