Best PRACTICE and Best FIT

Strategic Human Resource Management

Best PRACTICE and Best FIT

The concepts of ‘best fit’ and ‘best practice’ are two well-known approaches to human resource management.       Armstrong (2006) explains in one instance, best practices and best fit the model are one of the main roles of              management, and the responsibility of management is to use strategies according to changesin the business         environment, therefore organizations will use best practices and best-fit methods in various ways when                 considering actual use. According to Boxall and Purcell (2003) In order to obtain the versatile benefits of                best practices and best fit methods, the company's human resource management strategy must be consistent withthe organization's business objectives and business strategies. In the same way Boselie & Boon (2005) stated the following, in the field of HRM and performance the ongoing debate compares the "best practice" and "best fit"        methods. In short,the best practice approach assumes that some human resource practices are universally better than others. The "best fit" approach assumes that the effectiveness of human resource practices is specific to the organizational situation.

Best PRACTICE 

 

The notion of best-practice or ‘high-commitment’ HRM was identified initially in the early US models of HRM, many of which Put forward the following ideas: the adoption of certain "best" human resources practices will lead to improved organizational performance, manifested in improved employee attitudes and behaviors, absenteeism and turnover rates, higher skill levels, and therefore higher productivity, higher quality and efficiency(Beardwell and Claydon 2004). In the same way best practice is one of the factors that introduce several good and suitable practices to the organization to enhance the performance of the employees (Charles, 2001). According to Armstrong (2009) Best Practice is based on the assumption of that there is a set of best human resource management practices that are  best in any situation, these practices are universal, and adopting these practices will lead to excellent organizational performance.

Types of Best PRACTICE

A number of lists of ‘best practices’ have been produced, the best known of which was produced by (Pfeffer,1998a), namely:

1. Employment security

2. Selective hiring;

3. Self-managed teams;

4. High compensation contingent on performance;

5. Training to provide a skilled and motivated workforce;

6. Reduction of status differentials;

7. Sharing information.

Figure 1: Delta Air Lines: Pre-1994 Business Model

(Source : Wright P.M 2004 )

Further,Wright (2004) clearly explains with the example of Delta Air Lines( Figure 1) something similar  to Pfeffer’s (1998a) list, Wright (2004) stated that (How did Delta do it?)

•       A great reputation in the industry enabled Delta to recruit and select only the best employees who had skills and attitudes that fit well into the company’s family-oriented culture.

•       Delta invested more than most airlines in training.

•       Non-union status allowed for flexible work rules that let employees react to any    situation and get the job done.

•       Delta’s internal promotion system led to long employee tenure and a workforce with a wealth of experience and knowledge.

•       Relatively high pay also encouraged employees to stay with Delta for the long haul because they believed the company cared about them.

There are few more other lists of Best Practice by some authors Guest (1999), Delery and Doty (1996) and similar characteristics could be found when compared. 

Best FIT

In this ‘best fit’ approach, researchers have mainly focused on two main types of fit: strategic or vertical fit and internal or horizontal fit (Boxall & Purcell, 2003). However According to Armstrong (2009) The best fit approach is in line with contingency theory. It emphasizes that the human resources strategy should be consistent with the organization's background and environment. The "best fit" can be understood through vertical integration or the consistency between organizational business and human resource strategy. There are three models, namely:

ü  Life cycle.

ü  Competitive strategy.

ü  Strategic configuration.

Beardwell and Claydon, (2007) Stated that the inflexibility of the “tight-fit” model in a dynamic, constantly changing environment was evaluated, and consideration was given to achieving both fit flexibility through complementary SHR systems. The best-fit model is considered as a variant from precedent models of Harvard, Sparrow and Hiltrop, (1994) “matching model” for HRM.

The lifecycle best fit model

The lifecycle model is based on the theory that the development of a firm takes place in four stages: start-up, growth, maturity and decline. This is in line with product lifecycle theory ( Armstrong 2009 ).

Figure 2: How the IBM HR Strategy Supports and Enables the Business Strategy

(Source :  Wright , 2004 )

According the example (Figure :2) Wright,(2004) explains similarities of (Armstrong, 2009 ) life cycle theory. Wright ,(2004) shows that IBM’s overall business strategy focuses on four areas: 

ü  Innovation.

ü  Business value.

ü  Global integration.

ü  On-demand infrastructure.

Behind this overall strategy are all of the employees who make it work. IBM’s HR strategy identifies company characteristics that motivate and energize those employees.

IBM motivates its employees through:

•       Performance-based opportunities.

•       Leadership.

•       Hiring diverse and talented people.

•       Flexibility.

•       A values-based climate.

But what role does HR play in building the ideal IBM workforce? Again, at IBM, the goals are clear (Wright,2004).

At IBM, HR is expected to:

•       Anticipate and build skills.

•       Lead transformation.

•       Grow IBM ( Wright, 2004).

There are few more descriptions of Best Fit model by some of the pioneer authors Porter (1985) Miles and Snow (1978) that are more or less similar to Armstrong(2009).

List of References

Armstrong, M ( 2006) A Hand Book of Human Resources Management Practice,3^rd  Edition.

Armstrong, M ( 2009) A Hand Book of Human Resources Management Practice, 11^th Edition.

Beardwell.I and Claydom.T(2004) Human Resource Management and Cotemporary approach,4^th Edition.

Boon.C and Bosile.P (2005) Measuring strategic and internal fit in HRM: An alternative approach.

Boxall,J and Purcell,P (2003) Strategy and Human Resource Management, Industrial and labour relations review.

Delery, J E and Doty, H D (1996) Modes of theorizing in strategic human resource management.

Guest, D E (1999) The role of the psychological contract, in (eds) S J Perkins and St John Sandringham, Trust, Motivation and Commitment, Strategic Remuneration Centre, Faringdon.

Miles, R E and Snow, C C (1978) Organizational Strategy: Structure and process, McGraw Hill, New York.

Porter,M.E(1985)Competitive Advantage: Creating and sustaining superior performance, New York, The Free Press..

Sparrow, P. and Hiltrop J.-M. (1994): European Human Resource Management in Transition, Prentice Hall.

Wright P.M ( 2004 ) Human Resources Strategy : Adapting to the age of Globalization, Effective Practice Guidelines (2004 )by SHRM Foundation.

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