In enterprises that tend to have corporate philosophies or missions, and where there are underlying values that shape their corporate culture, HRM becomes a part of the strategy to achieve their objectives. In some types of enterprises such as ones in which continuous technological change takes place, the goal of successfully managing change at short intervals often requires employee cooperation through emphasis on communication and involvement. As this type of unit grows, “If there is strategic thinking in human resource management these units are likely to wish to develop employee-relations policies based on high individualism paying above market rates to recruit and retain the best labor, careful selection and recruitment systems to ensure high quality and skill potential, emphasis on internal training schemes to develop potential for further growth, payment system designed to reward individual performance and cooperation, performance and appraisal reviews, and strong emphasis on team work and communication … In short, technical and capital investment is matched by human resource investments, at times reaching near the ideals of human resource management.
Shift of personnel management to HRM took place in three stages:
1. Records and Administration
2. Accountability Regulations
3. Competitive Advantage
1- Records and Administration
In first stage the primary activities, which were carried out by personnel department, were, Planning Company picnics Scheduling vacations, Enrolling workers for health-are coverage, Planning retirement parties These concerns include how to mange layoffs, address reduced employee loyalty, create a well trained highly motivated work force that can deliver higher quality and productivity, mange and increase diverse workforce and contain health care cost.
2- Accountability Regulations
During this stage primary framework of rules and regulations started emerging tin the organization. In 1970s, the job of the HR manger was to keep their companies out of court and in compliance with the increasing number of regulations governing the work place. In the 1980s HR mangers had to address staffing costs related to mergers and acquisitions and downsizing. The economic issues related to an increasingly global and completive workplace characterize the 1990s. Beside these concerns
3- Competitive Advantage
The aim of this shift stage is from merely securing compliance to the more ambitious one of winning commitment. The employee resource, therefore, becomes worth investing in, and training and development thus assume a higher profile. These initiatives are associated with, and maybe are even predicated upon, a tendency to shift from a collective orientation to the management of the workforce to an individualistic one. Accordingly management looks for ‘flexibility’ and seeks to reward differential performance in a differential way. Communication of managerial objectives and aspirations takes on a whole new importance. What separates or distinguishes HRM from the traditional personnel function is the integration of HRM into strategic management and the pre-occupation of HRM with utilizing the human resource to achieve strategic management objectives. HRM “seeks to eliminate the mediation role and adopts a generally unitary perspective. It emphasizes strategy and planning rather than problem solving and mediation, so that employee cooperation is delivered by programme of corporate culture, remuneration packaging, and team building and management development for core employees, while peripheral employees are kept at arm’s length.
HRM strategies may be influenced by the decisions taken on strategy (the nature of the business currently and in the future) and by the structure of the enterprise (the manner in which the enterprise is structured or organized to meet is objectives). In an enterprise with effective HRM polices and practices, the decisions on HRM are also strategic decisions influenced by strategy and structure, and by external factors such as trade unions, the labor market situation and the legal system. In reality most firms do not have such a well thought out sequential HRM model. But we are considering here is also effective HRM, and thus a model where HRM decisions are as strategic as the decisions on the type of business and structure.
At a conceptual level the interpretations of HRM indicate different emphases, which lead to concentration on different contents of the discipline. The various distinctions or interpretations indicate that HRM “Can be used in a restricted sense so reserving it as a label only for that approach to labor management which treats labor as a valued asset rather than a variable cost and which accordingly counsels investment in the labor resource through training and development and through measures designed to attract and retain a committed workforce. Alternatively it is sometimes used in an extended way so as to refer to a whole array of recent managerial initiatives including measures to increase the flexible utilization of the labor resource and other measures, which are largely directed at the individual employee. But another distinction can also be drawn. This directs attention to the ‘hard’ and ‘soft’ versions of HRM. The ‘hard’ one emphasizes the quantitative, calculative and business- strategic aspects of managing the headcounts resource in as ‘rational’ a way as for any other economic factor. By contrast, the ‘soft’ version traces its roots to the human-relations school; it emphasizes communication, motivation, and leadership. There are several ways in which HRM has changed earlier attitudes and assumptions of personnel management about managing people. The new model of HRM includes many elements vital to the basic management goal of achieving and maintaining competitiveness.