The Best Fit and Best Practice Approaches to Strategic Human Resource Management - Literature review Example

BEST-FIT’ AND ‘BEST PRACTICE APPROACH’ Name: Course Instructor’s name Institution Date ‘ BEST-FIT’ AND ‘BEST PRACTICE APPROACH Strategic HRM is a development in Human Resource Management that has contributed a lot to the uccess of organisations over the years. Strategic HRM is the integration of Human Resource practices with specific outcomes hence giving businesses and organisations a competitive advantage in the market. In this case, strategic HRM enables businesses and organisation to focus on the unique workforce capabilities that are in line with the organisation present and future directions. This paper, therefore, seeks to review the relevant Strategic HRM literature while comparing and contrasting the best fit and best practice approaches of strategic human resource management. For the past decades, strategic HRM has been evolving and however, scholars are yet to come up with a conclusive definition of this term. On a broader scale, Strategic HRM is the integration of strategies in an organisation to incorporate the organisation's goals and visions . On the other hand, Strategic HRM are the plans that are laid out to solve the fundamnetal strategic issue which closely relates to human resource management (Kämpf-Dern and Pfnür, 2014 pp.97-125). According to Greer, (1995) Strategic HRM focus on the alignment of the HR practices, programmes and policies. Schuler and Jackson, (1999) also claim that strategic HRM links the HRM with the business strategies. They further claim that this impacts on the organisation performance in general and success in particular business or organisational strategies. Holbeche, (1999) backs up this claim by further stating that through strategic HRM the organisation or businesses management is hugely impacted. On te another hand he also emphasises that strategic HRM also gives businesses and organisation the ability to adopt unique strategies which can not easily imitated by competitors. Strategic Human Resource management best practice is essential in an organisation and business since it ensures that the workforce is highly involved in the organisation activities therefore ensuring that all the goals are met (Kaufman, 2011, pp.505-533). Strategic Human Resource Management practices also sell out the way an organisation's management will govern its workforce. On the other hand & Swart (2007) claims the Strategic HRM best-fit approach is also essential in an organisation management. Best fit approach is even more effective if it is tailored around the organisation surrounding context and environment. Bowman (2007) also states that the Strategic HRM best-fit approach has a close link to an of the organisation operation strategies and its perceived in relation to the alignment or vertical integration between the organisation’s HR strategies and its businesses. The Strategic management best practice approach hugely relies on the assumption that there are existing best HRM practices for an organisation and adopting these assumptions leads to a greater impact in the organisation performance. Pfeffer (1994) claims that these strategic HRM best practice approaches are also universal . Some of these best practices include; employment security, sharing of information, self-managed teams, and formal training to provide motivation and skill to the workforce, performance- based compensation and status differentials reduction (Pernkopf et al. 2015, pp.16826-16826). Delery and Doty (1996) claim that these strategic HRM best practices are related to the overall organisation performance. However, there are some scholars who have criticised the strategic HRM ‘best practice’ approach over the years. Cappelli and Crocker-Hefter (1996) claimed that some of these strategic HRM best practices are often overstated. Thus, some firms have distinctive strategic HRM best practices which shape the core competencies of an organisation and help determine how it competes. Purcell (1999) on the other hand criticises the strategic HRM best practices approach by claiming that there are some inconsistencies in strategic HRM practice and its belief especially in the resource-base veiw. In this case, the resource-based views are the intangible resources and assets that give a company a competitive edge over its competitors (Prodan and Ahlin, 2008, p,41). Purcell (1999) further argues that the universalism of best practice cannot be effective if some routines and resources are only made valuable, imperfectly imitable and rare. On the other hand, he claims that the contingency theory which stresses on the need for the alignment of an organisation and its environment in order to relieve an organisation from over depending on its context of the operation, hence, the concept of universal best practice can not be accepted in this context. Becker et al. (1997) supports this claim by further stating that the strategic HRM best practices that work well in one organisation will not necessarily work similarly in another organisation due to contrasting culture, work practices, technology and managerial styles. He goes further to state that Strategic HR bets practices are highly idiosyncratic, therefore; they should be tailored depending on each organisation in order to achieve optimum results(Ashdown, n.d.). In this case, the strategic HRM best practices can, therefore, be used to inform the management of what strategic best fit practices that need to be adopted. As long as the organisation management fully understands why a particular strategic HRM best practice shouldn’t be regarded it can also get some closure on what best-fit approach to take up in place of this best practice approach (Purcell, 2009, pp.26-41.). Strategic HRM best practice approach is more crucial in the identification of an organisation’s principles underlying the practice choice rather that putting these practices into action. In this case, they suggest that the name ‘good practice’ rather than ‘best practice’ is more appropriate for this approach since it spells out the exact essential purpose of this approach (Strategic human resource management,2007 p.745). On the other hand, strategic HRM best-fit approach emphasises on the alignment of both the organisation’s business and its Human Resource strategies. This approach is also characterised by a choice model which entail the life cycle; competitive strategy and the strategic configuration stage. The life cycle stage in the strategic best-fit approach is based on the theory that a firm development takes place into distinctive stages; start-up, growth, maturity and decline (Gobind, 2014 p, 12). This theory is borrowed from the product life cycle theory. Baird and Meshoulam (1988) claimed that Human Resource management effectiveness is dependent on how ‘fit’ it is with the organisation’s development stage. They also emphasise that the organisation growth and development must be complemented with a change of its Human Resource practices, programmes and procedures in order to meet its needs (Van Donk and Esser, 2012 pp.299-315). They were also keen to acknowledge that the Human Resource management development takes place in a series of phases resulting to the organisation becoming increasingly more complex. Buller and Napier (1993) state that the start-up phase of the strategic HRM best-fit approach is informal and loose, and the tasks within this phase can be carried out by either the founder or owner. As the growth in sales, production and market increase a consequential demand in for new employees in the organisation is also experienced (Ashdown, n.d.). This particular change in demand is above the ability of the organisation’s founder and line managers to handle it. In this case, the organisation best response to this change is to increase the formal structures and Human Resource functional specialists in order to attract the right kind of workforce for the organisation (Baron and Kreps, 1999). At this stage the organisation experience high levels of innovation performance and talent management, improvement of reward policies and learning and development. In the next stage, the organisation becomes increasingly mature therefore leading to it being more inclined to develop and consolidate the existing practices. Under the decline stage; the organisation Human Resource will be involved in making the tough decision including downsizing and being taken over (Armstrong and Baron, 2012). This plausible picture shows the essence of strategic HRM best fit approach. Schuler and Jackson (1987) found evidence that the strategic HRM best-fit approach is essential in the organisation growth stages since more priorities are put on the HR management innovation and planning. As evident in this plausible picture the strategic HRM best-fit approach fosters innovation, quality of goods and services and cost leadership in organizations. The effectiveness of the strategic HRM best-fit approach can be further fostered through blending the human resource practices with the selected best fit competitive strategy’ (HRM and Quantitative: Decision Tree and Vector Analysis in HRM Theory, 2014P, 13(06)). On the other hand, they also emphasise on the effectiveness of the strategic HRM best-fit approach which is fostered by its fit with the organisation development stage. Wood (1999) claims that there are four different types of ‘fits’ in line with strategic HRM best- fit approach; they include; organisational fit, strategic fit, internal fit and environmental fit. However, he also cautions that despite it not being mentioned the strategic HRM best- fit approach fosters the perception of the HR best practice and its alignment with the organisations values and goals. He also goes further to make a bold claim that this is the best practice for any organisation or employee. Its importance is also revealed through its essence during the start-up, growth maturity and decline stage. Kochan and Barocci argued that the HRM practices required in these stages were quite distinct therefore the best fit strategic HRM practice ensured that these practices are tailored to fit specific requirement as per these distinct stages. Porter (1980) supports this argument by further claiming that the best of HR policies can only be archived if they are adapted to the competitive strategy and there is a high likelihood that they will be a source of competitive advantage. However, the strategic HRM best practices have also faced some criticism especially its integration with the external environment changes. In this case, Purcell (1999) argues that organisation should constantly change their policies in order to fit with the changing external environment. Consequently, organisations have best- fit practices in order for them to achieve internal Human Resource managerial consistency (Darwish 2013). Adoption of the best fit practices also entails adopting the “organic” or “mechanistic” concepts in order to meet that change demand that comes with the best –fit. Individuals and scholars who advocate for the best practice strategic HRM approach claim that despite the context in which an organisation may fall into there is always a single area within the organisation Human resource, that enables the firm to achieve high performance. (Boxall & Purcell, 2000) argues that the individuals advocating for the best practice strategic HRM approach often have the perception that there are some Human Resource practices which are better than others and the function of the Human Resource is the most desirable best practice in line with the strategic organisation HRM (Pernkopf, Lazarova and Mayrhofer, 2015, pp.16836-16846). Additionally, the best practice approach is to its universalistic perspective. In this case, the critics claim that the best practice approach is not embedded in an organisation due to the social, cultural differences in different environment and organisation context (Hauff, Alewell and Katrin Hansen 2016). On the other hand, they have also raised the diffusion problem issue that is significant with the best practice approach on Strategic HRM. Boxall (2003) claim that if an organisation takes up a Human Resource framework which does not fit with the organisation strategies misfits are bound to occur. However, they are also keen to caution that both streams in the adoption of the best practice and best- fit might be right in their way (Lussier and Hendon, 2013). Thus, they also continue to reinstate that despite the fact that some of these strategies being universal their integration in an organisation is dependent on the uniqueness in an organisation. Evidently the best- fit approach appears to be the most effective strategy HRM practise compared to the best practice approach. The best practice approach has created the perception that this approach is superior to the other approach due to its reference name. This has therefore led to every organisation, and business adopting this approach which later leads to conformity and lack of a competitive edge (Qadeer n.d.). Due to this reason the best- fit approach, therefore, appears to be more effective and efficient for the organizations since it is characterised by some aspect of uniqueness. On the other hand, the best practice approach might be universally applicable, however; a best practice that might be highly viewed in one industry, company or corporate culture is not necessarily the same best practice approach in another industry or company (Martínez-López n.d.). Best fit strategic HRM approach is ideal compared to the best practice approach having that practices need to be fitted with specific ideal types of strategies. Pfeffer, (1994), backs up this claim by claiming that strategic HRM approaches are measures and valuation of the HRM practices. Despite its proclaimed benefits the best-fit approach is often criticised for involving a complex process which is also iterative. This approach is also criticised for being too dependent on the stakeholder's resources and to be the link to these resources (Schuler and Jackson 2007). However, Capeli and Crocker Hefter(1994) criticise the best practice approach by claiming that the chances that it might be overstated are quite high. On the other hand, they also criticised the best practice approach based on the fact that it does not encourage the aspect of differentiation and uniqueness. This might deter it from having a competitive advantage (Pernkopf, et al. 2015). They go further to criticise this approach by claiming that it is utopic for this approach to be adopted in an organisation and it might also make the organisation operation indispensable. Therefore, the best- fit approach is more effective since it allows the “bundle’ of practice implementation strategy. Thompson (2014), backs up this claim by stating that the likelihood of a bundle of practices being more effective compared to a single practice approach is quite high. The best- fit approach is a more effective approach since it is the best practice approach made on the assumption that the higher the revenues a company attains per employee, the better. However, on a closer look, this assumption does not guarantee any organisation success, higher ratios in some industries are natural (HRM and Quantitative: Decision Tree and Vector Analysis in HRM Theory, 2014P, 13(06)). On the other hand, this assumption might be interpreted wrongly since in most cases start-ups have significantly lower ratios compared to the already matured organisation. Also, organisations that are known to fall into the labour intensive industries significantly have low ratios and similarly organisation which often outsource most of their functions (Lussier and Hendon, 2013). The best fit- approach, in this case, is effective since it focuses on what works best for an organisation. In this case one will have to find the perfect alignment of the organisation business strategies before adopting the best- fit approach. Hence, one will have to consider the organisation culture, unique needs and business circumstances which are more likely to make the organisation Human Resource more effective (Armstrong and Baron, 2012). The internal focus adapted by the organisation is more likely to make this approach more relevant and valuable to the organisation. In conclusion, it is evident that there are different strategic HRM approaches which an organisation can choose in order to create an added value to the organisation’s workforce. I this case the best practice approach and best-fit approach are two of the common strategic HRM approaches. The best-fit approach as seen advocates for fit between the organisation business strategies and those of its Human Resource. The best practice approach, on the other hand, is a contingency view that seeks to add value to the organisation. It is also evident that these two approaches are also faced with some shortcoming, for instance, the best practice approach is the fact that it is universally successful while the best- fit approach requires integration with the organisation key contextual variable including business strategies. It is also evident that through comparison of these two strategic HRM approaches the best-fit approach appears to have some edge over the best practice approach. This is attributed to the fact that is quite rare that a single universal practice can effectively foster a positive result in every organisation Human Resource strategy. This leaves the best- fit approach as the more effective of the two approaches since it can adapt to varying contextual situations. References Armstrong, M. and Baron, A. 2012. Strategic HRM. London: Chartered Institute of Personnel and Development. Ashdown, L. n.d.. Performance management. Baron, J. and Kreps, D. 1999. Strategic human resources. New York: John Wiley. Boxall, P. and Purcell, J. 2003. Strategy and human resource management. Basingstoke, Hampshire: Palgrave Macmillan. Darwish, T. 2013. Strategic HRM and performance. Newcastle upon Tyne: Cambridge Scholars Pub. Gobind, J. 2014. Strategic human resource management: A brief introduction. SA j. hum. resour. manag., 121. Hauff, S., Alewell, D. and Katrin Hansen, N. 2016. 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