The modern business environment is constantly evolving and a large number of companies are focusing on employees as an important asset than ever before. Within the area of human resource management, the debate between the Best Fit approach and Best Practice approach have created a widespread controversy. “Best fit and Best practice approaches to HRM not only engages in a theoretical controversy but also attracts a higher degree of practical significance in management practices.” The present essay aims at analysing the best fit and best practice approaches to HRM within a globally operating company. Further, the purpose of this essay is to critically appraise the advantages and disadvantages for both of the approaches to HRM and also include consequences of each over the employee and organizational performance.
Strategies have been an integral part of any businesses, government bodies or agencies and many leading authors and experts have produced different articles and reviews regarding Best Fit and Best Practice approach as effective strategic tools for achieving a set of predefined objectives (Paauwe and Boon, 2018). These objectives include business and corporate objectives or functional objectives for any form of an organization operating at the multinational level by utilizing Human Resource Management as the tool of implementation. According to Boselie (2016), the term Best Fit approach means meeting the need of an organization which are agreed upon at both functional and corporate level of organizational management. On the other hand, when organizational goals are achieved through some set of predefined procedures or guidelines for gaining competitive advantages then it is known as Best Practice approach to HRM (Croonen et al. 2016). The Best Practice approach is often described as the HR strategy that has an additive, universal and positive effect on organizational performance. Hornung et al. (2017) added that many strategies are based on various factors that are many internal or external factors. The internal factors include organizational structure, financial, physical and human resources while the external factors include economic, sociological, political and technological factors (Voo et al. 2017). All these factors are aimed at gaining a competitive advantage which led to evolution of Best Fit and Best Practice approach. The in-depth detail of both the approaches along with its advantages and disadvantages and its consequences over organizational performance are discussed in the following.
The approach of Best Practice is based upon certain HR activities that are universally applicable to the companies for attaining a competitive advantages irrespective of the industry or organizational setting (Fratričová and Rudy, 2015). The model of Best Practice is implied upon a close connection between organizational performance and HR practices which are further associated with fiercely committed management practices. Researches have shown that these kind of approach are most suitable for maximizing performance regardless of the product and market strategies (Stenius et al. 2017). The activities or strategies incorporated within the Best Practice approach are characterized by high competence levels among the workforce, encouraging motivation and introducing a working design for boosting employee commitment. As referred by expectancy theory, the Best HR Practice is going to result in a higher level of productivity, quality and low rate of wastage and absenteeism (Boselie, 2016). On the contrary, Best Fit approach to HRM or also known as contingency model mentions that there is no single or universal way for managing employees as one strategy might be successful for one and not for other business organization (Sanders, 2016). Here it needs contingent or alignment relationship for business strategy to organizational HRM practice and then advocates this approach for suggesting vertical integration. Control can be therefore achieved through human resource process and practices and set managerial strategies which would determine the long-run objective of every individual organization. According to Garavan et al. (2016), the best-fit approach is further classified into three models, namely competitive strategy, lifecycle, and strategic configuration. All the combined strategies aim at achieving competitive advantage through innovation, quality excellence and cost leadership. The model of Best Fit approach to HRM signifies that organizational strategies and human resource strategies must be aligned together. Further, Syed Aktharsha and Sengottuvel (2016) added that it emphasizes to assure that HR strategies are applicable in various circumstances and among operational and culture process. Therefore different companies will have different HR strategies which will be individually focused upon the needs of both employees and organization. The management will be incorporating changes in strategies from the previous experiences and apply as relevant to fit the organizational long term objectives.
However, as compared to Best Practice approach to HRM, this model has major disadvantages. Villajos et al. (2018) criticized the model by stating that it limits the strategy since they become subjective to multiple alternating contingencies and are difficult for tackling new challenges. HR system is rigid, unlike the Best Practice approach which is flexible. Also, the flaws are mainly focused upon the limitation that search for a contingency and have difficulty in managing the interconnection. On the other hand, Wickramasinghe and Wickramasinghe (2017) opined that Best Practice model is claimed to have certain activities that exist and are universally supported by leading companies to attain a higher competitive advantages irrespective of the industry environment. The Best Practice approach is strongly based upon the assumptions that the set of human resource strategies are universally applicable (Lazarova et al. 2017). This means they can be applied to any type of organization operating at the global level and prove to be best for any situation. Further Glaister et al. (2018) mentioned that adopting such strategies always lead to superior organizational performance. There is a number of advantages and benefits associated with Best Practice approach to HRM which makes it stand out from the Best Fit approach as it fails to deliver the same. These are employment security, self-managed teams, selective hiring, and sharing information efficiently along with the reduction of status differentials (Haque, 2018). Moreover, the Best Practice approach produces a high compensation contingent over employee performance and also provides training to gain a skilled and motivated employees.
Along with its numerous advantages, the Best Practice approach also projects a series of limitations. First, while implementing the standards and practice in Best Practice approach to HRM, a multinational level organization automatically embrace the risk of introducing mutually prohibitive combinations like compensation and team working that are based upon individual performance level (Boselie, 2016). This results in a negative influence over employee collaboration and deteriorates the performance with the over exaggerated competition. Second, there is a complex undertaking required within the high commitment management system that also includes top-level management commitment and large inputs of planning. Third, Stenius et al. (2017) argued that the Best Practice approach to HRM lacks direct links with the core organizational strategies and therefore it is generally believed that organizational strategies are influenced by outstanding high-performance human resource. Paauwe and Boon (2018) mentioned that when the human resource strategy precedes the strategy at an organizational or corporate level, the organization runs the risk of introducing standardized or common sets of approaches. This means it fails in supporting the individual needs of employees and are detrimental towards overall strategic objectives. Finally, Sanders (2016) added the fourth disadvantage of Best Practice approach results from an insufficient researches and existence of theoretical definition that fails to address the gap and improvisation over the human resource strategies.
According to Veloso et al. (2015) the Best Fit approach highlights that HR techniques should be good with the novel situation and states of the business industry it belongs to. Best Fit approach can be seen to the extent vertical joining or game plan between the affiliation’s obvious certainty and HR philosophies. The present HR divisions enrol and develop the key human resource needs of a multinational business. The image of enrolling, planning and improvement has changed and can be used as a key driver for passing on financial specialist regard (Fratričová and Rudy, 2015). Organizations are growing coercing the best execution from just employees. Best Practice approach has the potential to produce the capacities of the present workforce, and with enrolling it will invigorate the lifestyle of an uncommonly skilled work drive. Subsequently in the occasion that Best Fit Approach successes, by then it is possible to show the kind of HR required for a given sort of business, and this preparation can be grasped in a wide number of firms in equivalent conditions. Hornung et al. (2017) opined that this view reflects a longstanding business visionary custom in which the product is viewed as a trademark at a global scale. The impressive maltreatment may be paternalist and kind, regardless, comparatively, it may neutralize the interests of workers. Essentially, experts are only advantages to be pounded and disposed of as business necessities oversee. Even more basically, the interests of workers and their flourishing are of no criticalness in themselves (Boselie, 2016). In the wrong hands, HRM ends up both a sharp weapon to appraise each individual with their potential from their organization and a contraption to threaten the employee wellbeing. Many theorists agree that there is no convincing motivation to look any more far off than the human advantage for increment high ground, in spite of the way that the models use change. Each other model in the sweep for elective recruitment of progressive advantage and fight that the principle favoured point of view is to direct workforce to fit an agent-centred procedure, exhibiting a model (Croonen et al. 2016). This is the foundation for best work on appearing human resource practices can be agreed with the capacities and practices required for the business system. These practices join work security, specific enrolling, independently directed gatherings and the decentralization of fundamental initiative, correspondingly high pay subordinate upon progressive execution and wide sharing of budgetary and execution information all through the organization.
As opposed to Best Fit approach, the Best Practice approach make it possible to select and carefully use the selection tests for identifying personnel who have the potential to make an effective contribution (Lazarova et al. 2017). Moreover, the Best Practice approach also engages communication that ensures a two-way process is engaged for keeping every individual informed. The job design ensures flexibility, motivation and commitment which includes steps for assuring the employees are given the privilege and autonomy of fully utilizing their skills and knowledge towards organization growth. Even if Best Practice brings more value to an organization many different small and medium multinational business hesitate to adopt this model as foremost it is difficult to implement. Wickramasinghe and Wickramasinghe (2017) argued that they are often crisis-driven and the cost/time effectiveness in short term falls below the average productivity rate. The national or cultural differences often acts as a hindrance and have a poor track record for entrepreneurial kind of business organizations (Voo et al. 2017). Both the approach advocates the regard that is placed in the human resource and changed in accordance with the legitimate framework. Stenius et al. (2017) opined Best Practice approach highlight on the middle abilities of the managers and develop these to address the general workforce framework. In spite of the fact that Best Fit HR will complement the method and fit in with the affiliations culture, neither one of the models is a perfect solution in every given situation. Organisations should pick HR practices and procedures that fit with their business objectives and requirements. The leaders of an organization should be a regarded resource composed into the definitive philosophy.
Finally,
to end at the conclusion, Best Fit approach and Best Practice approach to HRM
are both power tools for an organization to shape the human resource management
processes. Since the foundation of these approaches, there is no final
judgement on which is better as both have its significance in different
circumstances. The essay has critically appraised and analysed the advantages
and disadvantages of a Best Practice as opposed to a Best Fit approach to HRM
in a globally operating company, including the consequences of each for
employee and organizational performance. The Best Fit approach is found to be
aligned towards the contingency of strategies which neglect the internal
capabilities and environmental forces and therefore produces the risk of HR
failure in the global market. Within the global context, the Best Practice
approach is suitable in adapting localized needs for the international
subsidiaries and use HRM as a powerful tool to drive competitive advantages.
References
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