Outline briefly what is meant by the best practice/High Commitment HRM paradigm, and critically review this as way of looking at HRM. Provide examples from different practice areas of HRM to support your answer, and indicate clearly the key methodological issues that recent research had addressed.
Best practice or otherwise termed as High commitment HRM has been reviewed over a decade and has derived various perceptions from different scholars in the field. These are basically a set of seven 'Best' practices contributed by the work of Jeffrey Pfeffer and a few others from the UK and the USA, the idea behind these are 'a particular set of HR practices has the potential to bring about improved performance for all organizations'. Recent research has added two more, best practices to the initial seven. Since all these HR practices that contribute to operational level performance are assumed to be efficient for the management as well as the employees who work under the framework. However, not all studies support this argument of optimistic relationships between best practice HRM and performance as there are contradictions about the right set of practices that comprise the high commitment bundle especially in terms of the synergy with one another and as to how far would it be attractive to employees who actually are in the forefront. The components of best practice/High commitment HRM are illustrated in the below mentioned chart:
By just observing the above diagram we can draw obvious links between certain practices, these are termed as 'Bundles' of Human resource practices where these factors become inter-dependant. In a study done by John Macduffie during 1989-1990 which comprises of 62 automotive assembly plants two major hypothesis were tested,
Innovative HR practices affect performance not individually but as interrelated elements in an internally consistent HR "bundle" or system;
And that these HR bundles contribute most to assembly plant productivity and quality when they are integrated with manufacturing policies under the "organizational logic" of a flexible production system.
For example employee involvement and participation would be on the high when backed up with employment security and reduction of status differentials, similarly workers would be highly motivated towards team working if their efforts are timely rewarded with incentives, work-life balance and provided with access to training programmes. It is also observed that 'bundles' prove to be a success formula to those organizations whose culture merge with the High commitment paradigm and these practices outperform traditional and authentic work systems despite the fact that combination of practices are subjective and are industry specific. There has been significant contribution by David Guest to this area where he categorises internal fit into three distinct groups, which are:
Criterion specific - The closer organizations get to their 'best practices' the better their performance is to be.
Criterion-free - these are termed as 'synergistic', It would be better if organizations use all the HR practices because combination results in better productivity rather than not using any.
Bundles are 'additive' - The more the HR practices the better for the organization as long as the core essences of these are distinct.
A contradicting study to the above was conducted to find out the 'impact of bundles of strategic human resource management practices on the performance of European firms' in about 3281 firms located in the European union countries using data derived from Cranet data set, where a factor analysis of 80 different HRM practices resulted in 15 bundles which were categorised as calculative, collaborative and intermediary keeping in mind the contingency factors, firm size and market conditions, the analysis inferred that five of the six calculative practices and two of the three intermediary practices have a significant impact on performance but none of six collaborative practices has. Significantly it was further noted that the overall effect of HRM on performance was relatively modest.
'High Commitment paradigm' is been found fruitful by Pfeffer and its supporting researchers as they find it to be employee centric and empowering where employees feel that their needs are fed by the opportunities and benefits these practices provide and respond by employees being loyal and by taking initiatives without any instruction from their employer. It's also been observed that these High commitment practices is used as an alternative approach in out casting the limitation of Taylorist strategies like de-skilling and direct control.
As High commitment practices on one hand prove to give positive effects to organizations on the other its policies has an adverse effect on employees during tough times such as reducing pay scale in order to minimise labour costs, intensification of workload with a view to preserve the financial stability of the concern. Mick Marchington has contributed his research in terming these as 'Nice words and harsh realities' where for example self-managed teams are found to be difficult to be implemented in practice and are interfering and similarly information sharing can be easily interpreted as indoctrinating and controlling rather than being educative and empowering. The central claim of HRM is that organizational performance is determined by its workforce in particular High performance work systems contribute to the operational level performance of organizations, in reference to this a study was conducted on HR systems and performance by Justin Horgan and Peter Muhlau in the Ireland and Netherlands where they exposed three distinct processes such as reinforcement, flanking and compensation to five high performance HRM practices such as incentive schemes, training, sharing arrangements, guidance and selective recruitment in nearly 400 establishments. Each of the five practices observed here offer the firm the possibility to manage the core of its human resource needs. The data set was targeted out of private companies with 50 or more employees, key informants were asked to compare the performance and co-operation of the company's employees with that of other similar companies. While doing a comparison between data's gathered from both countries the Irish data set showed positive relationships for adopting High Performance HR practices and the Dutch data was a bit unclear although the high performance HR system on an average did well compared to other HR approaches and the differences between the HR systems were small and not significant.
These findings though provide little conclusive evidence for High performance work systems to be universally applicable, proves that it has an evident effect on private entities who have these practices as their success mantra. Pfeffer and Huselid strongly believe that 'best practice' HRM possess the capability to be used in any organization, irrespective of product-market situation, industry, or workforce where he puts people first. For example an organization which want to revive itself from its poor performance may adopt a particular set of 'best practices' whereas on the other hand many organizations may find little interest in investing on these during these tough situations. Similarly organizations which hold a strong product market may relatively find it easy to adopt 'best practices' but still many would again show less interest to invest on these as they are already doing well. And it is also very difficult to convince organizations which come from industries where highly skilled labour are employed and considerable labour costs are recorded for example industries such as Energy and Infrastructure, Pharmaceutical.
As it has been argued throughout the paper that 'Best practices' to be effective need to merge with core values of the organization, a obvious critic of it being universally applicable arises as organizations mostly adopt from a combination of HR strategies such as Cost-reduction, Innovation and quality enhancement which possess distinct frameworks where it is not possible to draw general conclusions. It would merely be a misfit for those organizations trying to implement 'best practices' without considering its core values and strategies and failing to develop a synergy which would be the right combination.
As I had earlier mentioned that a significant part of HR practice's success goes in merging itself with the core values of the organization, we would now add value to this by the contributions made my Peter Boxall and John Purcell towards 'Best Fit' model which states that HRM is tailor made by managers to suit to the organizational values as it would prevent them from the failure which would arise incase if they fail to align their policies with the external environment. A diagrammatic example showing as to how broad analytical frameworks assist a management in their long run is listed below:
In the above illustrated figure we can see as to how managers in firms are encouraged to set their own priorities based on shareholders interest and situational factors and in turn HR outcomes are seen having long-term impacts on organizational effectiveness and on societal and individual well being. These are termed as 'External' or 'Vertical' fit.
There has been numerous studies conducted in evaluating the effectiveness of HPWS, a few like Pfeffer and Huselid contribute in saying that 'best practices' produce positive results and are applicable universally, and there are equal number of criticisms towards the same which come from Ramsay, Marchington and Godard who underpin the drawbacks of these practices and reason out its limited applicability. Surprisingly there is still no 'concrete' conclusion drawn because of a variety of issues which arise from the methodology followed by the researchers in this field right from the type of HR practices examined, proxies used in these studies, performance measures used, industry specific research, data collection techniques and the source of sample size. For instance empirical studies conducted by Pfeffer were drawn out of sample size of sixty seven manufacturing concerns which makes it industry specific and adding to it, these were single site and single product organizations making the findings more subjective. Subsequent methodological issues related to the performance measures, which led doubts about directions and influence of non HR functions and reliance on single respondents to complete the research led to further contradictions. Majority of the researches conducted has been on westernised nations and sample organizations are too based out of here which limits its scope of travelling across boundaries and be universally applicable. The extent to which management practices work together as bundles is questionable and a consensus which builds up among researchers who have reported positive links between HPWS and organizational performance measures leads to a causal link of practices which flow through people. Statistical data such as WERS98 data were not adequate to capture the factors that operate to generate positive organizational performance. The measures of performance used such as gross profits, quality, employee satisfaction and labour turnover are subjective.
This paper has critically reviewed High commitment HRM/best practice where a particular set of HR policies and practices contribute in developing synergistic bundles. Reviewing works of empirical and subsequent researchers who have contributed towards HPWS we can be convinced that 'Best practices' are not universally applicable and they seem to be ignorant about employees and focus more on employer's perspectives. We have studies which contribute as well as contradict 'best practices' and leads us with no conclusive evidence, much weightage of these studies are primarily focussed on performance that the essence of 'best practice' HRM is been ignored. Work done by Pfeffer is been highlighted in this paper along with its methodological issues and perceptions gathered from other researchers like Marchington and Barker who have contributed in recent times as to what sort of realities these bring in to business. I strongly argue that there cannot be a single set of practices which can contribute towards organizational performance and it would certainly be a combination of 'best practices' which would merge with the values of the firm forming effective bundles. We need to however be careful drawing conclusions from these findings because if a broader, longer term, multidimensional concept of performance associated with the idea of success was used the results would have been entirely different. The likely important of these processes points to the need for case studies that would generate new theory and inform survey design so that the field can move beyond the HPWP paradigm.
