The Evolution of HR Terminology ― From HRM to HCM 

The language used to describe the field of human resources has changed significantly over time. Today, the term Human Capital Management (HCM) is becoming more prominent internationally, often replacing Human Resource Management (HRM). This shift is not simply a matter of fashion in terminology; it reflects a more profound transformation in the role of HR and the way organizations view people. 

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Shifting Terminology Reflects Shifting Values 

The names given to HR functions mirror how people have been perceived in different eras: 

• Administration (early 20th century): People were treated as “costs,” with HR focusing on clerical tasks such as payroll and attendance. 

• Personnel (post-WWII): Emphasis was placed on “treatment” of employees through hiring, placement, and benefits. 

• Human Resources (from the 1970s): People were recognized as one of the key resources of management, with the rise of strategic HRM. 

• Human Capital (since the 2010s): People came to be seen as “capital” to be invested in, directly linked to corporate value creation and sustainability. 

This evolution shows a fundamental redefinition of people—from a cost of doing business to a source of value creation. 

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Why HCM Is Gaining Ground 

Technology 

Gartner’s Magic Quadrant for Cloud HCM Suites (2024) identifies major vendors such as Workday, Oracle, and SAP, all of which brand their systems as HCM. IDC also categorizes the market under “Human Capital Management,” making HCM the industry standard in enterprise software. 

Investor Communication 

In 2020, the U.S. Securities and Exchange Commission (SEC) amended Regulation S-K, requiring listed companies to disclose “material human capital resources” (Item 101(c)). Similarly, the EU’s CSRD (Corporate Sustainability Reporting Directive) and ESRS emphasize human capital disclosures as key reporting elements. 

International Standards 

ISO 30414 (Human Capital Reporting Guidelines) was issued in 2018, with an updated version expected in 2025. The IFRS Foundation’s Integrated Reporting Framework also includes human capital as one of the six capitals. Non-financial reporting now places human capital alongside financial measures. 

Policy and Development 

The World Bank’s Human Capital Project highlights the role of human capital in national economic growth. Its Human Capital Index (HCI) measures investments in people, with more than 95 governments participating. 

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HRM Still Matters in Practice 

That said, HRM has not disappeared. Organizations such as SHRM (Society for Human Resource Management) and many university textbooks still use HRM. Within companies, department names like “HR team” or “HR function” remain deeply familiar. 

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What the Words Tell Us About HR’s Future 

The evolution of terminology reveals how the meaning of “people” in business has changed: 

• Administration: People = costs 

• Personnel: People = subjects of treatment 

• HR: People = organizational resources 

• HCM: People = capital with investment value 

HR has evolved from clerical administration, to a strategic partner, and now to a central role in investor dialogue and corporate value creation. Going forward, HR will not only manage people but also focus on measuring human capital and linking it to sustainable growth. 

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References 

• Gartner (2024) Magic Quadrant for Cloud HCM Suites 
• IDC (2023) Worldwide Human Capital Management and Payroll Applications 
• SEC (2020) Regulation S-K, Item 101(c) 
• EFRAG (2023) European Sustainability Reporting Standards (ESRS) 
• ISO (2018/2025予定) ISO 30414: Human Capital Reporting 
• IFRS Foundation (2021) International Framework 
• World Bank (2024) Human Capital Project