Definition of Best PracticeNo authoritative definition agreed upon by academics or practitioners • Leads to lack of conceptual claritySeveral definitions that have emerged that encompass many of the underlying factors of HRM best practice:Johnson (2000) details: “best practice or high performance work practices are described as HR methods and systems that have universal, additive, and positive effects on organizational performance”
Purpose and benefits• The idea revolves around commitment •Training Employer •Personal Development •Better performance Employee •Higher Productivity
Fifteen best practices1. Employee job security • Need for formal practices and procedures for employment2. Selective hiring3. Effective use of teams4. Effective compensation strategies5. Appropriate performance appraisal6. Training and development7. Flatter organizations with an aim to reduce status differences8. Increased communication
Fifteen best practices9. Grievance procedures10. Promotional criteria11. Employee ownership of the organization • Company stocks as compensation12. Empowerment of employees13. Ensuring upward channeling of employee suggestions14. Job rotation15. Career progression
Performance Monitoring: BenchmarkingA comparison with selected performance indicators from different organizations typically in the same industry, or with comparable organizations that are considered to be the best in class. Red Flags: • Some organizations benchmark firms only from the same industry • Some benchmark only competitors
What if firms in your industry or your competitors are worse than you? So why not benchmarking a company that is well known for being a good model sometimes referred to as Best Practices, Exemplary Practices, and Business Excellence.
Advantages Calibration Enables learning from others’ successes and mistakes. Creation of an environment of active learning Tool to motivate people to change Helps in setting direction and priorities Helps in initiating focused programs that move the company from its current position
Adopting the Benchmarking Process Decide the composition of the audit team Identify the function’s main customers Review the HR function’s mission statement Review the function’s role in formulating and implementing the organization’s strategy Review the HR function’s role in developing relevant HR policies and practices Review the delivery of current HR policy and practices Make internal comparisons to establish ‘best’ practice Review the outcome of analysis • Performance gaps need to be identified and the policy implications need to be discussed with the customer. Implement the agreed improvements and measure the progress against pre-set targets
High commitment adoption barriersContingent on strategy?Sometimes argued that a high commitment approach is best suited to specific market positions, namely a high quality and/or high product variety strategy that benefits from skilled workers and/or organizational flexibilityHowever, research in other industries has tended to show that the benefits of the HCWS are not conditional on strategy (Pfeffer, 1998)
High commitment adoption barriersSatisficing • Companies who are successful without implementing high commitment model are not prepared to invest in a risky change.Limited awarenessManagerial Interests • Too costly personally • Requires skills that they do not have or are not their forte • Maybe they just don’t “buy into” the idea of a more committed culture and less autocratic management style
Differences Between the Best Practice and the Best Fit Models ‘Best fit’ perspective ‘Best Practice’ perspective Firm’s reward system should One bundle of HR policies be aligned to support the including the reward system organizations business strategy Lead to highly motivated and committed employees who are Results in achievement of key to an organizations competitive advantage. competitive advantage
‘Best Fit’ and ‘Best Practice’ applied to reward systems Basic argument - Whether the rewards system are linked to the organizational strategy or not? Lawler (1995, p. 14) states that all organizational systems must start with business strategy because “…it specifies what the company wants to accomplish, how it wants to behave, and the kinds of performance and performance levels it must demonstrate to be effective.” Business strategy, driving individual and organizational behaviors, is the touchstone for the development of the reward strategy.
‘Best Fit’ and ‘Best Practice’ applied to reward systems However, according to Purcell (1999, p. 27),‘…what is most notable about the best practice model is there is no discussion on company strategy at all.’ Super human resources, talent and competencies : “These superior human resources will, in turn, influence the strategy theorganization adopts and is the source of its competitive advantage.” (Milkovich & Newman, 2002, p. 30) Therefore, for this approach, policy precedes strategy.
Criticism HRM best practice theory is still a widely debated topic in academic circles Largely due to the varying views as to what actually constitutes ‘best practice’ Best Practices are really nothing more than disparate groups of methodologies, processes, rules, concepts, and theories that have previously garnered success in certain areas Business is fluid, dynamic, and ever evolving. This means that static advice is at best short lived, but most times is simply incompatible with the very nature of business itself. More research coupled with greater support for best practice theory is required
Premise of the CasesPfeffer argued that there are seven best practices forachieving competitive advantageThese practices revolved around putting people firstand included:Providing employment security, selectivehiring, extensive training, sharing information, self-managed teams, high pay based on companyperformance and the reduction of status differentials
Planning 16 factories targeted • 8 in Vietnam in November 2008 • 8 in Southern China in March 2009 Employee satisfaction survey • Understand the issues facing workers • Measure mutual trust and respect Surveys were brought along to the two-week training Each factory developed action plans to address core HRM areas, including: • Supervisory skills • Incentive structures • Employee turnover • Employee satisfaction
Implementation Implementation of specific action plans with six-month deliverables Reduction of the number of workers reporting dissatisfaction with the behavior and attitude of their direct supervisor from 15 % to 5 % Targeted training for supervisors including: • Management, trust and respect • Leadership • Company policies • Grievance systems Increasing the technical skill level among workers on the shop floor
Plans also included: • Reassessing skill levels • Sharing information with leadership • Using findings to increase and improve trainingEach step in the process had clear goals, responsibilities, timelines and methods for tracking the progressThe real measure of success - HRM trainings ability to drive systemic and lasting improvement in working conditions
BackgroundAmong the 100 “Best Companies to Work For”Reputation of being one of the most employee- friendly companies in the worldIn 2000, FedEx employee turnover rate was 6%, well below the industry average of 20%
Employee Retention “In our competitive market place, employee loyaltytends to be low. If employees don’t like their jobs they simply walk across the street and find a new one. It’simportant to keep your people happy and to create an environment where they want to stay.” -Mc Mahan, HR manager at Fedex
History of employee commitment Since inception in 1971, its management focused on providing a suitable work environment that encouraged employees to come up with innovative solutions During severe financial difficulties during the first couple of years, the employees were prepared to sell their personal belongings They were also prepared to use their own credit cards to purchase fuel to deliver the packages to the customers Continued working even when they didn’t receive their salary on time
Best Practices at FedExPeople Service Profit (PSP) philosophy: • Adopted by the founder of FedEx • If FedEx took proper care of its employees, they would provide efficient service to the customers • This in turn would benefit the company by generating more profitsSurvey-Feedback-Action (SFA) Program: • Helped management take decisions regarding promotions • Online survey system in the US in 1992 • Each April, every employee is asked to participate in the online survey • Managers hold feedback sessions
Best Practices at FedExLeadership Evaluation and Awareness Process (LEAP) • Encourage non-managerial cadre employees to move to the managerial level within the companyEmployee Communication Program • SFA program • Guaranteed Fair Treatment Procedure • Open Door Policy • Grievance system
Best Practices at FedExJob Change Applicant Tracking System (JCATS) • Online computer job posting system that allows hourly employees to post for any available jobRecognition and Reward Program • Awards such as the ‘Bravo Zulu’ and the ‘Golden Falcon Award’