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BEST PRACTICE MODEL A critical analysis

Best practice model

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BEST PRACTICE MODELA critical analysis

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Group Members

KehkashanIbrahimIjlalIsbahLaylaMahrukhManojMaryam Haqqui

Maryam SaleemOsamaOvaisRafaySaad MujeebSaad AfridiSarfarazUsman

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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

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• The idea revolves around commitment

Purpose and benefits

Employer

• Training• Personal Development

Employee

• Better performance• Higher Productivity

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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“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

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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

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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

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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

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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

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Conclusion