CHRIST CHURCH BUSINESS SCHOOL

BA/BSC:
BSc (Hons) Business Management

Level 6 (top-up)
Year 3:

Student Name: D.W.Sajith Niroshana Kumarasiri

Student CCCCU
NIR20194172
ID:

Strategic Issues in Human Resource

Module:
Management

Module Code: MBTMD3SHR

Tutor’s Name: Mrs.Ann Pintoe

Assessment No: Individual Assignment 1

Contributing to successful organisational

Assessment
performance is a key aim of strategic Human
Topic:
Resource Management.

Submission
02.04.2020
Date:

Word Count: ………………2145……………………………… (Excluding abstracts, appendices,

direct quotes, bibliography, diagrams and illustrations)

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Introduction

Best fit and best practice can be identified as two famous approaches to human resource
management. According to best fit approach strategies of human resource are more effective
and efficient when they are in lining to with the environment of the business. Further, it
focusses on finding the relationship between human resource management and strategic
management by assessing the level of vertical integration among the business strategies and
HRM policies and practices of an organization. However, according to ‘best practice’ by
using best human resources organizational performance can be enhanced. This includes,
improved worker mentality, lower employee turnover and absenteeism rate, improved
employee skill levels, upgraded efficiency and quality. Therefore, best practice approach is
also named as high commitment model.

This article will focus on identifying the similarities and dissimilarities in-between ‘best fit’
and ‘best practice’ approaches. Therefore, section two of the article will compare these
models according to human resource studies and identify similarities while differences
between approaches will be explained in the third section.

As mentioned earlier, best fit model on strategic HRM investigate the immediate connection
in among human resource management and strategic management by taking nature and
impact of vertical integration in to consideration. In vertical integration, leverage is obtained
by building a close connection between human resource practices and policies to business
objectives. Therefore, key theme of strategic HRM can be identified as external context of the
fir. The rigidity of tight fit models in a dynamic situation was evaluated, and the idea was
given to attain both fit and flexibility by corresponding strategic human resource frameworks.

Best fit model focusses on use of better human resource practices to increase the
organizational performances. Generally organizational performance is determined in terms of
satisfaction of employees and commitment of employees. Those best practices used in an
organization can take numerous structures; certain practices have used a universal practice set
which would improve the performance of every organization which they have been applied
to. According to Pfeffer (1998) there are seven human resource practices to attain competitive
advantage. They are, selective hiring, high pay on company performance, employment
security, training in large-scale, self-managed teams, information sharing and reducing the
statute differences.
According to Tim Claydon (2007) harmony between policies and horizontal integration are
key components of best practice.

Similarities in between the best fit and best practice models.

After defining the approaches as above, let’s see into agreements among the best fit and best
practice models in below.

Achieving higher performance in an organization is considered as the main aim of both

approaches. Sparrow and Hiltrop (1994), stated that the two approaches can be named as
matching models since both their goal is to match the HR strategies with the strategies of the
organization.

Best fit model in strategic HRM centers on the fact of direct and close relationship in between
organizational systems and strategies. According to Lawler (1995) since business strategies
determine what organization wants to achieve, how the organization should behave, the sort
of performance and levels of performance it must accomplish, for them to become effective,
every organizational system must start by defining the business strategies.

Additionally, significance of business strategy on the performance of an organization is

identified by the theory of best practice. As stated by Conway (2003), in high commitment
management research, human resource management has its underlying foundations in both
universal theoretical and configurationally framework. Moreover, Marchington and
Wilkinson (2002), guarantee that higher level of focus over last few years has been on the
theories of best practice or high commitment human resource management, which was
motivated initially by work of academics in US, however improved more recently by people
from Britain as well. Therefore, according what two models believes human resource
practices must be complimentary.

Whether the organization uses best fit or best practice, organizations need for employees is
always recognized. Accordingly, these approaches need employees so as to accomplish
organizational objectives. Hence, hiring and staffing strategies and procedures are present in
both approaches. Moreover, testing, selection, recruiting, and staffing are take in to
consideration by both approaches. Backers recommended that there are bundles of human
resource policies which are mutually compatible, where they increase the motivation and
levels of employee commitment which impacts positively on the performance of the
organization. Even though there isn’t a consistent agreement to identify these practices, in
general the list includes, employment security, extensive training, selective hiring and a
structure which encourage pay policies and employee participant regarding competitors in the
industry (Pfeffer, 1998; Huselid, 1995). Furthermore, rewarding as an example, is yet another
significant problem inside utilizing of these approach. Generally, according to both
approaches HR is viewed as an important player when supporting to achieve organizational
objective and strategies.

According to both approaches, it is believed that having externally competitive reward

package plays a significant role in retaining and attracting the most qualified employees to
the organization. Therefore, the advocates of best fit model stress on the significance of
having external competitiveness to attract and retain employees. Effectiveness of the reward
system in an organization depends on the fact whether the employees who has been rewarded
feels satisfied with their reward when they compare it with the individuals who received
rewards by engaging in similar jobs in similar organizations. Schuster and Zingheim (1992)
stated that good performers will always go for organization where their performance is well
recognized and rewarded.

A similar idea is stated in books of best practice. Pfeffer (1998) stated that regardless of the
fact that labor markets are a long way from perfectly efficient, it is regardless the situation
that certain relationship exists in between the quality of the workforce it attracts in and what a
firm pays the employees. There is accordingly a mutual understanding that externally
competitive reward system has a significant role to attract suitable candidates and retain best
employees. Further, according to Pfeffer (1998), even though the labor market isn’t always
efficient, a relationship cab be seen between attracting a quality workforce and what firms
pays. Therefore, it could be said that according to both models having a reward system which
is externally competitive plays a major role when attracting and retaining appropriate
employees.

It could be said, through promoting great rewards systems, these two models strengthen and
characterize structure as well as the culture of organization. This is because the pay system in
an organization a significant impact on the behavior of people in an organization. Hence a
better reward system contributes and consolidate towards the corporate culture.
According to Armstrong (1999) strategies of rewarding employees gives the opportunity to
reinforce organization’s beliefs and values in areas such as quality, innovation, performance
and teamwork. Lawler (1996) stated that the system of pay can assist with changing cultures
where it expresses the behavior, they evoke to be the major patterns of behavior in
organization and lead to perceptions on what it stands for, believes in and values. Rewards
are considered to be a method of strengthening structure and culture of an organization by
both strategic approaches.

To sum up, in terms of strategic human resource management, ideas of best fit and practice
share some regular focuses. Generally, both approaches believe that HR has a significant role
in supporting to achieve organizational objectives and strategies. Further, according to both
approaches reward systems should be in line with HR practices in the organization. The
mutual agreement is that, having an externally competitive reward system can attract and
retain most suitable employees. Moreover, both approaches believe reward system as a
method for reinforcing organizational structure and culture.

However, there are number of differences between the two models. Let’s look into them in
the below section.

Of course, the frameworks in strategic HRM have various approaches and in this way, we
could feature many significant differences between those approaches.

At general level, best practice is considered as a universal approach where best fit is
considered as a contingency approach. The base of best fit approach is selecting best and
most effective HR practices and policies which matches the environment of the company.
Size of the organization, business strategy used, geographic area, types of technology used,
segment of the industry, pursued skills and economic conditions are some components
identified to have an impact on HR strategy. According to Cox (2007) contingency approach
is considered as a decision-making approach which is used in devising most suitable HR
strategies and named best fit approach in different to best practice models. Since advantages
of HRM over all context is reported by best practice model, it is known to be a universal
approach.
In best fit approach, first comes the organizational strategy and all the other organizational
practices and systems follow. While in best practice model there is a systematic arrangement
of practices, which goes before procedure yet gives the human resources required to fulfill
the organization’s goals and objectives, irrespective to what they are. Therefore, it is
identified that the two models contrast from their methods. In best practice model the
manager of HR starts from recognizing the best practices, at that point gives a profile to HR,
get high level of commitment, selling it, doing it, measuring it, and finally best performers
are rewarded. However, the process in best fit approach is different where the HR manager
firstly identify the external strategies such as, marketing, operational, etc. then trying to fit
them with strategies of HR.

When it comes to the reward system, two approaches have different perspective in regarding
how pay influence on the performance of people. The focus of the best fit approach is
towards the financial aspect of the pay system where they believe people will perform better
if their effort is recognized and paid well. Therefore, in best fit approach pay is considered as
the motivator to increase performance. However, according to best practice approach pay
system does not give a significant influence on the performance whereas they believe pay as
a factor which prevent disappointing employees and a symbol of acknowledging employee
work performed. Further advocates of best practice see rewards as a system which can
destroy employee relationships and trust which are the basis of employee commitment
towards the organization. Therefore, they promote a system of rewards which doesn’t
differentiate with pay amount, hence an equal pay for everyone and collective incentives.

Most suitable approach to SHRM

When it comes to the most suitable approach, it can be identified that there’s no such
standard on what the most suitable approach is to be used in an organization. Organizations
should design their own approach analyzing their environment, business strategies, goals and
objectives. According to best practice approach there are defined best strategies to use in
different scenarios. However, it can’t be said that pre-defined set strategies will always bring
success to the organization because there are many factors affecting to each incident which
are unique from each other. But strategies like hiring, training, recruiting, etc. employees can
be adopted to any organization. When it comes to best fit approach, advocates of best fit only
look at contingencies and internal capabilities and environmental forces are neglected.
Therefore, as mentioned previously, there is no best approach so that organizations should
analyze their own situations and use these concepts accordingly.

Conclusion

To this end, the present competitive environment has encouraged organizations to devise and
implement strategies capable enough of augmenting their competitive edge apart from
gratifying the intended aims and prospects. Numerous disparities are evident between the
notions of the best fit and the best practice regarding the HRM environment. Under the
former, the notion of best fit operates on the positioning of emphasis on measures regarding
practices for specific groups. Contrary to the notion of best fit, concept of the best practice
operates in a manner that adds significance to the implications of an organization’s values
and qualities.

As discussed above different writers have different perceptions on the two approaches where
there are agreement points and disagreement points on the similarities, differences and the
best approach to be used in an organization.

For an example, African United Bank has utilized the advantages of best practice model in
execution of Human resource practice in to their organization to gain better performance.
Therefore, there are numerous models in SHRM including best fit and best practice which
helps to improve the organizational performance. In all these approaches organizational
strategy is considered as the key factor to consider when preparing HR practices.
Accordingly, these approaches believe that connecting HR policies and practices to business
strategy will lead to achieve better performance and competitive advantage on the
organization. Further, best practice approach needs to be changed according to the
environment of the organization including national differences and aligning HR strategies
with business strategies in order to get better performance. Therefore, these strategies should
be aligned to match our own situation in order to get the maximum results.
References

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