best practice model
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BEST PRACTICE MODELA critical analysis
Group Members
KehkashanIbrahimIjlalIsbahLaylaMahrukhManojMaryam Haqqui
Maryam SaleemOsamaOvaisRafaySaad MujeebSaad AfridiSarfarazUsman
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”
Definition of Best Practice
• The idea revolves around commitment
Purpose and benefits
Employer
• Training• Personal Development
Employee
• Better performance• Higher Productivity
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
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
Fifteen best practices
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
Performance Monitoring: Benchmarking
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.
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
Advantages
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
Adopting the Benchmarking Process
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)
High commitment adoption barriers
Satisficing• 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
High commitment adoption barriers
Differences Between the Best Practice and the Best Fit Models
‘Best fit’ perspective
Firm’s reward system should be aligned to support the organization's business strategy
Results in achievement of competitive advantage.
‘Best Practice’ perspective
One bundle of HR policies including the reward system
Lead to highly motivated and committed employees who are key to an organization's competitive advantage
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 the organization adopts and is the source of its
competitive advantage.” (Milkovich & Newman, 2002, p. 30)
Therefore, for this approach, policy precedes strategy.
‘Best Fit’ and ‘Best Practice’ applied to reward systems
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
Criticism
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
Premise of the Cases
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 trainingEach factory developed action plans to address core
HRM areas, including:• Supervisory skills• Incentive structures• Employee turnover• Employee satisfaction
Planning
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
Implementation
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
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%
Background
“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
Employee Retention
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
History of employee commitment
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 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 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
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’
Best Practices at FedEx
Conclusion
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