HST5504 Lecture Notes - Lecture 6: Society For Human Resource Management, Path Dependence, Ikea
WEEK 6: BEST FIT AND BEST PRACTICE IN SHRM
Best Fit:
• hat ostitutes a good H‘ strateg ill deped o hat orks for the usiess i its speifi otet
• This approach is consistent with open systems and contingency theories.
• HRM must be aligned with business strategy / strategic direction.
• It is speifiall eploees role ehaiors that ust e aliged ith the firs usiess strateg
• HRM must also be tailored to other important internal and external forces/factors.
• Does not provide much practical guidance.
• Many organisations do not have an explicit business strategy with which HRM can be aligned.
• Strateg a e eerget.
• Challenges in adapting to a fast changing environment.
• HRM praties are path depedet - tendency of a past or traditional practice or
preference to continue, even if better alternatives are available.
• the best approach to managing people will vary according to organisational circumstances, most particularly,
business strategy
Best Practice:
• all firms will be etter off if the idetif ad adopt est praties i the a the orgaise ork ad
manage people
• Also ko as the uiersalisti approah to Strategi H‘M.
• Argues that there are H‘M praties hih are est for firs, regardless of otet.
• Assumes that more is better (wide range of sophisticated HRM practices is etter for fir perforae
• Does not ephasise aligig eploees role ehaiors ith a speifi fir strateg.
• Too much diversity in lists of best practices.
• Challenge for HR is to develop systems of HR practices that create a synergistic effect, rather than
developing a set of independent best HR practices.
• Many theorists simply list practices and do not specify the pathway (or intervening variables) through which
practices are supposed to improve business performance
• There is overwhelming research evidence that firms adapt their HR practices to their unique contexts.
• There can be no universally valid lists of best practice because of societal regulation of labour markets.
• There is a problem with trying to specify a set of cross-culturally best HR practices because there are
significant differences in cultural values.
• Studies of best practices within the major categories of micro HRM do have a long tradition.
• There is quite a lot of agreeet o hat ostitutes est pratie i micro HRM practices such as
employee selection, performance appraisal and training.
Pfeller’s Best Practice Model:
• Pfellers 1 see praties for uildig profits puttig people
first.
• This model has been widely propagated through books, journal
articles and conferences.
• Pfeffer is making a normative argument, an argument about what
ought to be, not what is. He is challenging the wisdom of the best-fit
(contingency) position.
Strategies for gaining competitive advantage:
• Innovation strategy (e.g. Apple)
• Quality enhancement strategy (e.g. Toyota)
• Cost reduction / leadership strategy (e.g.
IKEA)
• Hybrid approach (combination)
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