Understanding the difference between BEST FIT & BEST PRACTICE In Strategic Human Resource Management

Understanding the difference between

BEST FIT & BEST PRACTICE

 In Strategic Human Resource Management

Armstrong (2014) Strongly believes that Strategic human resource management (strategic HRM or SHRM) is a method of developing and implementing human resource strategies that integrate with business strategies and support their achievement. In the same way Boxall (1996) described Strategic Human Recourses Management as the interface between Human Resources Management and Strategic management. In the same way (Armstrong 2014) feels Strategic Human Resources Management is an approach that defines how the organization’s goals will be achieved through people by means of HR strategies and integrated HR policies and practices.

Wright and Snell (1998: 758) who wrote: ‘The primary role of strategic HRM should be to promote a fit with the demands of the competitive environment.’ Wright P.M (2004) further emphasizes that it is also important to remember that HR strategies are best designed and implemented for a particular job or a set of jobs.

The figure 1:1 shows SHRM is about both HR strategies and the strategic management activities of HR professionals.

Figure: 1:1 Strategic HRM Model

Source:   (Armstrong, 2014)

 Difference Between Best FIT and Best Practice

The relationship between performance and human resources management can be linked into two strategic approaches which are the “best practice” & “best fit”. The "best fit" view is that the company's compensation system should be consistent to support the company's business strategy to gain a competitive advantage. (Meloney and Morris, (2005). In the same way (Meloney and Morris,2005) describes “best practices" claim that a complete set of human resources policies, including a salary system, will lead to highly motivated and dedicated employees, which is the key to an organization's competitive advantage.

As Wright P.M (2004) explains Human Resources strategies always stay focused on getting the best performance from employees. Usually, this means getting employees to:

v  Have something (skills, competencies, abilities).

v  Feel something (commitment, engagement, motivation).

v  Do something (come to work, be productive, serve customers, stay with the organization).

There are two strategic perspectives used which are “Best Fit” and “Best Practice”. The “best fit” approach argues that HR strategy will be more effective when it is appropriately integrated with its specific organizational and environmental context (Boxall & Purcell, 2000). Upadhyay (2016) Argues that Best Practices concept of  universalism is best for all organizations regardless of its strategy. Orgernistaion believes that a bunch of HR practices certainly including the reward system ropes Organizational business strategy. This in turn leads to highly committed and motivated employees leading to enhanced competitive advantage.

Greer (2001) clearly explains the universal approach or in other words best practice approach maintains that there are several best practices that can have positive performance effects in nearly any organizational context. Furthermore, best practice approach applies to both individual best practices as well as systems of best practices. Greer (2001) further states that Best Practice approach maintains that the performance effects of such practices or systems are direct and that effects are so general or robust that Best Practice increase performance regardless of other organizational conditions or circumstances. Best Practice contemplates those bundles of HR practice that can be applied in most of the organizational context to increase performance that helps produce better outcome. It implies a strong connection between HR practices and organizational performance that requires high commitment management (Paauwe & Boselie 2003)

Video : 1 Top 10 best practices to build better work places

                                                      Source : cutehr.io

Meloney and Morris, (2005) explains that Best fit policies are contingent.  They are developed or amended to maintain a ‘line of sight’ with strategy. Meloney and Morris, (2005)   further argue that Best Fit emphasizes the importance of external competitiveness in attracting and retaining employees. Unlike the Best practice Greer (2001) clearly emphasize the best fit or fit perspective maintains that firms should adopt systems of human resources practices that fit to human resource strategies. Greer (2001) Further elaborates that best fit approach is consistent with the principles of strategic human resource management. The Best Fit approach that for the effectiveness of companies it is needed to reach stability between HR Practices and other aspects of the company (Delery and Doty 1997;Miles and Snow 1984).

Figure :1:2 Shows some Clear  come of the clear distinctions of Best Fit and Best Practice

                                                                      Source : slideshare.net

                                                      

FedEx is one of the clear example for implementing SHRM, and ‘ Best Practice’ approach as one of the significant HR strategy FedEX had chosen.  FedEx boats the following

v  Among the 100 best companies to work with among the world.

v  FedEx Carries a reputation of one of the top employee friendly companies in the world.

v  In year 2000 the employee turnover is just 6% well below of industry average of 20% in the same year.

Some of the Best Practices that FeDEx had implemented to keep the employee motivation high,

v  PSP- Philosophy ( people service profit )

v  SFA -program ( Survey Feedback Action )  

v  LEAP- ( leadership evaluation and awareness process)

v  Employee communication program.

v  Job changing applicant tracking systems.

v  Recognition and reward program.

Source: fedex.com

On the other hand, IKEA is one of the clear example of that adapted Best Fit approach.

IKEA strongly believes in that

v  Maintain a more resilient observable corporate culture.

v  Cost control is one of the major feature in IKEA’s corporate culture.

v  A performance driven employee structure. Employer/ Employee relationship based on contract/ hiring and promotion decisions based on merits.

v  A strong employee rewarding system.

v  A good quality customer service where customer wants to buy again and again.

v  IKEA maintains a low power distance, which means, being independent, equal rights , accessible superiors, coaching leaders.

Core values of IKEA

v  The IKEA sprit – Strong and living reality.

v  Reaching good results with small means.

v  Simplicity is a virtue.

v  Doing it in a different way.

v  Concentration.

v  Taking Responsibility.

Source: IKEA.com

References

Armstrong, M (2014) A Hand Book of Human Resources Management Practice, 13^th Edition.

Boxall, P (1996) The strategic HRM debate and the resource-based view of the firm, Human Resource Management Journal, 6 (3), pp 59–75.

Boxall, P, & Purcell, J. (2000, June). Strategic human resource management: where have we come from and where should we be going? International Journal of Management Reviews, 2(2), 183-203.

Charles,R.G (2001) Strategic Human Resources Management , 2^nd edition.

Maloney, M and Morris, D (2005) Strategic Reward Systems: Understanding the Difference between 'Best Fit' and 'Best Practice'. National University of Ireland, Galway.

Paauwe, J. and Boselie, P (2003) Challenging ‘strategic HRM’ and the relevance of the institutional setting. Human Resource Management Journal, 13(3): 56-70.

Upadhye, N (2016, June) Strategic Reward System- Analyzing the gap between "Best Fit" and "Best Practice". INTERNATIONAL JOURNAL FOR EMERGING TRENDS IN ENGINEERING AND MANAGEMENT RESEARCH, II(II), 1-5.

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