INTRODUCTION
Strategic
HRM 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
(Armstrong, 2009).Business objectives
are accomplished when human resource practices, procedures and systems are
developed and implemented based on organizational needs, that is, when a strategic
perspective to human resource management is adopted.(Baird and
Meshoulam, 1988).Strategic
HRM is largely about integration and
adaptation. Its concern is to ensure that: (1) human resources (HR) management
is fully integrated with the strategy and strategic needs of the firm (vertical
fit); (2) HR policies cohere both across policy areas and across hierarchies
(horizontal fit); and (3) HR practices are adjusted, accepted and used by line
managers and employees as part of their everyday work (Schuler (1992: 18).
THE BEST PRACTICES
This approach is based on the assumption that there is a set of
best HRM practices that are universal in the sense that they are best in any
situation, and that adopting them will lead to superior organizational
performance (Armstrong,2009).Lists of ‘best practices’ have been produced, the
best known of which was produced by Pfeffer (1998a), Guest (1999):
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.
THE
BEST FIT
The best fit model seems to be more realistic than the best
practice model. As Dyer and Holder (1988: 31).The best fit and competitive
strategies are (Porter,1985):
1.
Innovation – being the unique producer.
2.
Quality – delivering high quality goods and services to customers.
3. Cost
leadership – the planned result of policies aimed at ‘managing away expense’.
To
achieve the maximum effect it is necessary to match the role characteristics of
people in an organization with the preferred strategy ( Schuler and
Jackson,1987).
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THE SIGNIFICANT FEATURES OF BEST PRACTICE AND BEST FIT IN SHRM
It is unwise to pursue so-called
‘best practice’ (the ‘universalistic’ perspective of without being certain that
what happens elsewhere would work in the context of the organization (Delery
and Doty,1996).
Best fit’ is preferable to ‘best
practice’ as long as the organization avoids falling into the trap of ‘contingent
determinism’ by allowing the context to determine the strategy (Paauwe, 2004).
The search for best fit is
limited by the impossibility of modelling all the contingent variables, the
difficulty of showing their interconnection, and the way in which changes in
one variable have an impact on others (Purcell, 1999).
Best fit can be pursued in a
number of ways, namely by fitting the HR strategy to its position in its life
cycle of start-up, growth, maturity or decline (Baird and Meshoulam, 1988), or
the competitive strategy of innovation, quality or cost leadership (Porter,
1985), or to the organization’s ‘strategic configuration’ (Delery and Doty,
1996), such as the typology of organizations as prospectors, defenders and
analyzers defined by Miles and Snow (1978).
This
concept of universality is criticized because it takes no account of the local
context. The concept of best fit emphasizes that HR strategies should be
congruent with the context and circumstances of the organization. ‘Best fit’
can be perceived in terms of vertical integration or alignment between the
organization’s business and HR strategies. (Armstrong, 2009).It is generally
accepted that best fit is more important than best practice. HR strategies set
out what the organization intends to do about its human resource management
policies (Armstrong, 2009).
BEST PRACTICE ORGANIZATION
FedEX
Among
the 100 “best companies to work for “reputation of being one of the most
employee friendly companies in the world In 2000, FedEx employee turnover rate
was 6%, well below the industry average of 20%.((fedex.com, 2018).
Employee
retention “in our competitive market place, employee loyalty tends to be low.
If employees don’t like their jobs they simply walk across the street and find
a new one. It’s important to keep your people happy and to create an
environment where they want to stay (Mc Mahan, HR manager at FedEx).
History
of employee commitment since inception in 1971, its management focused on
providing a suitable work environment that encouraged employees to come up with
innovative solutions during severe financial difficulties during the first
couple of years, the employees were prepared to sell their personal belongings
They were also prepared to use their own credit cards to purchase fuel to
deliver the packages to the customers continued working even when they didn’t
receive their salary on time (fedex.com, 2018).
Best
practices at FedEx People service profit (PSP) philosophy adopted by the
founder of FedEx. If FedEx took proper care of its employees, they would
provide efficient service to the customers. This in turn would benefit the
company by generating more profits Survey-Feedback-Action (SFA) Program.Helped
management take decisions regarding promotions.Online survey system in the US
in 1992.Each April, every employee is asked to participate in the online survey
.Managers hold feedback sessions. Best practices at FedEx leadership evaluation
and awareness process (LEAP) • Encourage non-managerial cadre employees to move
to the managerial level within the company Employee Communication Program.SFA
program guaranteed fair treatment procedure and Open Door Policy and Grievance
system (fedex.com, 2018).
Best
practices at FedEx Job change applicant tracking system (JCATS).Online computer
job posting system that allows hourly employees to post for any available job recognition
and Reward Program.Awards such as the ‘Bravo Zulu’ and the ‘Golden Falcon
Award’ (fedex.com, 2018).
BEST FIT ORGANIZATIONS
Google
Google’s philosophy is that with the right tools, you can
attract the best talent, and develop happier and more productive employees.
With these HR efforts, Google’s leadership is recognized worldwide.
Cadbury
The Cadbury culture combines positivity and balance, among work
and life.
SAS
SAS is noted for offering a high-trust environment and
exhibiting a low turnover rate. The HR department is recognized as a pioneer in
addressing day-to-day stresses and concerns that are common in a workplace
environment.
Nissan
The HR practices at Nissan include transparent salary scales and
full autonomy for leaders to recruit and build their own teams. It is a
practice not seen in the automobile industry. But, at Nissan, it is the key to production
and manufacturing success.
Twitter
Twitter is able to maintain the scrappy start-up feel while
becoming a major tech firm because of the extensive training offered to those
in leadership.
Linkedin
The HR team hosts all-company parties, complete with live music
and a night club atmosphere to reward staff members for their hard work and
dedication to the company.
Boston
Consulting Group
Mentorships and open-door communication policies with leadership
allows for creative freedom and the confidence to share ideas.
Ford
The company is recognized for its HR innovation through a highly
disciplined culture, outstanding training opportunities, and strong and
consistent processes.
Shell
The company believes in having a strong, cohesive, and open
culture that works together as a team no matter what country the team member is
from. Having a global mindset is what sets Shell apart from its competitors.
Rolls Royce
The Rolls-Royce Company is long synonymous with quality training
and apprenticeships. The business model and value chain is incredibly
innovative
Sources:
Glassdoor’s
Best Places to Work – Glassdoor’s Employees’ Choice Awards 2015
Glassdoor’s
Best Places to Work – Glassdoor’s Employees’ Choice Awards 2014
Fortune’s Best
Companies – 100 Best Companies to Work For 2014
Fortune’s Best
Companies – 100 Best Companies to Work For 2013
CONCLUSION
To
put everything under consideration, one can see that best fit and best practice
approaches offer companies powerful tools for shaping human resource management
processes. The concept of best practice is based on the assumption that there
is a set of best HRM practices which are universal in the sense that they are
best in any situation and that adopting them will lead to superior
organizational performance (Armstrong, 2009). This concept of universality is
criticized because it takes no account of the local context. The concept of
best fit emphasizes that HR strategies should be congruent with the context and
circumstances of the organization. ‘Best fit’ can be perceived in terms of
vertical integration or alignment between the organization’s business and HR
strategies. (Armstrong, 2009).It is generally accepted that best fit is more
important than best practice. HR strategies set out what the organization
intends to do about its human resource management policies (Armstrong, 2009).
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