Approaches to HRM: Best Fit vs Best Practice

This essay explores the advantages and disadvantages of Best Fit and Best Practice approaches to HRM. It analyzes the impact of these approaches on organizational and individual performance. The essay concludes that companies can use both approaches as per their HRM requirements.

HUMAN RESOURCE
MANAGEMENT

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Approaches to HRM
HRM is an essential part of the companies in the modern day business. Different companies
have different approaches to HRM. There are two major approaches that are used by any
organisation namely “best fit” and “best practice” approaches. Both these approaches are
good in the modern day business perspective and the type of challenges that IHRM are
facing. Both these approaches have different kinds of advantages and disadvantages attached
with it. Both practices have consequences on the operations of the company and the
organisation performance and the performance of each individual (Stavrou, Brewster and
Charalambous, 2010). All these aspects of two approaches are analysed in the later part of the
essay.
Best practice approach suggested that few of Human Resource activities support the
organisation in gaining a competitive advantage irrespective of the industry or organisational
setting. It is argued that best practice models are related to highly committed management
and hence portrays a close relation among organisational performance and HR practices.
Researchers have concluded that best practices approach illustrates similar type of HR
policies that are exclusively suitable for improving the performance regardless of the product
strategies or the market. It is seen that best practice approach are compatible to the activities
of HR which supports higher workforce competence levels, inbuilds motivation as well as
announce a workdesign boosting employee commitment. The very basic advantage of the this
approach is highlighted by expectancy theory as this approach results in higher quality levels,
lower rates of absenteeism and wastage as well as productivity. The advantage of this
approach for the companies that are operational in different countries is that it helps in
bringing uniformity in way things are done in different organisation (Gooderham and
Nordhaug, 2011). It ensures higher levels of productivity and sets common standards for
quality and commitment.
Advantage of this approach can be seen in training and development of employees as it
creates win-win situation for the organisation and employees. This approach gives staffs with
knowledge and skills that is required by an organisation in its work for achieving the business
and corporate goals. Such kind of training and development program can provide competitive
advantage to the firm as it generates an avenue for self-confidence and improvement (Paauwe
and Boon, 2018). This is argued by the fact that more knowledgeable and skilled employees
are more efficiently and effectively they can perform their jobs. Any firm should not only

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focus on staff’s development and organisational operative tasks only but it shall also conduct
training and development programs that benefits them in their personal life. This brings
higher commitment from their side in getting things done as they are more satisfied with the
balance in the personal and professional life.
Apart from this its advantage can be evaluated on the basis of fact that it acts as a
performance appraisal as a motivational tool. It helps in improving the employee’s
commitment as they get rewarded for their performance. Performance appraisals act as a
production benchmark for operational performance (Saridakis, Lai and Cooper, 2017). This
approach improves the communication system that helps them in running the organisation
smoothly. It helps in calibration of operations. For multinational organisations it acts as a
universalistic approach at the time of organisational changes. It acts as a guide for setting
directions and priorities. At the same time this approach creates an avenue where each and
every one can learn from the mistakes of someone else. Such approach starts focus programs
which move a firm from its present position. Following this approach can improve the
economic performance of the firm as better productivity and lesser mistakes from the side of
the employees are promoted. This enhances the chance of the company to raise its
productivity while reducing the chances of wastage (Paauwe and Farndale, 2017). Following
this approach company is able to portray itself as unique that gives them competitive
advantage over the others. This approach acknowledges the importance of business strategy
on performance.
At the same time this approach has a series of limitations and disadvantages. This starts with
the fact that implementation of best practice standards firms run risk of bringing mutually
prohibited mixtures such as compensations on the basis of performance of individuals as well
as team working. This results in degrading of collaboration from the side of employees
through competition that is over exaggerated. Second disadvantage of using this approach is
that since it requires a high commitment management system hence makes the whole human
resource management system more complex (Kuvaas and Dysvik, 2010). Due to this higher
level of commitment and huge inputs of planning is required. This might waste a lot of time
of the management on the human resource practices. Third disadvantage in this approach is
illustrated through the critical review by many of the researchers who argue that while
following this approach corporate strategy is preceded by HR policies and organisations risks
recommending uniform sets of “One size fits all”. This approach will not support specific
needs of the workers and might be deterministic in overall strategic objectives. Another

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disadvantage of using this approach is that it provides appropriate choice of best practice
measures deriving outcomes from an insufficient theoretical definitions and research
methodology. It is also an over exaggerated approach in regards to matter of fact that what
has worked well for one organisation might not primarily work well for other organisations
hence it cannot be superimposed on every organisation in different situations (Gill and
Meyer, 2011).
Best fit approach is another essential approach that is used by the modern day HRM as it is
based on developing HRM policies on the basis of business strategies. Such strategies include
performance objectives, policies that help in reaching corporate objectives, and future activity
planning. This approach questions the universality assumption in the best-practice
perspective. It focuses contingency fit among firm’s development stage and the HR activities
as well as between firm’s internal structure and its external environments like competition,
labour market, suppliers and clients. HR policy must be designed as per the need of the
individual employees and hence support the overall competitive strategies (Kaufman and
Miller, 2011). Such alignment between the strategies and HRM practices to generate potential
competitive gains. This approach has a major advantage that it enhances the chances that
strategies will be implemented appropriately. In the success of the strategies, this strategy
plays a major role. This approach enables a company in making strategies and hence does the
work accordingly. The training and development is also given in the same reference so that
mind-set and working capabilities are also built in same manner.
Vertical integration can be achieved through this approach and hence leverage is gained
through close link between HR practices and policies in relation to the corporate objectives.
This approach has an advantage that it specifies the way in which company aims to
accomplish its goals and the way it wants to behave as well as the kind of performance and
performance levels it expects from their employees and thinks that it would be effective
(Bakshi, et al. 2014). Many companies believe that several HR strategies should focus on
provided requirement of employees and organisation both. The approach can be seen in terms
of structure, behaviour, technology, work process indication and culture are treated as the
criteria in the analysis of the business requirements of the firm.
Best fit approach also faces many kind of criticism. An important criticism that is attached
with approach is that in the changing environment for business, firms and their strategies are
subject to multiple alternating contingencies as well as it is highly unlikely to the change the

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HR system to a new challenges frequently. Firms moves with their HR practices and change
in the strategies also changes the way in which employees gets treated. This can have
demotivating effect and illustrates inconsistency in the corporate culture (Safdar, 2011). This
strategy also has disadvantage that it brings organisation in a state of change where
employees can easily get unsatisfied. This brings them in a state of hurry at the same time
forces them to treat their employees with whatever they want or they might face challenges in
managing their business. It is crucial to make sure that the strategies related to human
resource are suitable in different conditions in a prescribed process of operations and culture
as well. This approach confines the strategies like they are subjected to multiple change
possibilities. Difficulty is in take care of the fresh challenges since the HR system might not
be able to adjust according to the situation totally (Katou, Budhwar and Patel, 2014).
However, its faults concentrate on the search contingency limitations as well as the difficulty
in illustrating its interconnection.
Both these approaches focuses on the way in which strategic changes are brought within the
organisation and the way in which company is able to manage its human resource in different
situations. There have been debates going on about which of the approach is a better one in
managing the challenges that their human resources are facing (Croonen, Grünhagen and
Wollan, 2016). It is seen that most of the companies in today’s time applies best practice
method. The basic advantage that is provided by this approach is that it reduces the chances
of demotivation from the side of the employees. For popular and successful organisations,
this is must requirement so as to achieve competitive gains over their competitors and the
amount of competition that is faced by the organisation, it becomes necessary. The
disadvantage of best practice over the other is that best fit on overall works better and hence
it has a huge appeal to the people practicing HR. This is because it positions HR personnel in
the place as the first-level strategic partners in the management process and their decision
making process (Beh and Loo, 2013).
Both these approaches have different kind of consequences on the organisation and individual
performances. The best fit approach has an improved effect on the organisational outcomes it
combines people to work in a particular direction and helps organisation to achieve the
objectives they have set for themselves (Shen, 2010). At the same time, best fit has a negative
effect on the personal performance of employees. This is because they had to change
themselves as per the changing organisational objectives and demands of the firm’s strategy.
This might make them conscious several times since they will have to work according to the

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changing business environment. Upgrading skills needs to be done quickly. Best practice
approach also has an advantage in terms of the fact that it does not change the overall
working culture within the organisation as the long term approach is already in place. While
in the case of best practice company has to regularly change their approach so as to get ready
for the upcoming challenges and the strategies made by the organisation. It is seen that
change in the culture always has a negative effect on the individual’s performance for quite
some time while it also effect the organisational performance.
Best practice also has the advantage in terms of the fact that it suggests a company to become
the best irrespective of the approaches being followed by their competitors. On the other hand
in best fit approach, company has to focus on their goals and work according to the changing
business environment (Rok and Mulej, 2014). Since the overall influence of the senior
management is very high in the case of the best practice approach hence overall performance
of the organisation and employees on the higher side. In the case of best practices, employee
also remains highly motivated in the case of the best practice as they work in teams and
organisation also seems to invest more in the development of human capital.
In conclusion, it can be said that companies can use both this approach as per their HRM
requirements. Better practice approach improves the way in which organisation prepares
itself for the future and ensures that their employee’s motivation remains on the higher side.
The best practice approach ensures that they are ready for the challenges that company might
face in the future and unlike best fit approach they do not have to change their strategies
accordingly (Timiyo, 2014). Best fit approach can be highly beneficial in the case of small
organisation while best practice approach is beneficial for bigger organisations.

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