Strategic Human Resource Management Essay: Best Fit vs Best Practice

This essay provides an in-depth analysis of strategic human resource management (SHRM), examining its core components and significance in contemporary organizations. It defines SHRM as the integration of HR plans and policies with organizational goals, emphasizing the importance of aligning HR strategies with the changing business environment. The essay explores the internal and external factors influencing HR practices, including the interplay between HR strategy and business strategy. It delves into key concepts such as strategic performance management and the behavioral perspective in SHRM literature. A significant portion of the essay contrasts two primary approaches to SHRM implementation: the best fit approach (contingency model) and the best practice approach. The best fit approach emphasizes tailoring HR strategies to specific organizational contexts, while the best practice approach advocates for the adoption of predefined, high-performance HR practices. The essay discusses the advantages and disadvantages of each approach, including criticisms regarding their practicality and potential for conflicting interests. Ultimately, the essay concludes by suggesting that the best fit approach is generally more useful in today's dynamic business environment, while acknowledging the potential value of the best practice approach in certain situations. The essay highlights the importance of differentiating the layers of different levels that influence the decision.

Running head: Strategic Human Resource Management 0
Strategic Human Resource Management
Essay

Strategic Human Resource Management
1
In any organisation there are two basic components that needs management those
components are operating system and manpower. Operating system can only work
effectively with the help of manpower; therefore the management of human resource is the
most important part for the organisation (Alami, Iran, Sohaei, Iran, Berneti, Younesi, Farnia,
and Mirzajani, 2015, p.252). Human resource management can be defined as the company
which determines different ways how to deal with the people at the workplace. It deals with
all the aspects of dealing with the employment relationships of the firm. The HRM function is
managerial utilisation of knowledge, capabilities and skills of employees at workplace. It also
relates to various theories and concepts relating to the organisational and human resource
behaviour (Armstrong and Taylor, 2017, p.3). In the recent dynamic business environment
growing importance is seen for the concept of strategic human resource management.
Strategic human resource management can be defined as integrating human resource plans
and policies with the organisational goals and policies. The term emphasises on the needs of
changing environment. According to implications of the term the organisation’s HR
strategies and policies should be in context with the overall strategy of the organisation. This
strategy should also be responsive to the changes. In the context of strategic human resource
management there are two basic factors that influences human resource plans policies and
practices. These factors are internal fit and external fit. He internal fit means the internal
factors of the organisation and external fit involves external environmental factors such as
customer demands, market trends and competition (Waiganjo, Mukulu and Kahiri, 2012,
p.63).
Two main elements identified in the Strategic human resource management are HR strategy
and business strategy. HR strategy can be explained as where organisation wants to reach and
in what direction it should go, in terms of human resource. It a strategy, that emphasizes on
achieving goals by optimum utilisation of the workforce. Business strategy can be defined as
the long term plan of business in terms of goals and objectives that it wants to achieve. HR
strategy can be used as a tool for achieving the overall goals of the organisation (Jalagat,
2016, p.954). The link between HR strategy and business strategy should be established and
also interpreted for individual and group levels. There are various other concepts related to
strategic human resource management with links to both individual and group levels. One of
the key concepts is the concept of strategic performance management. Traditional systems of
managing the people failed because the communication from top to bottom was not much
effective. There was a mismatch between the strategies of corporate level and the goals of

Strategic Human Resource Management
2
individuals and teams. Strategic performance management has overcome this drawback of
traditional systems. Strategic performance management system establishes this missing link.
It is important for the top management to identify the competencies of human resource in
accordance with the needs of business and also develop a plan of performance evaluation that
links the performance of the employees with the strategic goals (Bagga and Srivastava,
2014). In the context of strategic human resource management literature, one of the important
theoretical models is behavioural perspective (Bagga and Srivastava, 2014). Behavioural
perspective provides a framework to understand in what ways employees make significant
contribution to the organisation. This theoretical perspective describes and prescribes links
between HRM system, strategy of business and stakeholders in association with the
behaviour of the employee (Jackson, 2013, p.66).
It is clear from the above theories and concepts that strategic human resource management is
important for an organisation. But there is an on-going debate on the implementation.
Application of strategic human resource management in organisation can be done with the
two contrasting approaches that are the best fit approach and best practice approach. Best fit
approach is also known as contingency model. According to this concept the there is no fixed
HR strategy that is suitable for all the organisational contexts. According to this theory the
HR strategy that works well for one situation or one organisation may fail in the other. This
approach implies that there should be a fit between organisational context and the HR
strategy. There should be a well-tailored strategy for different contexts. This approach
emphasises on the need of vertical integration, that is contingent or alignment of business
strategy and HRM practices. This framework stresses that in a competitive environment, HR
policies and practices must establish a perfect fit with the immediate conditions faced by the
business (Wilton, 2016).
In late 1980s and early 1990s, Harvard framework provided major insights to the approach.
According to this framework, HR strategies should vary on the basis of situational factors. It
was argued that this fit between the HR strategy and environment should be followed by the
consistency at internal level in HR choices. After Harvard model various models came into
existence that supported this approach the models. Dryer and Holder’s model (1988) advised
the management that there should be consistency between the three HRM policies, business
policies and the external environment. Another model in this regard was given by Baron and
Kreps in the year 1999. In this framework mangers are recommended to take into account
impact of five forces on the HR policy of the organisation. These forces include workforce,

Strategic Human Resource Management
3
organisation culture, technology used in production, strategy of the organisation and the
external environment which included political, legal, economic and social environment. On
the basis of research three analytical levels for reviewing contingencies that may have an
impact on HRM in the organisation are – societal fit, organisational fit and industrial fit.
Societal fit involves varied economic and social factors. It is basically concerned with various
nation features that impact HRM. Societal fit implies that HR strategy of the organisation is
aligned with the environment factors. It requires integration between HRM and cultural
norms & social institutions (Huemann, 2016, p.20). Organisational fit can be described as
alignment between HRM practices and other organisational systems (Stahl, Bjorkman and
Morris, 2012, p.109). Linking HR practices to competitive strategy of the organisation is a
four step process the first is determining the desired competitive strategy, identifying required
employee behaviours & skills, formulating supportive HR practices and accessing HR
outcomes. Industrial fit involves the factors that are significant for a particular industry. It
involves alignment with various implications of the particular industry. Establishing a fit at
all the three levels is important for an organisation to effectively implement best fit approach.
Best fit approach offers various advantages. Key advantage derived from this approach is that
the outcomes of this approach are more likely to be positive. It is so because they are
designed with reference to particular context. This approach enables the organisation to
utilise full potential of employees depending upon the different situations. The approach
offers various advantages but it is also criticised on various grounds. The main reason for
criticism is that it is practically impossible to make changes in the entire HR system to align
with the demands of the situation and contingencies that arise. Another major drawback
related to this approach is that inconsistency in the HR practices may lead to the
inconsistency in the organisational culture.
There are few proven practices that are been identified in researches, according to best
practices approach these predefined HRM practices should be applied in the organisation to
achieve desired outcomes. This approach emphasises that if organisations apply appropriate
practices it affects the organisational performance in a positive way. This approach in human
resource management helps to achieve the stated goals of organisation through achieving the
desired abilities of employees, motivation, behaviour and results (Sikyr, 2015, p.1405). Some
authors argue that whether the practices that are labelled good are actually beneficial to the
organisation or not. They argue that the literature on best practices of HRM may seem
superficially attractive but it is problematic under different perspectives (Price, 2007, p. 207).

Strategic Human Resource Management
4
The most influential paper on this approach was given by Huselid. He identified 13 practices
as high performance work practices. For the purpose of research he surveyed 968 specialist of
HR in US firms and asked them the extent to which their firms use these practices. These
practices include quality of work life programmes, employment tests, promotion on merit,
extent to which firms use information sharing, formal appraisals, grievance procedures,
individual performance based pay, performance incentives, job analysis, attitude surveys,
promotion from within, group incentives such as training and profit sharing and the
proportion to which firms are selective in the recruitment of employee.
The major critic associated with this approach is that best practice is best for whom. Some
practices may be good for the shareholders and executive board but may not serve the interest
of customers and environmentalist. Some practices may seem best or good for mangers but
not for the labours. Some practices may bring out the positive corporate returns but on the
other hand may not serve the interest of workers. One best practice cannot serve the interest
of all the parties at one time.There will always be a problem of conflicting interest in the
application of best fit approach. This approach emphasises that the same practices of HRM, if
applied consistently and collectively will always result in providing better outcomes. It
ignores the nature of situation and organisation and believes that all the organisations can be
benefited from the same set of recognised HRM practices (humdyn, 2017). It is argued that
the organisations will gain advantage and improvements in the performance of the
organisation, if they identify and implement the set of best HRM practices. There is abundant
literature that supports this approach but various authors have criticised this approach. The
major criticism is about there are conflicting views about determining the set of ideal
practices. It is very difficult to determine the ideal set of practices for different organisations
some emphasise on high performance practices while others determined high involvement
and high commitment practices as the set of ideal practices (Wisdom, 2017).Another
drawback associated with this theory is that there is only one way to reach a particular
objective. This may seem simplistic but sometimes turns out misleading. This approach only
gives an idea about the outcomes, it does not guarantee outcomes. The outcomes from this
approach can be unintended or unhelpful for the organisation (Banfield and Kay, 2012, p.26).
The concept of best fit and best practice is clear from the above discussion. Now question of
choosing between the best practice and best fit becomes more difficult. Each approach has its
own pro’s and corns. Organisation in today’s era deals in a dynamic business environment
and different product markets. But contingency models basically rely on link establishment

Strategic Human Resource Management
5
between static variables. In addition to this HR techniques of similar kind may be perceived
in dissimilar ways (Truss, Mankin and Kelliher, 2012, p.99). From the view of dynamic
business environment best fit approach seems more useful and appropriate for the
organisation. It is because the changes in the environment and functioning can easily be dealt
with. The HR strategies, policies and practices will be with regard to a particular scenario.
Today the firms usually go for this approach because they want to arrive at immediate
solution to the problem. But this does not mean the best practice approach can be ignored.
The value can also be extracted from this approach. The firms can apply this approach in
generalised and superficial matters. This will save their time and resources for formulating
HR policies and practices. Although it is agreed that the best fit is the most appropriate
approach for the organisations in today’s scenario but best practice approach can also turn out
useful in some situations. The fact cannot be neglected that the best practices or the ideal set
of practices are based on experimentations on practical situations for years. It is important
for the organisation to differentiate the layers of different levels that are undermining in
HRM. In the case of superficial or surface layers the best practice approach can be applied.
For example for deciding the interview procedure, generally advocated approaches can be
utilised. For the interior layer or the issues such as management of diverse workforce best fit
approach can be applied. There is the need to identify the situations and contexts, in order to
determine which approach to use. There should be balance between both the approaches in
order to gain competitive advantage. The firm must strive to gain the benefits of both the
approaches. If it will rely only on best fit approach it may lead spending lot of time and
resources for the much generalised issues. The chosen resource should be cost effective. On
the other hand if the firm completely relies on the best practices approach it may fail to deal
with the challenges of dynamic business environment. Therefore it is important to attain an
optimum balance between best fit and best practice approach.
Managing change in the organisation is not an easy task for human resource management.
There are various complex and challenging issues that may arise in an organisation while
implementing the change. Human resource strategies help to support changes in the
organisation. The challenging issues can be divided into three categories HR strategies, HR
processes and practices and HR services & technology (Coopers, 2005).Most important
challenges that SHRM face while supporting the change are economic & technological,
organisational restructuring, demographics & diversity issues and workforce availability and
quality concerns. Major changes in economic and technological environment affected the

Strategic Human Resource Management
6
employment and occupational patterns. Jobs have shifted from manufacturing & agriculture
industry to telecommunications and service industry. Use of internet has forced various
changes to the organisations. This change has different implications for different
organisations. Some organisations need to reduce workforce while others need to hire and
retain ne workforce. The challenges regarding demographics & diversity are also increasing.
Today’s organisations have workforce from different races, nationalities, caste, regions and
ethnicity. The participation of women has increased in the workforce. To manage the
changing diversity in the workforce is another major challenge for the workforce. The
concern for balancing work and family is another major challenge for the management. In the
changing environment there is growing importance of work life balance. Employees have
realised the significance of managing the demands for family along with the work. Therefore
for HR department it is important to establish work life balance in the routines of employees
to reduce employee stress levels. Another challenge that organisations face today is
organisational restructuring. This restructuring involves eliminating the different layers of
managers, merging with other organisations, closing facilities and outplacing workers. Now a
day’s major change seen in the organisation is organisation structure is the flattening of
organisation structure. The organisation structures have now become less formal. The reason
for this change is to increase productivity, services, quality and reducing the cost. Workforce
availability and quality is another major concern for organisations in today’s scenario. Now a
day’s organisation a facing the challenge because of workforce deficit and the available
workforce lacks skills that are needed to perform the jobs of change nature. Workforce
quality deficit and growth in contingent workforce is the major concern for the organisation
(gfknowledgecenter, 2017). Various issues related to supporting the change in the
organisation can be address by few efforts from the HR manager. Training programmes
should be organised to make employees aware about the diverse workforce and the behaviour
that they are expected to portray, formulised approach should be adopted for understanding
diversity related problems (Shaban, 2016, p.76). To address the challenges it is important that
the HR manger should not play the role of administrator; his role should be more strategic in
nature. HR manager should prove his existence and effectiveness on regular basis (Singh and
Dhawan, 2013).
Thus it can be concluded that human resource is the major element of asset of any
organisation that needs to be managed. Organisation will only be able to achieve its
objectives if the firm effectively manages its workforce. For managing human resource in the

Strategic Human Resource Management
7
organisation there is an emerging concept called strategic human resource management. It
links HR plans and policies to the organisational goals and objectives. It provides a clear
direction to reach the goal. Two main element of this concept are HR strategy and business
strategy. This concept establishes a link between both of them. One of the major theoretical
concepts that can be linked to this approach is the behavioural perspective. This theoretical
perspective describes and prescribes links between HRM system, strategy of business and
stakeholders in association with the behaviour of the employee. The next question this arises
is whether to apply best fit approach of best practice approach in strategic human resource
management. After the deep analysis and comparison the arrived solution is to maintain the
optimum balance between both the resources. That is using best practice approach for surface
level generalised matters and using best fit approach for intense matters. There are also
various complex challenges and issues to the strategic management. These issues occur on
strategic level, practices & process level and technology & service level. The major
challenges related to workforce diversity, workforce deficiency, organisation restructuring
etc. These changes can be addressed with the help of effective training programs and strategic
role played by the HR manager.

Strategic Human Resource Management
8
References
Alami, R., Iran, B., Sohaei, R., Iran, B., Berneti, A.K.M., Younesi, A., Farnia, M. and
Mirzajani, H., 2015. The Effectiveness of Human Resource Management on Improving the
Performance of Education Staff. International Journal of Business and Social Science, 6(5),
pp.251-254.
Armstrong, M. and Taylor, S., 2017. Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
Bagga, T. and Srivastava, S., 2014. SHRM: alignment of HR function with business strategy.
Strategic HR Review, 13(4/5).
Banfield, P. and Kay, R., 2012. Introduction to human resource management. Oxford
University Press.
Coopers, P.W., 2005. Human Resources management strategies to support organizational
changes. Survey for the 44th meeting of the Directors general responsible for Public
Administration of the EU member states, viewed on 4 August 2017 from
http://www.eupan.eu/files/repository/HRManagement1.pdf
gfknowledgecenter, 2017. Changing Nature of Human Resource Management, viewed on 4
August 2017 from http://gfknowledgecenter.org/PDF_files/Human-Resource-
Management.pdf
Huemann, M., 2016. Human Resource Management in the Project-Oriented Organization:
Towards a Viable System for Project Personnel. Routledge
Humdyn, 2017. Strategic human resource management an overview of HR strategy
perspectives, viewed on 4 August 2017 from http://www.humdyn.co.uk/downloads/SHRM
%20UNPLUGGED.pdf

Strategic Human Resource Management
9
Jackson, S.E., 2013. Behavioral perspective of strategic human resource management.
Encyclopedia of management theory, 1, pp.66-72.
Jalagat, R. C., 2016. A critical review of strategic human resource management and
organizational performance. Global Journal of Advanced research, 3(10), pp.953 – 958.
Price, A., 2007. Human resource management in a business context. Cengage Learning
EMEA.
Shaban, A., 2016. Managing and Leading a Diverse Workforce: One of the Main Challenges
in Management. Procedia-Social and Behavioral Sciences, 230, pp.76-84.
Sikyr, M., 2015. Best practice approach to human resource management .Best practice
approach to human resource management. The 9th International Days of Statistics and
Economics, Prague, viewed on 4 August 2017 from
https://msed.vse.cz/msed_2015/article/63-Sikyr-Martin-paper.pdf
Singh, B. and Dhawan, S., 2013. Challenges Faced by H R Managers in the Contemporary
Business Atmosphere, viewed on 4 August 2017 from
http://www.ijmbs.com/32/1/balwinder2.pdf
Stahl, Bjorkman and Morris, 2012. Handbook of Research in International Human Resource
Management. Edward Elgar Publishing
Truss, C., Mankin, D. and Kelliher, C., 2012. Strategic human resource management. Oxford
University Press.
Waiganjo, E.W., Mukulu, E. and Kahiri, J., 2012. Relationship between strategic human
resource management and firm performance of Kenya’s corporate organizations.
International Journal of Humanities and Social Science, 2(10), pp.62-70.
Wilton, N., 2016. An introduction to human resource management. Sage.

Strategic Human Resource Management
10
Wisdom, 2017. Best-practice SHRM: high-commitment models , viewed on 4 August 2017
from https://www.wisdomjobs.com/e-university/hr-management-tutorial-69/best-practice-
shrm-high-commitment-models-8742.html