HR Best Practices VS Best Fit

Most organizations don’t place a high enough focus on human capital management as a component of core competence. In order for organizations to be successful in any market, they must have a strategic approach in managing human resources which will lead in creating a workforce that provides a sustainable competitive advantage.

The relationship between performance and human resources management can be linked into two strategic approaches which are the “best practice” & “best fit”.

Best practice

The Best-practice model claims that certain bundles of HR activities exist which universally support in improving Any organizational performance in reaching a competitive advantage regardless of the organizational setting and irrespective of the location & size.

From my point of view: what works well in one organization will not necessarily work well in another because it may not fit its strategy, culture, management style, technology or working practices.

Best fit

On the other hand, Best-fit approach is also known as the contingency model and proponents of this approach assert that there is no universal way of doing things as what might work well in one place may be unsuccessful in another place.

This vertical integrated approach the proposition that organizations will be more effective if they adopt a policy of strategic configuration by matching their strategy to one of the ideal practices, where leverage is gained through the close link of HR policies & practices to the business objectives.

Resource-based view (RBV)

The resource-based view of the firm (RBV) represents a fundamental change in SHRM thinking by focusing on the internal resources of the organization, rather than external. This approach particularly seeks to build a ‘unique bundles’ of HR practices as a source of sustainable competitive advantage.

In order to have competitive advantage keeping key employees loyal is essential.

For an example, a luxury restaurant management provides a unique platform for employees where they customize their kitchen based on the Chef’s needs & desire, this strategic HR approach is a core competence that will make your employees feel like business partners.

Another example of using (RBV) approach in attracting & wining back employees who matters to your business.

A trading firm offers their key employee’s a comprehensive benefits scheme through providing flexible hours initiatives which allows them to work from home; such HR practices acts as a valuable resource which will reduce the threats of them leaving you and heading to the competitor.