Best Practice vs. Best Fit Human Resource Management Approaches - Coursework Example

Best Practice vs. Best Fit Human Resource Management Approaches Name Institution Course Date Best Practice vs. Best Fit Human Resource Management Approaches The focus on human resource management has increased in recent times as organizations increasingly recognize the importance of human resource management. Human resource management is important as it has a direct impact on organizational performance. In today’s competitive, complex and dynamic business environment, companies must have highly skills, knowledgeable, enthusiastic and highly committed workforce to succeed (Armstrong, 2012). In addition to having the right people, firm are forced to adopt HR practices that promotes good organizational performance. However, there are two HRM approaches namely best-fit and best-practice. Traditionally, best practice approach to HRM has predominantly been applied across industries (Enz & Siguaw, 2000). However, recent trend in the across industries indicate that most organizations are adopting best-fit HRM approach as a means of promoting organizational performance. However, there is an ongoing debate as to whether best-practice approach to HRM is dead or not. This essay discusses the reasons for the increased adoption of best-fit approach to HRM instead of best-practice approach. Best practice (universalism) is one of the two HRM schools of thoughts. Best practice schools of thought maintain that there are a set of HRM practices that results in high commitment and high performance of an organization regardless of context (Wright & Snell, 1998). According to this school of thought, the best practices HRM practices work for any organization and results in high performances manifested through lower rates of absenteeism, improved employee attitude, low turnover, high productivity, and enhanced efficiency and quality (Boxall & Purcell, 2000). There are a number of best practice models that have been proposed by different theorists, key among them being Pfeffer’s (1998) model. Pfeffer’s model highlights seven critical HRM practices that result in high performance and organizational success, which include employment security, high compensation, selective hiring, managed teams, information sharing, reduction of status differentials and training. Best fit school of thought, on the other hand, maintains that HR strategy is more efficient when HR practices are linked to the business environment (Brewster, 1999). In this respect, best fit HR approach is based on the assumption that environmental context, such as micro and macro-environmental factors differ from business to business and from industry to industry. Therefore, to achieve greater efficiency and superior performance, HR strategies needs to be tailored to suit the context or business environment (Paauwe & Boselie, 2005). Additionally, this school of thought maintains that different HR strategies need to focus on distinct needs of the people and organization (Collins & Clark, 2003). Although best practice approach has traditionally been the main HRM approach, this approach is falling out of favor of best fit approach is increasingly being adopted by businesses across industries. Critics of best practice school of thought maintain that universalism has no place in the modern world considering the changing nature of the business environments in which companies operate. Sisson and Storey (2000) are some of the key critic of best practice approach argues that it is not easy to accept the claim of the existence of universal best practice on the grounds that what works well in one company will not necessary work well in another firm. Lawler (1996) opine that, rather than adopting best practice, companies ought to begin by thinking critically about being unique in order to achieve a competitive advantage in the industry where they operate. In the modern business environment, to gain a competitive advantage, companies must be unique by adopting unique strategies and HR practices, something that most organizations have acknowledged, thus the increased adoption of best fit HR practices instead of best practice HR approach. Cappelli and Crocker-Hefter (1996) in their study observed that most successful companies are those that strive to be unique by differentiating from rivals in the industry by adopting peculiar HR approach as a core firm competency for competitive advantage. Adopting unique HR practice enable a company to differentiate itself and build unmatchable competencies for better brand position, image, services and products (Wright, 1998). . It is for this reason that critics of best practice argues that universal best practice has no place in the modern day competitive business environment because best practice approach lacks the consideration of firm strategy in the set of human resource practices that proponents of the approach have proposed. (Enz & Siguaw, 2000). Thus, most organizations are adopting best fit HRM approach because the approach allows an organization to adopt HR practices that are unique to it and the business environment where they operate. In the end, businesses that adopt best fit approach perform better because they adapt their HR practices to the unique environment where they operate. The other setback associated with best practice approach is the fact that it assumes that a universal HR practice can be used successfully in all business contexts and cultures, which is not true. Geert Hofstede (1984) developed national culture model called cultural dimensions that outlines the dimensions of cultural differences between countries. The cultural dimensions include power distance, individualism, uncertainty avoidance,, masculinity, indulgence vs. restraint and long-term orientation. According to Hofstede, the national cultures in which businesses operate vary from one country to another. Accordingly, this implies that the HR adopted in one country might not work in another country because of the cultural differences (Becker & Gerhart, 1996). The fundamental flaw of best practice approach is demonstrated by power distance dimension. Power distance dimension looks at the extent to which inequality is accepted in the society (Hofstede, 1984). Comparing Australia and China, it emerges that, where China scores highly in terms of power distance at 80, Australia has a low score of just 36 in this dimension. This implies that, whereas Chinese employees accept inequality and has high regards for superiors, Australians is a more equal society, where employees are ready to question or challenge their superiors (Wright & Snell, 1991). Accordingly, the differences between China and Australia in terms of power distance dimension indicates that the HR practice that works in Australia will not necessarily work in China because of the cultural differences between the two nations. This implies that, for an Australian company to succeed in China, HR practices must be aligned to suit the Chinese business and cultural contest, and this explains why most companies are increasingly adopting best fit instead of best practice because best fit considers the context and business environment when coming up with the HR strategy (Tyson, 1997). The reason best practice approach is considered irrelevant today is also demonstrated by Hofstede’s individualism cultural dimension. Individualism vs. collectivism is a cultural dimension that looks at the extent to which a society is oriented towards individuals or groups. In individualistic societies, people are more concerned about self and close family members while in a collectivism society, people belongs to groups (Luger, 2009). Analysis indicates that Australia has a score of 90 on individualism while China has a score of 20. This implies that China is a collectivism society, where people belong to groups while Australia is an individualistic society, where the concern of people is about self and close family members. The differences between nations in terms of individualism vs. collectivism have implications on HR practices because it implies that HR strategy that succeeds in an individualistic society like Australia might not necessarily succeed in China which scores highly on collectivism cultural dimensions. Accordingly, this highlights why best practice approach to HR practice is becoming irrelevant in the modern day globalized business environment (Johnson, 2000). Best fit approach is, therefore, the most promising because companies that adopt best fit approach align their HR strategies to the business context, such as culture of the country in which their company operates to ensure success (Purcell, 1999). Additionally, the flaws of best practice HR approach are highlighted by masculinity dimension. Masculinity defines the degree to which a society distributes duties between genders (Hofstede, 1984). In highly masculine societies like China, when recruiting and selecting employees for a position, favoritism might come into play for male at the detriment of women. This is because such societies belief that some roles are meant for men and not women. On the other hand, societies that is more feminine beliefs in equal distribution of roles (Truss & Gratton, 1994). Therefore, the differences in the cultural contexts with regards to masculinity vs. femininity suggests that there is no universal best practice that can apply to all cultural context and this explains why best practice approach to human resource is considered dead in the modern world (Baird & Meshoulam, 1988). Similar differences can be said of uncertainty avoidance, long-term orientation and indulgence, which differs from once society to another, meaning that universalism cannot work in practice to achieve high performance. In conclusion, best practice and best fit are the two most commonly adopted HRM schools of thought. Although best practice approach has been the most commonly adopted HR approach in the olden days, this school of thought as demonstrated in the discussion is increasingly becoming irrelevant as companies increasingly favor best fit approach. Best practice is dying because practically, there is no such thing as universality best practice considering that what works well in one company might not necessarily work for another company based on the differences of business environments and contexts in which different companies operate. Accordingly, this explains why there is a mass shift towards the adoption of best fit approach that takes into account the business environment and context in which a company operates when coming up with the HR strategy and aligning to ensure that the strategy matches the culture, organization mission, vision and values, as well as the micro and macro-environment. References Armstrong, M. (2012). Armstrong's handbook of human resource management practice, [12 edition]. London: Kogan page limited Baird, L., & Meshoulam, I. (1988). Managing two fits of strategic human resource management. Academy of Management Review, 13(1), 116. Becker, B., & Gerhart, B. (1996). The impact of human resource management on organizational performance: Progress and prospects. Academy of Management Journal, 39(4), 779. Boxall, P., & Purcell, J. (2000). Strategic human resource management: Where have we come from and where should we be going? International Journal of Management Reviews, 2(2), 183. Brewster, C. (1999). Different paradigms in strategic HRM: Questions raised by comparative research. In P. Wright, L. Dyer, J. Boudreau & G. Milkovich (Eds.), Research in personnel and human resource management: Strategic HRM in the 21st century (Supplement 4 ed.). Greenwich, CT: JAI Press. Cappelli, P., & Crocker-Hefter, A. (1996). Distinctive human resource is firm’s core competencies. Organizational Dynamic 24(3), 6. Collins, C. J., & Clark, K. D. (2003). Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practices in creating organizational competitive advantage. Academy of Management Journal, 46(6), 740-751. Enz, C. & Siguaw, J. (2000). Best practices in human resources. Cornell Hotel and Restaurant Administration Quarterly, 48 61. Hofstede, G (1984). Culture's consequences: International differences in work-related values. London: SAGE. Johnson, E. (2000). The practice of Human Resources Management in new Zealand: Strategy and Best Practice? Asia pacific Journal of Human Resources, 69(1), 1-13. Lawler, E. (1996). The Design of effective reward systems. In motivation and leadership at work, 6th edition, eds. R. Steers, L. Porter and G. Bigley, 531. New York: McGraw Hill International Press. Luger, E. (2009). Hofstede's Cultural Dimensions. Berlin: GRIN Verlag. Paauwe, J., & Boselie, P. (2005). Best practices... in spite of performance: Just a matter of imitation? International Journal of Human Resource Management, 16(6), 987-1003. Pfeffer, J. (1998). The human equation: Building profits by putting people first. Boston, MA: Harvard Business School Press. Purcell, J. (1999). Best practice and best fit: Chimera or cul-de-sac? Human Resource Management Journal, 9(3), 26–41. Sisson. K., & Storey, J. (2000).The realities of human resource management. Buckingham: Open University Press. Truss, C., & Gratton, L. (1994). Strategic human resource management: A conceptual approach. International Journal of Human Resource Management, 5(3), 663. Tyson, S. (1997). Human resource strategy: A process for managing the contribution of HRM to organizational performance. International Journal of Human Resource Management, 8(3), 277-290. Wright, P. (1998). Strategy-HR Fit: Does it really matter? Human Resource Planning, 21(4), 56-57. Wright, P. M., & Snell, S. A. (1998). Toward a unifying framework for exploring fit and flexibility in strategic human resource. Academy of Management Review, 23(4), 756. Wright, P. M., & Snell, S. A. (1991). Toward an integrative view of strategic human resource management. Human Resource Management Review, 1(3), 203. Read More