Critically evaluate ‘best fit’ approaches to Human Resource strategic decision-making concerning relevant academic and practitioner literature.
A ‘best fit’ approach to strategic human resource management (HRM) explores the correlation between strategic management and HRM (Cunningham and Kempling, 2011). In an organisational context, ‘best fit’ considers the effect of vertically integrating multiple facets of the HRM process (i.e., well-being and equity) to enhance the employee experience and improve organisational efficiency. This suggests HRM strategy benefits when properly integrated with certain organisational frameworks and environmental factors (i.e., a contingency opposed to a universal approach, ‘best practice’) (Armstrong and Taylor, 2023).
Based on the supposition that different organisations have different needs, a matching model, such as that theorised by Victor Vroom and Robert Blake, posits that the most effective HRM strategies are those tailored (or ‘best fit’) to specific organisational strategies and employee needs (Cunningham and Kempling, 2011). In practice, this might involve designing performance objectives and implementing policies to achieve strategic goals (i.e., the development of a rewards scheme to prioritise individual achievement for a meritocratically-based organisation). Incidentally, ‘best fit’ approaches can be challenging to effectively align when endeavouring to identify the primary contingencies of highly-complex organisations (Armstrong and Taylor, 2023). This becomes apparent as external influences rapidly alter organisational strategies and employees’ needs (i.e., COVID-19, remote working, social distancing). In such circumstances, it may not always be possible to adapt entire HRM frameworks to frequently meet every challenge.
In closing, ‘best fit’ approaches in strategic human resource management emphasise the significance of aligning HRM strategies with organisational goals. While the approach has its challenges, it can be most effective at ensuring practices and practices are tailored to the specific organisational and employee needs.
References
- Armstrong, A. and Taylor, S. (2023). “The Strategic Approach to HRM”, in: Armstrong’s Handbook of Human Resource Management Practice: A guide to the theory and practice of people management, 16th edn. London: Kogan Page. pp. 63-83.
- Cunningham, J. B. and Kempling, J. (2011). “Promoting Organisational Fit in Strategic HRM: Applying the HR Scorecard in Public Service organisations”. Public Personnel Management, 40(3), pp. 193-213. doi: 10.1177/0091026001104000302
What factors should an HR director consider when proposing to introduce a performance-related pay scheme? Refer to relevant academic and practitioner literature.
To contextualise, a performance-related pay scheme is a system whereby employees’ compensation relates to occupational performance (Armstrong and Taylor, 2023). The concept is intended to motivate employees by incentivising the achievement of strategic goals and thereby improving overall organisational performance (Cotton, et al., 2022). In proposing a new performance-related pay scheme there are three elements for an HR director to consider.
- Develop a clear rationale for performance-related pay: The HR director should consider why introducing a performance-related pay scheme is necessary and clarify what they hope to achieve. For instance, they might be motivated to encourage high performance levels by associating performance with pay (Cotton, et al., 2022).
- Codify the criteria: The HR director should also consider what factors might be used to determine an employee’s pay under a new scheme (Armstrong and Taylor, 2023). Determining factors might include profit, job evaluation, cost of living, seniority, negotiating strength, and skills.
- Weigh the potential employee impact: Implementing a performance-related pay scheme often has a significant impact on employees’ motivation, engagement, well-being, and overall job satisfaction (Armstrong and Taylor, 2023). Thorough consideration should be given to how employees are likely to respond, the conceivable stages warranted to ameliorate employees’ concerns, and ongoing monitoring to ensure the scheme is effectively implemented (Cotton, et al., 2022).
In closing, when proposing to introduce a performance-related pay scheme, an HR director should prudently consider the rationale underpinning its intention, the criteria deployed to determine the allocation of pay, and the potential impact on employees.
References
- Armstrong, A. and Taylor, S. (2023). “The Practice of Reward Management”, in: Armstrong’s Handbook of Human Resource Management Practice: A guide to the theory and practice of people management, 16th edn. London: Kogan Page. pp. 420-434.
- Cotton, C. Gifford, J., and Young, J. (2022). “Incentives and Recognition, An Evidence Review: Practice Review and Recommendations”. [online] Available at: https://www.cipd.co.uk/knowledge/fundamentals/people/pay/evidence-financial-incentives [Accessed: 1 March 2023].
