Best Fit and Best Practice Approaches in Strategic HRM
- Best Fit Approach The best-fit model is considered as a variant from precedent models of Harvard, Michigan and York and is called “matching model” for HRM. It is based on developing HRM policies according to business strategy. ...
- Best Practice Approach ...
- Similarities of Best Fit and Best Practice Approaches ...
- Differences between Best Fit and Best Practice Approaches ...
What is the difference between best fit and best practice HRM?
The terms ‘best fit’ and ‘best practice’ are used in strategic human resource management literature. The best fit approach refers to the firm using human resources management (HRM) to their particular strategies and adapting to the firm’s condition and the environment referring to workforce character and business strategy.
What is the best fit approach to human resource management?
Conversely, the best fit approach argues that performance of a firm is maximized if the human resources policies are constant with the firm’s business strategies.
What are human resource best practices?
Conclusion The first question is: what are Human resource best practices? Best practices are a set of Human Resources Management processes and actions that work universally. In HRM research, there are two schools of thought on how to manage people. The first one is the best fit, the second is best practices.
Do HRM practices improve firm performance?
In best practice, a set of HRM practices are argued to be associated with improved firm performance in all types of organization and by allusion for al types of employees (Nahapiet & Ghoshal, 1998).
What is best fit in HRM?
What does the 'best fit' approach of linking HRM with strategy entail? The 'best fit' approach "argues that firms must adapt their HR strategies to other elements of the firm's strategy and to its wider environment. What constitutes a good HR strategy will depend on the specific context" (Boxall & Purcell, 2011:63).
Why is best fit more important than best practice?
The idea is that certain practices will ultimately result in better performance regardless of the business, and should be applied in almost all cases. Best fit is more flexible, taking into account your business, your team, your products, services and point of difference.
What does best fit mean in business?
Best fit means getting HR processes and solutions that are designed to meet specific business needs -- they take the context and culture of each organization into account.
What is fit in human resource management?
Fit as strategic interaction indicates the relationship between external circumstance and human resource management. In other words, HR practices should fit the strategies and activities responding to the environment.
What does best fit mean?
the theoretical pattern that best accounts for the relationships among variables in a data set. For example, a regression equation having the best fit to sample data is the one that minimizes differences between observed and predicted values.
What do we mean by best practices?
A best practice is a standard or set of guidelines that is known to produce good outcomes if followed. Best practices are related to how to carry out a task or configure something. Strict best practice guidelines may be set by a governing body or may be internal to an organization.
Why is best fit important?
The best fit approach emphasizes the importance of ensuring that HR strategies are appropriate to the circumstances of the organization, including its culture, operational processes and external environment. HR strategies have to take account of the particular needs of both the organization and its people.
What is best fit for job?
Being a good fit for a job means, of course, having the ability and experience to carry out the job duties, but it also means having the right combination of soft skills, character traits, and career goals that align with the mission and values of the organization and fits in well within the existing company culture.
What are the benefits of best practices?
A best practice strategy can help your business to:become more competitive.increase sales and develop new markets.reduce costs and become more efficient.improve the skills of your workforce.use technology more effectively.reduce waste and improve quality.respond more quickly to innovations in your sector.
How can you improve HRM practices?
Here are some useful tips for improving HR effectiveness.Improve organizational communication.Develop an effective training program.Provide more regular feedback to employees.Build a company cultural vision.Use available technology.Take advantage of data.
Why hiring for fit is important?
Hiring for cultural fit is essential to keeping your company's reputation in good standing. Bad cultural fits tend to be disengaged from work. Weeding out people who don't fit your culture during the recruitment process can save you money in the long run.
What are the disadvantages of best practice?
Here are four:Best practices can dilute an organization's strategic differentiation. ... Best practices may enforce a limiting industry paradigm. ... Best practices can expose underlying worldviews. ... Best practices can preserve functional area power.
What are the benefits of best practices?
A best practice strategy can help your business to:become more competitive.increase sales and develop new markets.reduce costs and become more efficient.improve the skills of your workforce.use technology more effectively.reduce waste and improve quality.respond more quickly to innovations in your sector.
How do you develop best practices?
How to develop best practicesPerform thorough research. ... Share your findings with stakeholders. ... Make your practices measurable. ... Be prepared to implement change management techniques. ... Adjust best practices to fit your business. ... Involve everyone within the organization. ... Get feedback from customers.More items...•
What is the difference between best fit and best practice HRM?
The terms ‘best fit’ and ‘best practice’ are used in strategic human resource management literature. The best fit approach refers to the firm using...
What are the best practices of Human Resources Management?
Best practices are a set of Human Resources Management processes and actions that work universally. In HRM research, there are two schools of thoug...
What is the 'best fit' approach to strategic human resource management?
The ‘best fit’ approach to strategic human resource management (HRM) explores the close relationship between strategic management and HRM by consid...
What is the link between HRM and firm performance?
The link between HRM and Firm performance mostly focused upon the two approaches, best fit and best practices. Best practices are more focus on per...
What is the difference between best fit and best practice HRM?
The terms ‘best fit’ and ‘best practice’ are used in strategic human resource management literature. The best fit approach refers to the firm using...
What is the best-fit approach?
On the other hand, Best-fit approach is also known as the contingency model and proponents of this approach assert that there is no universal way o...
Does fit beat best practice?
Instead, companies should choose and implement a set of practices that fits well together. The simple conclusion that follows from these two studie...
Is best practice one size fits all?
Best Practice assumes that there is one ultimate practice better than the rest, a one size that fits all.
What is best practice in HR?
The best practice approach claims that certain bundles of HR activities exist which universally support companies in reaching a competitive advantage regardless of the organizational setting or industry. Best practice models imply a close connection between HR practices and organizational performance and are often associated with high commitment management. Studies in the best-practice field shows similar groups of HR polices which are especially suitable for maximizing performance irrespective of market and product strategies. Best practice bundles of activities are characterized as mutually compatible HR activities which forge high levels of workforce competence, encourage motivation and introduce a work-design boosting employee commitment. Based on concepts from expectancy theory best practice HR will result in higher levels of quality, productivity and low rates of absenteeism and wastage.
What is the best fit approach?
Best Fit Approach. The best-fit model is considered as a variant from precedent models of Harvard, Michigan and York and is called “matching model” for HRM. It is based on developing HRM policies according to business strategy.
What is best fit?
The concepts of ‘best fit’ and ‘best practice’ are two well known approaches to human resource management. The ‘best fit’ perspective claims that HR strategy become more and more efficient when it is linked to its environment of the business. It explores the close link between strategic management and HRM by assessing the extend to which there is a vertical integration between an organizations business strategy and its HRM policies and practices. ‘Best practice’ approach claims that certain ‘best’ human resource practices would result in enhanced organizational performance, manifested in improved employee attitude, lower level of absenteeism and turnover, higher level of skills for higher productivity, enhanced quality and efficiency. That is why the ‘best practice’ model is also referred as high commitment models.
How does best fit work?
It follows the expectancy theory that believe that people will perform more and more better if they believe their effort will be rewarded. So, the best fit method focuses on the financial aspect and uses it as a driver for corporate human resource. Best fit proponents see rewards as the stick and the carrot. Since pay varies with performance, poor performers ‘vote with their feet’. Excellent performers are attracted to the large pay differentials that reward their performance. However, in relation to pay, best practice advocates usually use the term “… first. Do not harm.” Thus, they do not really believe in the great influence of pay that best practice advocates want to show. They see pay more as a factor helping to prevent dissatisfaction and provide symbolic recognition that employees are valued. Rewards, for best practice advocates, can even destroy the relationship and trust that are the basis of organizational commitment. This leads them to promote a reward system that does not differentiate with compressed pay bands, equal pay for all team members and collective incentives.
Why should HR policies be minted?
HR policy should be minted by the appropriate context of individual employees and therefore support the overall competitive strategy. Aligning HRM practices to strategies can enable companies to create potential competitive advantages. The best fit approach is also subject to sever criticism.
What is HRM strategy?
HRM strategy should be designed and applied to support the given corporate strategy. The “best-fit” approach questions the universality assumption of the best-practice perspective.
Why is externally competitive reward important?
To be effective, a reward system must distribute rewards in a way that will lead the organisation’s most valuable employees to feel satisfied when they compare their rewards with those received by individuals performing similar jobs in similar organisations. Good performers tend to seek organisations where performance is recognized and rewarded. The same idea is found in ‘best practice’ books. Although labour markets are far from perfectly efficient, it is nonetheless the case that some relationship exists between what a firm pays and the quality of the workforce it attracts. There is therefore a shared view that an externally competitive reward system has an important role in attracting appropriate candidates and retaining employees.
What is best practice and best fit?
The discussion between promoters of best practice and best fit approaches has sparked widespread controversy in the human resource management (HRM) area. The topic has gained much scholarly attention because it not only addresses a theoretical controversy but also possesses a high degree of practical managerial significance. The essay has the aim to analyse best practice and best fit approaches in HRM of a multinational enterprise. The reader receives insight into Lincoln Electric’s organization through a case-study analysis of practical HR approaches serving as a basis for developing practical managerial implications in the last part of the paper.
What is best fit approach?
The best fit approach is also utilized for the field of employee participation. The company possesses an open-door policy where employees can contact management directly. Flat hierarchies with minimal supervisory management lead to very low communication barriers and wide-opportunities for taking responsibility (Milgram & Roberts 1995). Due to participation is one of the evaluation criteria for employee remuneration Lincoln has a very high workforce participation rate concerning continuous improvement suggestions. Similar continuous improvement and feedback programs are also pursued by Japanese companies like Nissan in order to enhance productivity (Erstand 1997). That not only encourages idea generation but also directly involves employees in major decisions like the turnaround after the economic crises (Hastings 1999). Although workers are not unionized a very lively participation with the management board takes place through the Employee Advisory Board leading to a very high level of workforce loyalty. The best fit participation approach supports the core competence and sustainable competitive advantage of productivity and innovative quality as major strategic objectives (Pfeffer 1995)
What is the best fit model?
The best-fit model is considered as a variant from precedent models of Harvard, Michigan and York and is called “matching model” for HRM (Sparrow and Hiltrop 1994). It is based on developing HRM policies according to business strategy. Strategy involves planning future activities, performances objectives, and policies towards reaching the corporate aims. HRM strategy should be designed and applied to support the given corporate strategy (Lawler 1995). The “best-fit” approach questions the universality assumption of the best-practice perspective. It emphasizes contingency fit between HR activities and the organization’s stage of development, an organization’s internal structures and its external environment like clients, suppliers, competition and labour markets (Redman and Wilkinson 2009). HR policy should be minted by the appropriate context of individual employees and therefore support the overall competitive strategy. Aligning HRM practices to strategies can enable companies to create potential competitive advantages (Schuler and Jackson 1987 in Redman and Wilkinson 2009).
What are the limitations of best practice?
Firstly, when implementing best practice standards organizations run risk of introducing mutually prohibitive combinations like team working and compensation based on individual performance resulting in a deterioration of employee collaboration through overexaggerated competition (Delery 1998 in Redman and Wilkinson 2009). Secondly, high commitment management systems are generally a complex undertaking requiring large inputs of planning and top level management commitment. Thirdly, critics like Milkovich and Newman (2002) argue that best practice HR lacks direct linkages with organizational strategies and is minted by the belief that outstanding high performing human resources will influence strategy. By making HR policy precede corporate strategy an organization risks prescribing standardized sets of “one size fits all” best practice approaches which will not support the particular needs of employees and be detrimental to overall strategic objectives (Maloney and Morris 2005). Fourthly, discussions with regard to the appropriate choice of best practice measures resulting from an insufficient research methodology and theoretical definition exist (Marchington and Grugulis 2000 in Redman and Wilkinson 2009).
What is Lincoln's best fit strategy?
Lincoln is applying a best fit strategy which aims at enhancing employees’ abilities, technical and business knowledge through a significant investment in globally recognized best practice training methods (Marchington & Grugulis 2000). Examples are a sophisticated trainee program for sales and engineering trainees, constant vocational trainings for experienced workers and regular work certification programs (Björkman & Galunic 2003). These actions aim at supporting and maintaining the superior efficiency objectives creating core competences compared to industry rivals and a competitive advantage. Lincoln’s approach to training employees resembles the immersion training conducted by Toyota which also conducts extensive investment in worker’s qualifications to achieve highest productivity and quality (Spear, 2004).
How does the legal environment affect Lincoln's HR strategy?
Firstly, the legal environment both in Lincoln’s domestic market and international markets significantly influences the HR strategy. Regulations regarding the legality of piece-work systems, vacation requirements and working hour limitations force Lincoln to adapt HR practices in all fields elucidated in chapter 3.1. In the U.S. more performance driven and entrepreneurial HR approaches are possible whereas regulations in Europe, Asia and Latin America force Lincoln to adhere to adapt local HR practices (Björkman & Galunic 2003). Secondly, Lincoln is affected by the cultural diversity of its operations again creating barriers for the introduction of performance driven measures in markets like Western-Europe and China. Whereas in the U.S. traditionally hierarchy is low and employee idea generation is common, Chinese culture is more subversive and critical idea generation practices will fail (Zhu 2005). Similarly hiring and training practices are different across cultures: The U.S. and Europe allow for the application of best practices in recruitment and training. In Asia Lincoln needs to align to the environment of conducting rather relationship oriented hiring and in-depth skill development (Warner 2005). Thirdly, different market maturity and industry-life-cycles between developed and developing markets affect Lincoln’s HR approaches with differences in hiring, training and workforce participation.
Is there a single best way to approach HRM?
The broader implication is that there is no single best way to approach HRM. Companies should design their approach according to elements of best practice and best fit to achieve the best possible outcomes . Studies conducted by Mendonca & Kanungo (1994) and Cyert & March (1963) show that the adaption of HRM approaches to local international environments is essential for companies leading to and adaption of processes and practices to fit with the local workforce. Successful MNCs like Unilever, Royal Dutch Shell and Nestlé are those that conduct HRM strategies based on localized requirements incorporating elements from best fit and also standardized best practices (Briscoe & Schuler 2004). In this context a localized resource-based HRM approach can be a good possibility to create synergies between internal competences with strategy and performance.
What is the best fit approach?
On the other hand, Best-fit approach is also known as the contingency model and proponents of this approach assert that there is no universal way of doing things as what might work well in one place may be unsuccessful in another place.
What is the strategic approach to managing human resources?
In order for organizations to be successful in any market, they must have a strategic approach in managing human resources which will lead in creating a workforce that provides a sustainable competitive advantage.
What is vertical integrated approach?
This vertical integrated approach the proposition that organizations will be more effective if they adopt a policy of strategic configuration by matching their strategy to one of the ideal practices, where leverage is gained through the close link of HR policies & practices to the business objectives.
Why is it important to keep key employees loyal?
In order to have competitive advantage keeping key employees loyal is essential.
What is the relationship between performance and human resources management?
The relationship between performance and human resources management can be linked into two strategic approaches which are the “best practice” & “best fit”.
Why does what works well in one organization not necessarily work well in another?
From my point of view: what works well in one organization will not necessarily work well in another because it may not fit its strategy, culture, management style, technology or working practices.
What is RBV in HR?
The resource-based view of the firm (RBV) represents a fundamental change in SHRM thinking by focusing on the internal resources of the organization, rather than external. This approach particularly seeks to build a ‘unique bundles’ of HR practices as a source of sustainable competitive advantage.
Who proposed the 7 best practices in human resources?
The 7 Human Resource best practices presented below have been proposed by Jeffrey Pfeffer. Pfeffer wrote two books on this topic:
What is the first human resource best practice?
The first Human Resource best practice is employment security. Life is unpredictable and work is a stable factor that is very important to most people. Having an employer who enables the employee to provide for themselves and their family is, in essence, the number one reason why people come to work.
What is the best practice school?
The best practice school argues that there is a set of universal HR processes that lead to superior business performance. According to its proponents, there are certain bundles of HR activities that support companies in reaching a competitive advantage regardless of the organizational setting or industry ( Redman & Wilkinson, 2009 ).
How much is the difference between an average performer and a high performer?
Research shows that the difference in performance between an average performer and a high performer can be as high as 400%! This holds for different industries and job types, including researchers, entertainers, and athletes.
What makes a team the best?
The best teams are cognitively diverse and psychologically safe. This means that team members can generate ideas that are different while feeling comfortable bringing these up and discussing them.
Why do companies hire exceptional people?
Companies do their utmost best to hire exceptional people because they add the most value to the business. There also needs to be a prioritization of building a structured and fair selection process. This reflects legal requirements, internal diversity goals, and that a more diverse workforce, better reflects society. This can be hugely beneficial for understanding wider consumer behavior and the needs of different customers.
When best practices are combined, we call them “bundles”?
When these best practices are combined we call them ‘bundles’ . Bundles create synergies. This is how Human Resource Management can create a competitive advantage for the organization.
What is HRM best fit?
With the best fit model of HRM in place, the strategies of managing the firm’s workforce should reflect that of the organisation’s mission and corporate objectives, which reflects the classical approach to strategic planning, an approach which became popular during the industrial revolution and was used to tell workers how to do their job in a way that resulted in the most productivity and efficiency . The classical approach to strategy saw that employees were trained only in working their jobs in the most efficient way possible. The view of workers as machines rather than human beings is flawed as it leads to the de-motivation of employees who feel little self worth within the organisation due to having little responsibility and being asked to perform such mundane tasks.
Why is best fit approach failure?
The ‘best fit’ approach is subject to failure due to its inability to consider the relationship between HR strategy, competitive strategy and the organisational environment. An age old criticism of the classical approach applies also to ‘best fit’ strategy making in that the importance of being ‘dynamic’ is not stressed greatly enough, as well as flexibility to react to changes in the working environment. Fluctuations in market stability and performance leave the benefits of ‘best fit’ short lived as reaction to change is slow. This emphasises the strategic strain between performance in the present and having an eye towards the future and what lies around the corner, which needs to be analysed when deciding on the strategy to undertake.
What is the most common measure of organisational performance?
The most common measure of organisational performance is the balanced scorecard. The tool is used by managers to monitor and track the execution and effectiveness of activities by staff activity and to monitor the consequential effect of these actions on the firm. The balanced scorecard operates on the basis that for an organisation to be successful it must satisfy the requirement of key stakeholders (Kaplan and Norton., 1992). . The balanced scorecard measures the financial perspective, customer perspective, internal business process perspective and learning and growth perspective.
What are the criticisms of resource based HR?
As with all of the HR strategies that have been discussed, the ‘resource based view’ has criticisms which bring the capability of the strategy into question. The largest criticism is that the ‘resource based view’ is too concerned with looking introspectively, a view point that was shared by McKenna and Beech (2008), saying that the ‘resource based view’ “tends to be too introspective, giving insufficient attention to the socio-political and economic context in which the organisation operates”. Another criticism of this strategy is that it is not applicable to all sectors of business, suggesting that the conditions of the ‘resource based view’ are not suited to certain sectors; such as the public sector.
What is the key point of resource based view?
The key points of the ‘resource based view’ are to identify the resources that are available. After identification the organisation must then evaluate whether the resources fit Barneys (1991) framework of criteria:
What is resource based HR?
The Resource Based View of HR management is a tool used to determine the resources that are available to a company that can be used to gain a competitive edge. The elementary principal of adopting a resource based view is that the basis of being more competitive than a rival lies primarily in the pool of resources that are available to a business and how they are applied, rather than the external environment.
Which approach to decision and business strategy is best for small and medium sized businesses?
From the points discussed in this essay the evidence recommends either the evolutionary approach to decision and business strategy. The reason that this approach succeeds above the others is that is does not over simplify or complicate the already complicated field of the strategic process. The evolutionary approach better accommodates small and medium sized businesses who do not have the sheer volume of
Best Fit Approach
Best Practice Approach
- The best practice approach claims that certain bundles of HR activities exist which universally support companies in reaching a competitive advantage regardless of the organizational setting or industry. Best practice models imply a close connection between HR practices and organizational performance and are often associated with high commitment management. Stud…
Similarities of Best Fit and Best Practice Approaches
- Having defined the two systems, let’s now look at the agreements points between ‘best fit’ and ‘best practice’. Both approaches aim to achieve high performance in organisations. These models could be classified as ‘matching models’ because of their common aim is to match the human resources strategy with that of the corporation. The ‘best fit’ school of SHRM focuses on the fac…
Differences Between Best Fit and Best Practice Approaches
- Indeed, the systems in SHRM have different approaches and therefore we can highlight many important differences between those systems. At the most general level, best fit is a contingency approach while best practice is a universal approach. Best fit is based on the premise that picking the most effective HR policies and practices depends on matchi...