Critical evaluation of "best practice" and "best fit" practices in HRM

The Best practice model

The assumption is that ‘best practice’ HRM affects organizational performance as workers change
their attitudes and behaviors in response to their experience of HR practice. (Gould and Mohamed,
2010). This model 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 2014). Best practice proponents believe that human
resources activities should be carried out following a set of HRM practice which is capable with
improving any organizational performance irrespective of the location and size of the organization
(Marchington & Grugulis 2011).
A number of lists of ‘best practices’ have been produced, the most quoted being by Pfeffer
(1998).

 employment security;
 selective hiring;
 self-managed teams;
 high compensation contingent on performance;
 training to provide a skilled and motivated workforce;
 reduction of status differentials;
 sharing information.

Best practices are transferable across organizations and units and, thus, require little trial and error
and distractions at the unit level (Samnani and Singh 2013). However, best practices are not
without drawbacks, a major disadvantage of a best practice HRM system is that it may result in
standardized HR practices that are suboptimal at the unit level (Becker and Huselid 2010;Samnani
and Singh 2013).

The Best Fit Model

The best fit model is in line with contingency theory, and It emphasizes that HR strategies should
be congruent with the context and circumstances of the organization, therefore ‘Best fit’ can be
perceived in terms of vertical integration or alignment between the organization’s business and
HR strategies (Armstrong 2014). Advocates of this approach suggest vertical integration where
control can be achieved through human resources practices and process is taken as the key element
(Jackson and Schuler 1995).As Armstrong (2014) states, there are three models in best fit:

 Life Cycle
The life cycle model is based on the theory that the development of a firm takes place in four
stages: start-up, growth, maturity and decline. This is in line with product life cycle theory.

 Competitive strategy

According to Porter (1985) there are three strategies aimed at achieving competitive advantages

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.

It was argued by Schuler and Jackson (1987) that to achieve the maximum effect it is necessary to
match the role characteristics of people in an organization with the preferred strategy.

 Strategic configuration.
According to Delery and Doty (1996) best fit is the proposition that organizations will be more
effective if they adopt a policy of strategic configuration. This means matching their strategy to
one of the ideal types of theories.

With reference to best fit viewpoint, Lawler (2008) raised the argument that most performance
that are subject to pay systems and reward employees for skill and knowledge development
indirectly by rewarding the performance that results from the skill.

Table 1.0, Differences between Best Practice and Best Bit

Best Practice Best Fit

Best practice proponents state a bundle of HR
Policies which include reward system.
The set of HR practices introduced lead to
high motivation and better employee
commitment.
Best fit advocates believe firm’s reward
system should be aligned to organization
strategy.
Best fit HRM strategy results in achieving
competitive advantage.

Source: Gould and Mohamed, (2010)

At SDB Bank, the relationship between performance and human resources management of SDB
can be linked and more towards “best fit. The best fit model support that if human resource policies
of the bank align with business strategy, high performing work practice will be achieved.

References

Armstrong M. (2014) Armstrong's handbook of human resource management practice, [13

edition]. Kogan page limited.
Evelien P.M., (2015) Best fit, best practice, or stuck in the middle? The impact of unit ownership
on unit HR performance in franchise Systems.Vol.40, no.4.[Online].
<https://link.springer.com/journal/volumesAndIssues/11365>. Accessed on 19th December
2017.

Gould-Williams J. and Mohamed R.B., 2010, ‘The International Journal of Human Resource
Management’, Vol. 21, No. 5, [Accessed on 11th December 2017].

Lawler, E. (2008) the Design of Effective Reward Systems. In Motivation and Leadership at
Work, 8th edition, New York: McGraw Hill International Press.
Marchington M. & Grugulis I. (2000) 'Best practice' human resource management: perfect
opportunity or dangerous illusion? The International Journal of Human Resource Management
11(6) 909.
Pfeffer, J (1998) the Human Equation, Boston, MA, Harvard Business School Press.

Samnani, A., & Singh, P. (2013). Exploring the fit perspective: an ethnographic approach.
Human Resource Management, 52(1), 123–144.

Schuler, R S and Jackson, S E (1987) Linking competitive strategies with human resource
management practices, Academy of Management Executive, 9 (3), pp 207–19

Ukessays, (2015) Best Practice and Best Fit Approach in HRM Management Essay Available
from < https://www.ukessays.com/essays/management/best-practice-and-best-fit-approach-in-
hrm-management-essay.php> [Accessed 13 December 2017].