Contrast the Best-Fit with the Resourced Based Approach to Human Resource Strategy.

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Contrast the best-fit with the resourced based approach to human resource strategy. Sabrina Kuschminder
Essay

Globalisation and the rapid growth in technology and communication changed the competitive environment of companies, because they compete against foreign firms, both domestically and abroad (Gómez-Mejía et al. 2007 and Wright, P. 2008) and nowadays the global presence by itself is not enough to guarantee global competitive advantages (Gupta and Govindarajan 2001). In order to be profitable, companies are using new innovative technologies to provide qualitative low-cost solutions and are trying to manage their human assets more effectively (Wright, P. 2008). In other words especially people and the management of people are increasingly seen as key factors of competitive advantage (Boxall and Purcell 2003, Pfeffer 1994, 1998, 2005). On the one hand many multinational organisations are conducting business in global markets, that’s why their workforce is distributed world-wide to meet their needs or to gain sustained competitive advantages. On the other hand certain problems can appear for managing human resources across selected cultures (Rima Česynienė, 2008), different rules and guideline (Pucik 1992) may be needed or the firm is facing restrictive immigration quotas. However, in our decade of fast moving globalisation in all areas it is very important for strategic planning to remain successful. Moreover it’s built nowadays especially on the capabilities and potential available through a company’s human resources. This paper will discuss different Human Resource Management approaches, such as the best-fit and the resource-based view. On the basis of the theoretical background the essay will argue about, which might be the most suitable approach for managing people in the changing global economy.

To analyse the particular Human Resource Management (HRM) approaches and to evaluate their impact on globalisation, we need to deepen the understanding of what a Human Resource Strategy (HRS) actually is. Wright (2008) defines HRS as “a system of human resource practices for a particular job or collection of jobs aimed at the best employee performance possible to meet the firm’s ultimate goals” (Wright, P. 2008, p. 3). Hence there is a need for focussing on developing skills, motivation and appropriate behaviour to formulate a successful business strategy for the future. With these HRS global companies attempt to address their problems within, but the coordination and complexity of the task is enormous (Pucik 1992). In the literature the “contingency” or “best-fit” approaches are mentioned “to develop operational guidelines for global management decision making framed around the characteristics of the industry” (Pucik 1992, p. 62). Paauwe and Boselie argue that best-fit recognise the pertinence of contextual factors, which includes that different institutional settings gain in influence of HRM (Paauwe, J. and Boselie 2007). In addition to this Schuler and Jackson (1987) as well as Miles and Snow (1984) belief that the performance of a firm is maximised when the HRS is consistent with the business strategy and might has a positive impact on all employees who work for the firm (Kinnie et al. 2004). Surely, only under the precondition that a certain competitive strategy within the company exists, which is able to fit the internal HR policy and able to be adopted by the subsidiaries. However, the best-fit approach of strategy making starts with an external focus, which is in my point of view very problematic, because it’s difficult to generate efficient HR strategies. An entire information system is needed to collect relevant data as a basis for decision making. I agree with Kinnie, Rayton, Hutchinson and Purcell that in the age of globalisation it’s very challenging to produce knowledge about the “complex external environments with multiple contingencies that cannot all be isolated or...
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