Best Fit Versus Best Practice
In the modern competitive business world, managers are increasingly using strategic human resource management (SHRM) in a bid to sustain growth and effectiveness (Kahiri et al., 2012; Hsieh & Chen, 2011). The realization of the critical importance of SHRM interventions is essential in promoting competitiveness, and profitability. For years scholars, consultants, and practitioners have debated and examined the best fit and best practice approach with an aim of pinpointing the best strategy. Universalistic academicians argue that companies that adopt a set of evidence-based practices put themselves in a higher level of competitiveness than their rivals (Kahiri et al., 2012; Milkovich et al., 2014). On the other hand, contingency scholars are of the opinion that the best organizational performance is achieved when administrators align human resource decision to the firm’s culture and business strategy (Milkovich et al., 2014; Kahiri et al., 2012; Hsieh & Chen, 2011).
According to Milkovich et al., (2014), the best practices promote organizational competitiveness by allowing a company to access superior employees who in turn led to exceptional performance. For optimal results, companies need to adopt best human resource strategies such as employee training and development, staff-organization relations, and reward management (Kahiri et al., 2012). Staff satisfaction influenced employee attitude and behaviors that result in a highly committed and capable workforce. Today, most firms achieve a competitive edge due to the skill, commitment, and satisfaction of their employees. Universalistic scholars insist that best practices yield better performance in almost all business settings (Milkovich et al., 2014).
The best-fit approach, on the other hand, emphasizes on a rational HR decision-making process whereby the company resources are matched with opportunities in the market. The internal processes of the firm are set up in a manner that supports the pursuit of a business’ vision. This model calls for an HR strategy that based on the company’s context and business strategy while influencing employees’ attitudes and behaviors (Hsieh & Chen, 2011). Excellent firm performance is achieved because of a ‘fit’ between external factors and internal processes (Hsieh & Chen., 2011).
Recent research evidence indicates that optimal organizational performance becomes elusive when a firm’s HR strategy relies entirely on a single model (Kahiri et al., 2012; Milkovich et al., 2014). According to Milkovich et al. (2014), the success of best compensation practices is dependent on the context of the business operation. Kahiri et al. (2012) emphasize on a configurational approach that bundles together best SHRM practices with a competitive strategy so that the two complement and reinforce each other.
Starbucks is a perfect illustration of the effectiveness of adapting best practices and aligning them with the company’s business strategy to maximize competitiveness and profitability. Starbucks’ business strategy focuses on providing the ultimate customer experience by delivering world-class client services. In line with this strategy, the company has developed its screening system that ensures the recruitment of the best employees for excellent customer service. The HR administration has drawn up a reward strategy that recognizes employees as partners and gives competitive benefits packages that keep them motivated to achieve Starbucks goals. The HR strategy adopts a customer service aspect in recruitments and a reward and growth model that is unprecedented in the coffee business. The internal structure of the beverage firm is supportive of the external opportunities available in the market. As a result, Starbucks has become a global brand and that is highly profitable in a competitive market.
References
Hsieh, Y. H. & Chen, H. M. (2011). Strategic fit among business competitive strategy, human resource strategy, and reward system. Academy of Strategic Management Journal 10(2): 11-31.
Kahiri, J., Mukulu, E. & Waiganjo, E. W. (2012). Relationship between strategic human resource management and firm performance of Kenya’s corporate organizations. International Journal of Humanities and Social Science 2(10): 62-70.
Milkovich, G. T., Newman, J. M. & Gerhart, B. A. (2014). Compensation. New York: McGraw-Hill/ Irwin.
