Human Capital Management (HCM) and Customer Relationship Management software are two distinct solutions that are designed to solve different problems.

HCM focuses on streamlining daily Human Resource (HR) processes, like running payroll, while also allowing businesses to make strategic decisions on improving workforce utilization. On the other hand, CRM emphasizes on driving businesses growth by ensuring reliable customer communication.

In this article, we will go over these two software types in detail, explore their differences and core functionalities, and discuss key factors that you should consider when choosing one for your organization.

HCM Vs CRM: At A Glance

Aspect

HCM

CRM

Core Focus 

Helping businesses simplify daily HR operations and plan for the future 

Helping organizations improve customer communication 

Main Functionalities 

Streamlines HR, payroll, and attendance processes, as well as oversees employee performance 

Consolidates customer information and communications and tracks leads 

Business Stage Fit 

Usually large to enterprise-level businesses 

Businesses of all sizes 

Primary Value 

Efficient processes and better workforce strategy 

Better customer relationships 

Implementation Time 

One to twelve months, depending on business size 

Weeks to over a year, depending on business size 

What Is HCM?

HCM is software that helps businesses simplify and manage hiring, payroll, employee learning, and more. It is designed to help recruiters empower their employees so that they can perform better and drive business growth.

A distinction we would like to make here is between HCM and human resources management (HRM), as most people confuse the two. They are similar in the sense that they both help manage tasks like payroll and employee training. However, HCM goes beyond administrative tasks and helps with strategy, for example, helping businesses revise compensation rates for different positions or designing plans for employee development that align with company needs.

Core Features Of HCM

  • Talent Management: It allows managers to manage employee performance, planning how the business is going to hire better talent in the future, and train top performers for future leadership roles.
  • Workforce Management: Helps businesses align their compensation strategy with business goals by analyzing market trends and predicting future needs.
  • Payroll Processing: Processes payroll and submits payroll taxes while ensuring local and federal compliance.
  • Benefits Administration And Planning: Lets businesses offer meaningful benefits to employees and plan how they can improve employee satisfaction.

Examples Of HCM

Workday

Workday HCM is a cloud-based solution designed for medium-to-large-scale businesses. It brings together HR, payroll, and talent management in one platform. Workday can help organizations automate their workflows and get valuable insights to improve overall workforce performance.

SAP SuccessFactors HCM

SAP SuccessFactors HCM is a comprehensive solution designed for businesses of all sizes. Just like Workday, it centralizes payroll, workforce management, talent management, and more under one roof. Businesses can use it to attract top talent, eliminate errors from payroll, and enhance overall employee productivity.

What Is CRM?

Customer Relationship Management (CRM) software is a system that helps businesses strengthen their relationships with their customers and grow their business. It helps streamline communication through multiple channels like email, chat, social media, and phone, helping sales teams manage relationships throughout the sales funnel.

Its impact reaches every department, from product development that responds to customer feedback to sales that nurture long-term relationships.

Core Features Of CRM

  • Omni Channel Support: Enables businesses to contact customers through a number of communication channels, including but not limited to social media, email, call, and chat.
  • Contact Management: Collects and stores customer information, such as emails, phone numbers, and addresses, in a centralized and easy-to-access space.
  • Lead Management: Allows managers to keep track of every lead in the system, analyze where they drop the most, and find solutions to minimize lead drop rate.
  • Reporting And Analytics: Equips teams with detailed reports and dashboards to analyze all the data related to customer interactions and make informed decisions based off of that.
  • Workflow Automation: Streamlines repetitive sales or marketing tasks to allow teams to focus on closing deals.

Examples Of CRM

Salesforce CRM

Salesforce CRM is a digital solution designed for businesses of all sizes. It fits in this category because it takes all the customer and communication data and centralizes it in one space. Businesses can also use it to automate sales and marketing processes, enabling them to drive more revenue.

HubSpot CRM

HubSpot CRM software is known for its intuitive interface and free tier, that makes it popular among startups and SMBs. It’s one of the most popular CRMs out there because of the simplicity it offers when it comes to communicating with customers and managing leads.

How To Choose Between HCM And CRM?

HCM and CRM are two distinct software categories, designed to solve different problems and come with unique features. Your challenge is to understand whether your organization requires internal optimization or external customer engagement. 

Choose An HCM When: 

  • Your priority is to streamline internal processes, like benefits administration, running payroll, and tracking employee worked hours
  • You want to focus on growth by developing your current workforce through learning programs or career counseling
  • You want to retain talent by providing a better, more comfortable environment for your employees

Choose A CRM When:

  • Your main goal is to improve customer relationships and close more leads
  • You want to have stronger analytics and reporting tools for leads, sales, and marketing initiatives
  • You want better customer data to understand user behavior and align your strategies accordingly

Conclusion

Choosing the right platform depends on what part of your business you want to focus on. If you think you have a lot of clients, but are unable to meet their demand due to a productivity issue, then you should select an HCM. If you think you have a high churn rate or a low lead-to-conversion ratio, then you should get a CRM.

In the end, the choice depends on the exact problem your business is facing. We recommend you read more on these categories, assess some software in each category, or maybe even take a demo to see for yourself which one is better for your needs.

FAQs

HCM manages internal workforce operations, while CRM manages external customer relationships.

Yes, many organizations use both to manage employees internally and customer communication externally.

Businesses focused on payroll, performance management, and employee engagement need HCM software.

Businesses focused on lead management, sales tracking, and customer support often benefit from CRM software.

Yes, though it’s more common in mid-to-large organizations, small businesses can also benefit from cloud-based HCM solutions.