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Week 3: Best practice Strategic HRM

Critical evaluation of the best practice strategic HRM Explore the link between best practice and organisational performance Explore case study evidence of the take-up and success of best practice strategic HR

Emerged in the USA Context: service and knowledge sector growth and influence of Japan Application of distinctive combination of HR practices Taken together and properly introduced associated with higher performance Universally applicable especially in firms where employee discretion is required

High commitment management practices are associated with better economic performance, better workplace well-being and a better climate of employment relations but just 14% of all workplaces have a majority of them in pace

(Cully et al, 1999)

High performance work systems (Appelbaum et al, 2000) High commitment management (Pfeffer, 1998) High involvement management (Guthrie, 2001) High performance work practices (CIPD, 2005)

differences in work practices affect profits by as much as $15,000 per (Huselid, 1995) steelmaking production lines with a full complement of innovative HRM practices are 7% more productive (Ichniowski et al, 1995) in the clothing industry there is a 30% cost advantage (Dunlop Weil, 1995)

1. 2. 3. 4. 5. 6. 7.

Employment security Selective hiring of new personnel Self managed teams and decentralization of decision making Comparatively high compensation contingent on organisational performance Extensive training Reduced status distinctions and barriers dress, language, office arrangements Extensive sharing of financial and performance information throughout the organisation

Set of complementary work practices or bundles covering three broad areas: 1. High employee involvement practices 2. Human Resource Practices 3. Reward and commitment practices


2. 3. 4.

Can you identify the high involvement, HR and reward and commitment practices in this case study ? What are the key factors that facilitate the successful implementation of HPWPs ? Would you actively seek to work in organisations with HPWPs ? How do you think HPWPs can with stand the pressure of a financial down turn?


2. 3.

Can you identify the high involvement, HR and reward and commitment practices in this case study What are the key factors that facilitate the successful implementation of HPWPs What ethical issues are involved in the use of HPWPs in this organisaiton ?

What are the key supporting factors that you need for the effective implementation of Best Practice HRM? How important is organisational culture in sustaining best practice? How durable will can best practice be?

The most common practice was appraisals (95%) Other practices less common e.g. share options for all employees 16% Adoption of more practises equates to better organisational performance HPW bundles are used in different sectors to achieve different business outcomes Organisations adopting HPWP are leaders in their industries

Little evidence of organisations using complete bundles Considerably higher use in public sector and where trade unions present Job security guarantee is the LEAST used HPWP
(Guest et al, 2000)

Something very strange is occurring in organisational management. Over the last decade numerous studies have demonstrated the enormous economic returns obtained through the implementation of HPWPsbut even as these research findings pile up trends in actual management practice in many instances are moving in a direction exactly opposite
(Pfeffer, 1998)

Top management beliefs and values Middle management resistance Lack of HR Director Short-termism System inertia Labour-management distrust Lack of crisis (Purcell, 2003)

Cant ignore the political, social, economic, and technological operating environment
Has the link between HPWPs and performance been proved conclusively ? UK business environment focused on the short term Individual practices vs bundles being adopted

Concept needs to be analysed more systematically Lack of agreement on the precise HR practices that constitute best practice No consist measure of performance Employee perceptions/experience of work needs to be taken into account
(Marchington and Grugulis, 2000: 1119)

Employers are able to take a long term perspective Labour costs are a low proportion of total costs Knowledge workers can be rewarded for using their discretion Firms and workers are in a strong market position
(Marchington and Grugulis, 2000)

Research revealing how beneficial best practice can be In reality take up is limited Have we fully considered the impact on employees Next week examine Best Fit HR strategy