3. Definition of Best Practice
No authoritative definition agreed upon by academics or
practitioners
• Leads to lack of conceptual clarity
Several 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”
4. Purpose and benefits
• The idea revolves around commitment
•Training
Employer •Personal Development
•Better performance
Employee •Higher Productivity
5. Fifteen best practices
1. Employee job security
• Need for formal practices and procedures for employment
2. Selective hiring
3. Effective use of teams
4. Effective compensation strategies
5. Appropriate performance appraisal
6. Training and development
7. Flatter organizations with an aim to reduce status differences
8. Increased communication
6. Fifteen best practices
9. Grievance procedures
10. Promotional criteria
11. Employee ownership of the organization
• Company stocks as compensation
12. Empowerment of employees
13. Ensuring upward channeling of employee suggestions
14. Job rotation
15. Career progression
7. Performance Monitoring:
Benchmarking
A 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
8. 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.
9. 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
10. 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
11. High commitment adoption barriers
Contingent 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 flexibility
However, research in other industries has tended to show
that the benefits of the HCWS are not conditional on
strategy (Pfeffer, 1998)
12. High commitment adoption barriers
Satisficing
• Companies who are successful without implementing high
commitment model are not prepared to invest in a risky
change.
Limited awareness
Managerial 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
13. 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
organization's business
strategy Lead to highly motivated and
committed employees who are
Results in achievement of key to an organization's
competitive advantage. competitive advantage
14. ‘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.
15. ‘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 the
organization adopts and is the source of its competitive advantage.” (Milkovich &
Newman, 2002, p. 30)
Therefore, for this approach, policy precedes strategy.
16. 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
17. Premise of the Cases
Pfeffer argued that there are seven best practices for
achieving competitive advantage
These practices revolved around putting people first
and included:
Providing employment security, selective
hiring, extensive training, sharing information, self-
managed teams, high pay based on company
performance and the reduction of status differentials
18.
19. 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
20. 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
21. Plans also included:
• Reassessing skill levels
• Sharing information with leadership
• Using findings to increase and improve training
Each step in the process had clear
goals, responsibilities, timelines and methods for tracking
the progress
The real measure of success - HRM training's ability to
drive systemic and lasting improvement in working
conditions
22.
23.
24. Background
Among the 100 “Best Companies to Work For”
Reputation of being one of the most employee-
friendly companies in the world
In 2000, FedEx employee turnover rate was 6%, well
below the industry average of 20%
25. Employee Retention
“In our competitive market place, employee loyalty
tends to be low. If employees don’t like their jobs they
simply walk across the street and find a new one. It’s
important to keep your people happy and to create an
environment where they want to stay.”
-Mc Mahan, HR manager at Fedex
26. 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
27. Best Practices at FedEx
People 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
profits
Survey-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
28. Best Practices at FedEx
Leadership Evaluation and Awareness Process (LEAP)
• Encourage non-managerial cadre employees to move to
the managerial level within the company
Employee Communication Program
• SFA program
• Guaranteed Fair Treatment Procedure
• Open Door Policy
• Grievance system
29. Best Practices at FedEx
Job Change Applicant Tracking System (JCATS)
• Online computer job posting system that allows hourly
employees to post for any available job
Recognition and Reward Program
• Awards such as the ‘Bravo Zulu’ and the ‘Golden Falcon
Award’
This definition relates to the fact that the more best practices that the organization employs, each will add to the previous, thus compounding the resulting performance of the organizationEach of these best practices must complement each other, as if this is not the case the other will ultimately negate any advantage that could possibly result from its inception
In simple terms, each best practice technique is aimed at developing the employee, increasing their commitment, with the resulting intention to improve the organizational performance, and ultimately create a sustainable competitive advantage.
