Best Fit and Best Practice Approaches to HRM in a Globally Operating Company

Running Head: ESSAY
HUMAN RESOURCE MANAGEMENT

2ESSAY
TOPIC A
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.

3ESSAY
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