The 'best-practice' theory is based on the assumption that HR practices observed in high-performing firms can be transformed to other companies with the same results.
Pfeffer's list of seven HR practices for competitive advantage through people is one of the best known set of best-practices. It is said when adopted will lead to better business performance.
Employment security and internal labour markets
Selective hiring and sophisticated selection
Extensive training, learning and development
Employee involvement, information sharing and worker voice- Sharing information Self-managed teams/teamworking
High compensation contingent on Company performance
Reduction of status differentials/harmonisation - Reduction of status differences The idea is that a particular bundle of HR practices has the potential to contribute improved employee attitudes and behaviours, lower levels of absenteeism and labour turnover, and higher levels of productivity, quality and customer service. This, it is argued, has the ultimate effect of generating higher levels of profitability.
HR Practices embrace strategy, fitting horizontally and vertically into the business.
Since the HR practices that supposedly contribute to an improved bottom line performance are generally perceived as ‘good’ for workers – for example, employment security, training and development, information and consultation, and higher levels of pay – this looks like an attractive scenario for employers and workers alike.
In essence, recruiting and retaining talented, team-oriented, highly motivated people is seen to lay a basis for superior business performance or competitive advantage. But this theory, like several other universal models, has been criticised for a variety of reasons:
• Disconnection from company's goals and context
• Disregard of national differences such as management practices and culture Inconsistency between the RBV's...