5.2 Perspectives on HR Strategy

Question 1

Best Fit Approach is

Answer 1

The ‘best fit’ or ‘contingency’ approach to HR strategy formation advocates a close match between HR and business strategy and the use of a set of HR policies and practices that are strategically integrated with each other and with the goals of the organisation. This approach suggests that business performance will improve when HR practices mutually reinforce the firm’s approach to the marketplace.

In other words, HR strategy should be inextricably linked to the ‘formulation and implementation of strategic corporate and/or business objectives’ (Forbrun et al., 1984: 34).

One size does not fit all, lack of innovation are common sited issues with this approach.

Question 2

The best fit is about matching employees to

Answer 2

.In essence, therefore, the best-fit approach to HR strategy formation is concerned with matching employee role behaviour with the company’s mission, values and goals through the vertical alignment of competitive HR strategy.

Question 3

What is a competitive advantage

Answer 3

An organisation has a competitive advantage when it achieves a consistent pattern of superior returns for its shareholders, or when it is able to do something unique that its competitors cannot easily copy.

Question 4

How HR can help to deliver competitive advantage through its roles?

Answer 4

competitive advantage and the notion of ‘HR advantage’, refers to the situation where an organisation ‘builds a superior, hard-to-imitate capability through the special quality of its human resources’ (Boxall & Purcell, 2011: 18).

Question 5

How to maintain competitive advantage

Answer 5

1. Investing or attracting good human capital and developing and retaining experts.
2. Creating a unique or difficult to imitate set of processes, such as team-based learning and approaches to managing issues, which develop over time and within the social context of the organisation.

Question 6

HR advantage is composed of:

Answer 6

1. human-capital advantage, which occurs when an organisation employs more talented employees than its rivals,

plus

2. organisational process, or social capital, advantage, which occurs when organisations ‘have developed superior ways of combining the talents of individuals in collaborative activities’ (Boxall & Purcell, 2011: 18).

Question 7

Best practice Approach refers to

Answer 7

high commitment or high-performance HRM.

In broad terms, the best practice approach advocates enhancing knowledge, skills and competence through effective recruitment, selection and investment in training, motivating and generating desired employee behaviour through both financial and non-financial reward and sympathetic job design, and providing opportunities for employees to contribute to organisational decision-making.

At the heart of best practice, therefore, is the strategic investment in human resources to generate a range of universally desirable organisational and employee outcomes including improved individual and organisational performance, greater organisational adaptability and cost-effectiveness, greater employee engagement and commitment, lower levels of employee absenteeism and turnover, and improved job satisfaction.

Issue: The high investment required for employees in this approach results in the question of affordability.

Question 8

Managers should follow a home-grown blend of best fit and best practice approaches like the…

Answer 8

the Harvard Model

Question 9

The Resource-Based Review Approach (RBV)

Answer 9

RBV suggests that any features of a firm with value-creating properties, for example, in-house knowledge or technology, culture, skilled personnel or networks, are considered as ‘strategic assets’ that can be a source of advantage if they are scarce, valuable, organisation-specific and difficult to imitate.

Question 10

RBV Management Strategy formulation is done by

Answer 10

Under RBV, the question for management in strategy formation is how to develop valuable, firm-specific characteristics, exploit them for strategic purposes and create barriers to their ‘imitation’ or ‘erosion’ by competitors.

The circumstances in which an organisation develops are unique and, by taking advantage of opportunities to learn and develop, firms can build up unique clusters or ‘bundles’ of human and technical resources over a period of time which constitute value-adding capabilities or competencies.