Best Practice Vs. Best Fit Approach to Strategic Human Resource Management
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Best Practice Vs. Best Fit Approach to Strategic Human Resource Management
Due to the different changes that are going on in the business world, as well as the realization of different businesses and firms that the employees are considered as an asset as well as important resource of the organization, more and more companies are focusing on planning and implementation of different strategies that will focus on the integration or connection of the human resource with the success of the entire business, together with the process of setting standards, goals and visions.
The strategic human resource management or SHRM is considered as a complex process that is continuously evolving and studied, as well as discussed by academics and managers. It is considered as one of the primary factors that help to improve the performance of the business (Armstrong & Baron 2002). Above all, it is considered as a primary approach in human resource, with connection to the intentions of the organization regarding the future direction that they want to take, thus it focuses on the longer term about the issues of the people and the macro-concerns regarding the structure, quality, culture, values as well as commitment, together with the matching resources for the future needs (CIPD 2008).
Best Practice versus Best Fit Approach to SHRM
Best Fit Approach
The best fit approach focuses on the importance of making sure that the HR strategies are suitable to the different circumstances of the entire organization, together with culture, operational processes as well as external environment. Thus, it focus on the idea that different human resource (HR) strategies have to focus on a given needs of both the organization and its people (Armstrong 2006, p. 138). Due to the said reason, most of critics and commentators believe that best fit approach is more important and vital than the best practice.
Figure 1 shows the processes and aspects that are needed and included in the best fit approach. It focuses on learning what works, and what does not work, in connection to the organizations, thus, it is up the firm to decide what may be pertinent and applicable in the general terms and what lessons can be learnt that can be adopted in order to fit the company’s given strategic as well as operational requirements.
The process starts with the analysis of the business needs of the firm within its context such as culture, structure, technology and process that indicate what has to be done. Afterward, it can be useful in order to choose and mix different best practices ingredients, as well as develop an approach that applies those that are applicable in a way that is aligned in order to identify different business needs (Armstrong 2006, p. 139).
On the other hand, its flaws focus on the limitation of the search for contingency or matching model of HRM as well as the difficulty in showing their interconnection, as well as the way that changes in one variable that have an impact on others (Armstrong 2006, p. 139).
Figure 1 Best Fit Model of Strategic Human Resource Management
Adopted from: (Shields 2007, p. 100)
As a result, the best fit approach has a huge appeal to the HR practitioners due to the fact that it positions them as the first-level strategic partners in the process of management decision-making. This is because, the rejection of a one size fits all approach helps to widen the range of good judgment that are available to them (Shields 2007, p. 101).
Best Practice Approach
On the other hand, the best practice approach speculate that there is a exact set of human resource practices that can be applied in almost any organizational context that helps to increase the performance that helps to deliver outcomes that are valuable for all the stakeholders, particularly employees. However, the effect of the performance is said to be stronger and more influential if all of the said practices are packed together in order to balance and harmonize each other, thus create positive synergies between them. As a result, the said approach covers different related prescriptive models of human resource management such as high-commitment, high-involvement, high-performance work system, and mutual gains models (Shields 2007, p. 90).
The best practice approach is based on the idea that there is a set of best HRM practices and that applying them will help to superior organizational performance. The best known set is Pfeffer’s (1994) model that shows that seven important HR practices of a successful organizations which are: employment security, selective hiring, self-managed teams, high compensation contingent on performance, training, reduction of status differentials and sharing information (Armstrong 2006, p. 65) (see Appendix A).
There are different critics and commentators that are attacking the idea of best practice. This is because the best practice or universalist views by pointing out the discrepancy between a belief in best practice as well as the resource-based view that pertains on the intangible assets that includes HR, which allows the firm in order to do better than its competitors. The major question is how can the universalism of the best practice be squared with the view that only some resources and routines are significant and vital by being rare as well as imperfectly limitable? Aside from that, it is also hard to accept that there is a universal best practice, because one practice that have been successful for one organization, doesn’t necessarily mean that will work on others (Armstrong 2006, p. 65).
Intel in Ireland
Intel is a company that offers products and services regarding convergence of computer and communications technologies, together with the activities that focuses on the manufacturing of chips, boards systems, software and network and communications equipment. As of now, the company holds the 15.3% of the semiconductor market in the world (IDA Ireland 2009).
Currently, the Irish operation employs about 5,000 people that are directly and indirectly in the field or profession of engineering, technical as well as operational activities (IDA Ireland 2009).
Pfeffer explained employment security as vitally strengthen and support the other six HR practices due to the fact that it is considered as unrealistic to ask the employees to provide their ideas, hard work as well as commitment without some expectations of security on their part (Marchington & Wilkinson 2002, p. 179). In connection to this, because Intel is a huge multinational company, it implements and applies a massive hiring and selection process, with the help of the Internet or their web-based tools. This is supported with the comprehensive compensation and benefits package that is designed in order to attract, retain and reward the people that are necessary to help the company to create longer-term growth and profitability (Intel Ireland n.d.). However, the major problem of Intel is its lay off as well as downsizing, as part of development phase. However, Pfeffer (1998) stated that compulsory lay-offs and downsizing weaken and challenge employment security. As a solution, he recommended the following: proportionately reducing the working hours, in order to spread the pain of reduced employment cost in the entire workforce; reducing wages to reduce the labor costs; freezing the recruitment process in order to prevent overstaffing as well as putting the production workers into the sales in order to build up the demand (Marchington & Wilkinson 2002, p. 180). In terms of the selective hiring the organization is clear about the different critical skills as well as attributes that are needed, as well as the choices that are considered as a basis of the said attributes that are hard or impractical to change, as well as to train the people in the said behaviors as well as skills that can be easily learned (Armstrong 2006, p. 64).
On the other hand, the company is not focusing on the self-managed teams that are also important aspect of the SHRM. This is because the company focuses on the hierarchical flow of communication as well as power. Thus, it will be important because it can help the employees to pool their ideas to produce better as well as creative solutions in order to work the problems (Armstrong 2006, p. 64). In connection to the security aspect, it is important to consider the compensation contingent on the performance. The company is offering different benefits and bonus that enables the employee to have motivation. The said compensation is contingent on the organizational performance (Armstrong 2006, p. 64).
In terms of training, it can be said that the company is handling it with expertise; this is due to the implementation and establishment of the worldwide training organization which is the Intel University that focuses on the culture of the company, career and manager development as well as new employee orientation and integration. In addition, in order to encourage education, the company offers reimbursement for work-related coursework, certificates, degree programs as well as foreign language training to the qualified employees (Dell Ireland n.d.).
Furthermore, in order to ensure good working environment, it will be important to focus on reducing the status differentials that enables to tap the ideas, skills as well as efforts of all the people (Armstrong 2006, p. 65).
The most important aspect is the communication and information sharing inside the organization. This focuses on the financial performance, strategy and operational measures that convey a symbolic and substantive message that the employees are being trusted and reduce the role of the grapevine in the process of spreading the humors. It is also important that communication is a great support to team working because it helps to encourage the team members to offer and provide their ideas (Marchington & Wilkinson 2002, p. 184).
Armstrong, M (2006), A Handbook of Human Resource Management Practice, Kogan Page Publishers
Armstrong, M & Baron A (2002), Strategic HRM: the key to improved business performance. Developing practice. London: Chartered Institute of Personnel and Development, viewed 6 January 2008, <http://www .cipd.co.uk/bookstore>
CIPD (2008), Strategic Human Resource Management, viewed 6 January 2009, <http://www.cipd.co.uk/subjects/corpstrtgy/general/strathrm.htm>
IDA Ireland (2009), Intel, viewed 7 January 2009, <http://www.idairelan d.com/home/case_study.aspx?id=244&content_id=13>
Intel Ireland, Intel, viewed 7 January 2009, < http://www.intel.com/>
Marchington, M, Wilkinson, A, Sargeant, M (2002), People Management and Development: Human Resource Management at Work, Chartered Institute of Personnel and Development Publishing
Rusu, A (2006), Intel to Lay Off 10,000 Employees, Softpedia, viewed 7 January 2009, <http://news.softpedia.com/news/Intel-to-Lay-Off-10-000-Employee s-34504.shtml>
Shields, J (2007), Managing Employee Performance and Reward: Concepts, Practices, Strategies, Cambridge University Press
Appendix A: Pfeffer’s Model of Best Practice
Adopted from: (Armstrong 2006, p. 65)