Best Practices in Business and HRM | Free Essay Example

Best Practices in Business and HRM

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Topic: Business & Economics
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Introduction

Human resource management has gone a long way from being an obscure and novel approach to a legitimate and widely recognized concept among all modern business practices. Academic efforts dedicated to studying and expanding the field of HRM have broadened the views on the subject and significantly improved the information base available to managers who wish to guide and motivate their employees better (Andersen & Nowak, 2015). HRM is widely utilized in any field of industry that deals with large numbers of employees, ranging from medicine and healthcare services to metallurgy and vehicle production. HRM is a complex field of practice, as every individual manager is required to assess, analyze, and synthesize large amounts of research and information to determine what is the best fit for the organizations they work in.

A quick google search reveals various sets of allegedly best HRM practices, promoted by numerous academic and non-academic sources. Academic journals in the field of human resource management publish researches that define practices utilized in the context of a particular industry, with a series of general recommendations for other HRM specialists to use. These quick and easy tips openly available in the literature and the internet provide basic knowledge and techniques of HRM practices, but at the same time significantly marginalize the role of the HR managers and simplify their work at the cost of organizational efficiency (Pfeffer, 2015). The purpose of this paper is to examine the concept of “best practices” in HRM as well as the benefits and limits of their applicability within the scope of for-profit and non-profit organizations.

What are Best HRM Practices?

The term “best practices” is loosely defined as a set of practices that lead to improved organizational performance. However, depending on the circumstances and scope of research and practice, the term may possess several meanings. For example, some researchers define the term “best practices” as a set of practices that can be implemented in any business or organization regardless of the context (Andersen & Nowak, 2015). Another definition of best practices states that best practices are those likely to work out in the majority of organizations and are supported by evidence. The retroactive model defines best business practices as those utilized by the most successful companies. The logic behind such a definition revolves around the idea that if a company maintains a leading position for a significant period, its practices must be superior to those of its competitors. The situational approach to best practices dictates that no HRM practice is best by default, and the company specifics as well as the talents of its managers define the success or failure of any particular practice (Croonen, Grunhagen, & Wollan, 2016). The resource model states that the best HRM practices are those that grant the best results while remaining within the organization’s ability to implement and sustain (Andersen & Nowak, 2015).

The purposes of “best HRM practices” also require a definition. Armstrong and Taylor (2014) define HRM practices as ways in which a company can enhance its performance and obtain a competitive advantage. Shields et al. (2015) claim that best HRM practices are those that enhance the employees’ ability to absorb, share, transfer, and create knowledge, which would later transform into increased productivity and competitive advantage. As it is possible to see, definitions of best practices are many. In most cases, the researchers define “best” about the HRM model, utilized in their respective studies.

Nature of Best HR Practices to the HRM Models

Studying the best HR practices is impossible without deciding the HRM model, which would be used as a framework for the analysis. HRM models serve many purposes. One of these purposes involves providing an analytical framework for the study. Another revolves around legitimization and distinguishing of certain HRM concepts like “best” in comparison to others, within the scope of the model (Croonen et al., 2016). For example, all HRM models acknowledge that training and selection of personnel is an important part of HRM. However, the differences appear when trying to compare distinctive approaches to selection and training. The third purpose is the characterization of HRM practices and the establishment of variables that could be used for comparison. This is important, as the greater number of variables would provide a more accurate reflection of the effectiveness of HRM practices, which helps to determine the best one. On the other hand, a multitude of unnecessary variables can muddle the results. Lastly, HRM models are utilized as heuristic devices to help discover the nature and significance of key HRM practices.

To summarize, best HRM practices can be defined only within the scope of a particular HRM model, which serves as an even field for comparison of different techniques. The choice of a working model may affect the definition of best practices considerably. An example can be made utilizing TQM practices, which are considered the best practices in operational management, as they help streamline logistics processes, increase the quality of production, speed up production times, and allow for more participant and informal forms of organization. If we use the Fombrun, Tichy, and Devanna HRM model for practice analysis, TQM would indeed be presented as the best practice in any given situation, as it emphasizes the four functions of HRM and their interrelatedness (Andersen & Nowak, 2015). However, this model would not be able to explain why TQM proves efficient in some areas of the world while showing subpar performance in others, such as China.

Fombrun, Tichy, and Devanna HRM model do not include environmental or contingency factors that impact HR functions. However, in the scope of the Warwick HRM model, TQM would not be considered the best practice for Chinese businesses and organizations, as the model takes into account the cultural factor, which is prevalent in the success or failure of TQM (Warner, 2014). Many Asian cultures are proven to be inimical to participative management techniques necessary for the successful implementation of TQM. The Chinese culture has a strong prevalence of autocracy, compliance, and obedience, which is engrained into the mindset of Chinese people. They would not be receptive to TQM, which means it cannot be considered the best practice when applied in Asian settings. Thus, when talking about the best HRM and business practices, the first question that needs to be answered is the model, in the scope of which practices would be analyzed.

Qualities of Best HRM and Business Practices

Practices reviewed and considered to be named the best in a particular field or a situation needs to possess a set of qualities that would enable them to enter into the competition. These practices must be measurable. The goals, processes, and results of the practice must be measured to quantify their effectiveness. Practices would also need to be reproducible. The proposed techniques have to be fully documented, which would enable their reproduction by other HRM specialists. Practices would need to be effective. The main reason why the proposed techniques are considered the best is due to their notorious efficiency when compared to other methods and practices that have similar goals in mind.

If a technique or series of HRM techniques fits the following criteria, it may be considered the “best HRM practice.” However, the reason why there is an overabundance of such techniques in the information field is that the standards presented above are very loose. Every HRM specialist follows their criteria of what they consider to be valid HR practices. The discrepancy lies in the applicability of every individual set of practices to a particular business. Some practices, while adequate and viable, may not be the best for a particular enterprise. On the other hand, if the standards are placed too high, some potentially valid and useful ideas may be left out based only on estimations and preliminary research.

The Difference between Best Practices and Promising Practices

There is a certain degree of confusion between these two terms, as promising practices are often presented as the newest expertise in the field, while not fitting some of the criteria listed above. The main difference between best practices and promising practices lies in the evidence provided to support the argument (Armstrong & Taylor, 2014). If we take professional HRM standards developed by associations and large organizations, they are typically based on the results of numerous researches in the field.

Any dedicated research on the matter is considered circumstantial evidence, as the effectiveness of techniques tested is largely defined by various internal factors unique to particular organizations participating in the research, as well as numerous external economic and political variables (Armstrong & Taylor, 2014). However, repetitive success throughout numerous researches overtime is the prime indicator of viability for these techniques. Promising practices are different in a way that they do not possess the same amount of academic support behind them. Many stories of success, often utilized as examples of promising practices being effective, fall into that category. Therefore, before contemplating the utilization of a “best practice” in the scope of their organization, a manager must first assess the amount of evidence supporting the practice. While promising practices may often appear as innovative and may have the potential to work in a particular HRM environment, it is often impossible to utilize them to their full potential due to a lack of documented evidence.

Factors that Limit the Applicability of Best HRM Practices

As far as HRM practices are concerned, the main factor that defines the usefulness of a technique within the scope of a particular enterprise is reproducibility. After all, practice is considered useless if it cannot be utilized by the HR specialist and effectively reproduced in business. It must be noted that all management techniques provide some measure of success when compared to the baseline, where HRM techniques are either not employed. Thus, one of the factors that limit the use of best HRM practices is the ability to either replicate the practice or adapt it to serve the purpose of the organization. It is also the most troublesome feature to attain.

Another important factor is the ability of a manager to understand and utilize the best HRM practices in particular situations. Sometimes, managers are underqualified or do not possess the necessary knowledge and understanding to correctly implement these practices. Servant leadership and transformational leadership are being widely popularized in HRM, but they would be useless if the manager does not possess the charisma and understanding to make them work (Roueche & Rose, 2014). In contrast, hero-type leadership with the centralization of all major functions in the hands of a single manager would not work if the said manager does not possess a vision coupled with immense capabilities for working.

Another factor includes the realities of a particular community where the business is located. The HR manager has to make certain that the utilized technique can be applied or adapted to fit the needs and realities of the organization and community at large.

Alignment with the intended goals is a very important factor to consider when adopting an HRM practice. Any intervention has specific goals in mind. If an intervention does not address these goals in full, it cannot be considered the best practice for that particular scenario.

The availability of resources has to be recognized. While some HR practices are notorious for their effectiveness, the organization may not always have the resources on hand to utilize the technique. For example, while promoting employee education paid for by the company is noteworthy for establishing long-term ties and improving the quality of human resources, it may not be applicable for a small business that is barely making ends meet.

Cost-efficiency is key. This criterion ties in with the availability of resources. The effectiveness of the intervention must be worth the amount of money spent on it. Between an intervention that produces great results at a great cost and an intervention that produces merely good results, but requires significantly fewer resources, the latter is usually considered favorable.

The Benefits of Utilizing Best Practices in HRM

Many organizations and HRM specialists utilize the best practices for a specific reason – these practices have been tested in numerous environments and found successful, therefore utilizing them offers a greater chance of accomplishing company goals than anything that a manager can come up with on their own, as the margins for failure in the latter case are significant. It is why the majority of HRM advice is aimed at novices or beginner specialists who require a framework to start their practice. While large companies have the experience and the financial backbone to afford experimentation on a smaller scale, starting businesses do not have the margin for failure. There are several benefits of utilizing the best HRM practices (Northouse, 2015).

One of them is improved authority. This factor comes into play during the process of introducing and managing change. The employees are typically opposed to change at first, as they have become comfortable and familiar with the current routine. They may be skeptical or outright hostile to the proposed organizational changes. Utilizing a practice that has been proven to be effective is a good way of reducing anxiety and gaining trust and support, which is a necessary part of accepting change (Northouse, 2015).

Another benefit lies in improved organizational credibility. Utilizing HRM techniques that are widely recognized builds up the image of the company as one that follows progressive trends and bases its practices on evidence and research. This is an important tool to attract customers and potential employees into the organization (Northouse, 2015).

Utilizing the best HRM practices has improved funding potential. This point is important on both external and internal levels. The utilization of best HRM practices makes the company a more attractive sight to the investors. On the other hand, it also makes it easier for the HR manager to justify HR-related expenses to the directorial board. Some business owners are self-made entrepreneurs who lack the academic knowledge and a background in management and economics. They may view the needs of the HR department as secondary or even tertiary. Thus, an argument supported by widely-acknowledged specialists in the field may be necessary to convince them to provide the necessary funding for the department (Northouse, 2015).

Best HRM practices eliminate doubt. They are often provided with a framework and a checklist of processes to complete and items to acquire. This is especially true in the case of government standards and association lists of recommended practices. The structure and implementation process have plenty of documentation that makes the implementation of the practice easier to sustain and follow. The manager does not need to invent it from scratch and risk missing any of the critical aspects required for effective HRM (Northouse, 2015).

Best HRM practices have a consultative value. Many HRM agencies work utilizing widely-acknowledged frameworks and provide consultations on how to best utilize particular practices in particular business environments. Using a recognized technique enables the use of outside expert help to tailor-fit it to the situation at hand. Also, the inventors of particular best practices and tools are widely known, which enables direct dialogue with the progenitor of the practice in question. Lastly, the utilization of a framework makes it easier to describe the situation to anyone not closely familiar with the inner workings of the organization (Northouse, 2015).

The greatest benefit of utilizing best practices is knowing that the practices work. It removes the sense of uncertainty in both managers and employees, which causes significant changes in confidence and behavior. Doubt often causes HR managers to second-guess their decisions, which leads to reduced effectiveness of whatever changes they are trying to promote, as the employees begin to share the uncertainty and resist change whenever they feel it does not work the way it should (Northouse, 2015).

Thus, it is evident that the utilization of the best techniques offers plenty of advantages to all levels of HRM practice. It offers a series of tools that are widely acknowledged and can be fitted to most scenarios at hand. They significantly simplify the job of an HR manager to set up and utilize an effective human resource management system, especially when the manager lacks the required experience in the field.

Who Benefits from Utilizing Best Practices in HRM?

Several groups of stakeholders may benefit from the application of the best and recommended HRM practices in their company. The first and most numerous group is the employees of the company. The majority of widely acknowledged HRM practices exist to ensure these basics are covered completely. The employees benefit from best practices when those replace non-existent or inefficient ones. They also help the process of accommodation and change acceptance go smoother (Brewster &Cerdin. 2017).

The second group of stakeholders to benefit from the utilization of the best HRM practices in the company are the owners, sponsors, and funders of the company (Brewster & Cerdin. 2017). Efficient and proven techniques bring insurance that their money is not spent on idle frivolities and that they can expect results. Besides, the implementation of these techniques makes it possible to predict and quantify any positive results from the intervention, making it easier to attract additional funding from sponsors and stocks.

The third group of stakeholders to benefit from utilizing the best practices of HRM are the managers themselves. Popular and well-researched methods provide a solid framework to follow, which saves time, provides results, and ensures no critical mistakes are being made. While it takes an effort to adapt an existing framework to the situation and the realities of an existing company or a business, it is significantly easier and faster than developing a custom HRM framework from the ground up (Brewster & Cerdin, 2017).

The last group of stakeholders to indirectly benefit from the introduction of modern practices by the HRM department are the customers. According to Rees and Smith (2017), they would benefit from the increase in the quality of products and services as well as from improved employee satisfaction and dedication. However, some researchers, namely Andersen and Nowak (2015) claim that the benefits from the introduction of best HRM practices for the customers can only be evaluated by how successful these practices were implemented, as the use of allegedly superior practices does not automatically guarantee success or increase in quality or productivity.

When to Utilize Best Practices in HRM?

One of the common mistakes made by the HR managers is a failure to recognize the need for change and the use of best practices within the scope of their organization. The implementation of something new inevitably launches the process of change, which often comes with additional expenses, reduced productivity, and general discontent of the employees. Therefore, the opportunities to utilize the best HRM practices must be identified before they are being proceeded with. While there are many instances when a change in the existing HRM methodology is required, it is possible to identify the most common reasons for it.

One of the reasons to utilize the best HRM methods involves the adaptation of a new practice or a program. It is always easier to introduce a new HRM technique when it goes along with the general overhaul of the existing management and quality control systems. It is easier to implement new practices with employees that are not familiar with how the previous system was running. They are more open and accepting towards best HRM practices, and the status of the techniques as effective and recognized has a positive influence on morale.

Best HRM practices are useful during crisis management. For example, an organization experiences a serious HRM problem that needs to be dealt with as immediately as possible. Usually, a crisis is associated with high turnover rates, a lack of essential personnel to maintain operations, employee riots, increasing labor inefficiency, etc. In these situations, the manager does not have the time to develop a personalized strategy. Implementing one of the best and widely-recognized practices would lend the necessary results to continue operations and would have higher chances of being accepted and acknowledged by the remaining personnel.

Utilizing tried and true practices can help to restore the Status Quo. Sometimes a tailor-made strategy devised by the HRM manager does not work as intended. In these situations, it is safer to utilize a proven strategy to maintain operations at a reasonably high level. This works well when the initial intervention has been designed with a widely recognized HRM practice as the initial framework. In that case, it would only require reverting custom changes to increase the effectiveness and productivity of labor.

It must be noted that best HRM practices are useful in community mobilization. In some scenarios, the community is directly demanding a need for a new and effective HRM strategy. Using an acknowledged and respected HRM practice removes any doubts they might have about the intervention, provides a promise of efficiency and success, and removes many unnecessary and time-consuming processes standing in the way of the implementation of the new system.

Lastly, the best HRM methods are in line with demands by funders, sponsors, and higher-up officials. With the emergence of the Internet as a source of information, many non-HRM decision-makers become more familiar with the basic and popular HRM concepts, which sometimes evolves into a demand to utilize these familiar and notably effective practices within their organization. This may cause certain complications, as the HRM would, at times, be required to explain to the major stakeholders why a particular system would not very efficient in the scope of the company. Nevertheless, a failure to respond to the demands of its major stakeholders may result in a loss of trust and funding (Rees & Smith, 2017).

Do “Best HRM Practices” Work for Everyone?

Despite the widespread use and advertising of the best HRM practices in practical and scholarly fields of management, the popularity of the “universal recipes for success” is finding opposition both in the ranks of academics and practice management specialists. One of the most common reasons for implementing the so-called best practices is to avoid reinventing the wheel. Indeed, the majority of the concepts utilized by all HRM approaches are universal in implementation. However, there are several problems with that approach. As it was accurately mentioned by some of the HRM experts, if nobody tried to re-invent the wheel, our current wheels would have still been made of wood and stone. The purpose of this section is to analyze and highlight some of the more apparent flaws in the concept of “best HRM practices.”

Best HRM Practices” Do Not Exist

The concept of best-fit practices in HRM denounces the existence of objectively best HRM practices as a class. The reason for that being that no HRM practice should be taken out of context and the situation in which it was implemented and utilized. Rees and Smith (2017) point out that in many cases, the academics perceiving and analyzing successful HRM strategies in a business environment suffer from several mistakes.

One such mistake is hindsight judgment. The researchers make a backward correlation between the results of an intervention and the actions and reasons taken during the implementation. It can be summarized as “if the results were beneficial to the company, the line of thought behind the intervention must be correct.” At the same time, the process of decision-making about the internal and external factors is rarely investigated (Spears & Laurence, 2016). Many cite the HRM strategy used in Google as exemplary while forgetting the marketing situation that Google was at the moment of its foundation in, the situation it is in now, and the relation between HRM and the company’s success and retention rates. While Google is a useful example, it does not fit the situation the majority of managers and companies are in, as they do not have the same size, employees, managers, and specifics.

The Survivor’s Mistake is often found in hindsight analyses. A term coined from the American military engineering department that devised bombers during WW2. The term implies the use of a small number of successful survivors to constitute the majority of the sample while ignoring the information that could be provided by analyzing failed ventures. Indeed, the majority of “best HRM strategies” are revered based on the samples that followed it and found success, whereas the data provided by companies whose HRM departments followed the same methodology but failed is largely overlooked (Spears & Laurence, 2016)

Personal qualities decide everything. One particular branch of HRM analysis focuses on the initial driving forces behind employees and their managers as well as on the leadership skills of individual specialists. According to this theory, while modern HRM practices can enhance performance to some degree, most results are defined by effective recruitment strategies and personal qualities of the employees themselves, as well as capabilities for self-organization. While generally unpopular among the HRM managers, this point of view states that HRM is largely useless beyond being part of the recruitment commission (Pfeffer, 2015).

The “Best-Fit Practices” Approach

As it was demonstrated in the previous chapters, using “best practices” as a panacea has several downsides to itself. While the use of a standardized and research-proven HRM strategy more likely to produce good results and is relatively safe to implement, it is unlikely to produce outstanding results, as those are typically attributed to practices specifically tailored to every individual organization, process, and employee (Ramalingam, 2014). An HRM manager is more than an operator of a grander practice developed by someone else. Instead, a manager is a leader armed with many tools and practices that he or she can combine, dissect, and fit according to the needs of a particular company or community. This approach is commonly referred to as the “best-fit practice” approach.

It is riskier and requires more experience from the HRM and the managerial department, as in some cases the situation may call for an unorthodox method of human resource management and leadership. For example, even the autocratic leadership model, which is largely looked down upon by the modern leadership theorists, can apply and appropriate to situations when the situation is critical and requires a hands-on approach (Ramalingam, 2014). Such situations are common in the highly competitive business landscape, where many companies are not in the position to grow and develop servant leaders, as it is a lengthy process that does not lend immediate results. In some structures, such an approach to HRM may even prove fatal. A naval ship with more than one captain will not be able to survive a storm, as its subordinates will be receiving conflicting orders. Large and successful companies utilize the best-fit practice approach in their HRM operations, while smaller companies that are looking up to the top see their model as an unconditional “best practice,” which is erroneous.

Conclusions and Recommendations

The title of “Best Practices,” which are often given to particular techniques and models, is a highly subjective term that tends to be idolized without realization. At the end of the day, any practice or technique is a tool meant to be implemented in a particular case or scenario. A hammer is a tool developed for hammering nails in. It can be used to hammer a screw into the wall as well when a screwdriver is missing, but it will not be as efficient as a screwdriver. In the field of HRM, there is no room for absolutes. Objectively best techniques for every situation do not exist, as every situation and every company is unique. What works perfectly for one situation does not fit the other as much as it is expected.

The term “best techniques” should be replaced with “universal techniques.” These would be the frameworks and practices that apply to the majority of companies and situations. They can be scientifically tested and utilized to provide a quick and efficient framework to serve the needs of any organization in the event of a crisis or an emergency. Following the template or making slight adjustments to it, however, is not the true purpose of the HR manager. The role of the specialist is to produce tailor-fit solutions to individual companies based on their nuances and internal conditions as well as the overall situation in the labor market.

Abolishing a dogmatic approach to HRM practices and management practices, in general, will inspire academic effort in the field as well. Many individual HR managers would be encouraged and inspired to conduct research and promote innovations of their own without being looked down upon for not following the rigid guidelines of the aforementioned “best practices,” while at the same time improving the efficiency of the companies and their personnel. Following templates created by other people without thinking critically and without inspiration has led many companies to their downfall. One does not become a leader by copying what the leaders do. One does so by learning from them and improving on what they have built. Thus, the best-fit approach, while more complicated, risky, and time-consuming, is better than the best practices approach in the long run.

References

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Brewster, C., & Cerdin, J. L. (2017). HRM in mission driven organizations: Managing people in the not for profit sector. New York, NY: Palgrave.

Croonen, E., Grunhagen, M., & Wollan, M. L. (2016). Best fit, best practice, or stuck in the middle? The impact of unit ownership on unit HR performance in franchise systems. International Entrepreneurship and Management Journal, 12(3), 697-711.

Northouse, P. (2015). Leadership: Theory and practice (7th ed.). New York, NY: Sage.

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Warner, M. (2014). Traditional Chinese thinking on HRM practices: Geritage and transformation in China. Asia Pacific Business Review, 21(4), 557-558.