Hr Systems Comparison: System Thinking , Best Practice, Best Fit

Managing human capital| HUMAN RESOURCE MANAGEMENT| | | | Table of Contents 1. Abstract3 2. Introduction3 3. System and Ecological Thinking4 3. Best Practice5 4. Best Fit6 5. Discussion7 5. 1. ‘Systems Thinking’7 5. 2. ‘Best-Practice’8 5. 3. ‘Best-Fit’9 6. Summary and Conclusion10 7. Bibliography11 1. Abstract This assignment will assess three main schools of thought that apply to Human Resources Management (HRM). With regards to contemporary HRM concepts it is evident that a consideration of the ‘larger picture’ is necessary to be able to effectively push an organisation towards its ideals goals.A consideration of ‘system thinking’, ‘best practice’ and ‘ best fit’ systems of HRM lead to balanced conclusion that it is necessary for an HR Manager to have a sensitivity to the individual needs of the workforce as well as the ultimate mission of the company. Each system discussed here does this diff erently here does this differently with each focussing on alternate viewpoints of what is most important; be it the intricacies of the system, the commitment applied to the overreaching goals of the organisation.This study finds that our of the three areas studied is viable and arguable that best practice system offers the most well rounded set of principles for general HRM. However, to assess the appropriate HR System for a more specific organisation either local or international, it is essential to consider a conglomerates system, which takes into consideration the specific aims of the company the needs of the staff to create an efficiency and enhanced performance that is still systematic and easily applicative.Key words: System Thinking, Best Practice, Best Fit, Human Resource Management 2. Introduction Human Resource Management was influenced from the changing look of the employment management relationship that occurred after the First and Second World War. It starts with the Fi rst World War; it can be classified in terms of a changed attitude of managers towards labour, changed labour management practices, the development of personnel techniques, and development of the personnel profession.During WW1 the demand for workers significantly increased, as a result of this, the need for monitoring workers, and finding qualified workers to manage the group of people similarly increased. â€Å"These new values became incorporated in what was emerging as a distinctive body of management thought, practice and ideology, upon which later theory and practice are founded. † WW1’s impact on HRM grew rapidly during WW2, with an increase in new theories and ideas. In addition to this, labourers created their industrial unions which enhanced the monitoring of the people and also allowed a development in training.During WW2 developments opened vast fields for HRM. Significant impacts occurred after the war, when the idea was introduced that â€Å"quality adds to costs†. Subsequently, â€Å"western organisations have since come to emulate the philosophy and practises of quality that proved so successful†. The concept of HR can thus find their beginnings rooted in the aftermath of the two world wars This essay will consider three main systems of HR namely; ‘systems thinking’, ‘best practice’ and ‘best fit’.Within these topics there will be an assessment of what each of these systems involves with regards to HR and occasionally the International HR Manager. The ‘best-fit’ system can be subdivided into three models which shall be discussed also. These are the ‘life-cycle model’, the ‘competitive model’ and finally the ‘configurational model’. Furthermore there will be consideration of the benefits and limitations of each of these practices, culminating in an assessment of which of these systems could offer the advantageous and beneficial HRM for the Director. . System and Ecological Thinking By definition, the context of HRM is complex because the nature of HR is that it is affected by many different factors, both internal (Vision, Mission and Goals, Policies, Management Approach, Organizational Culture, Quality of Work Life) and external (Political , economic, Social and Technological). Collins comments that â€Å"from the perspective of context, the story is never-ending†. He refers here of course, to the idea that these internal and external factors have an enormous effect on the working environment.It is a sensitive issue which requires a large amount of continued assessment; the goal being to keep these factors in check and accounted for in order to create a harmonious, productive and efficient workforce. This approach helps to simplify the complexities of context by looking upon HR as a ‘system', a term which denotes a delicate habitat made from smaller ‘sub-systems', where each ‘sub-s ystem' provides a layer of information that feeds up the chain to create the bigger picture.In the context of International HR (IHR), managers take on the same responsibilities as their local based colleagues but the area of activity and difficulty of these duties is based on the extent of internationalisation of the organisation. As they move towards a more global economy, organisations are supposed to revise their HR strategies. From one country to another, for example, external factors (e. g. politics) or internal factors (e. g. practice) would be vastly different.As a result of this, normal decisions can be really complex in an organisation operating around the world in multiple countries, particularly since for international organisations, all HR events are supposed to be synchronised across the home country and different national branches. The IHR manager needs to consider how to improve their leadership of a global company, choosing high potential employees and making correct decisions for the overall HR organisation A critical issue for IHR managers is creating co-operative strategies between countries.Consequently, the IHR manager cannot look at the ‘big picture’ from only one perspective. As Collin’s suggests, positivist and alternative views of a system can open â€Å"useful insights into the understanding of context†, ‘system’ thinking â€Å"allows us to see the whole rather than just its parts and recognise that we are a part of that whole. It registers patterns of change, relationships rather than just individual elements, a web of interrelationships and reciprocal flows of influence rather than linear chains of cause and effect. †The ‘system’ approach is organised in such a way that the processes and objectives are considered as a whole. For example, the ‘system’ consists of the organisation of the human element, machines, material resources, tasks, formal authority relatio nship; all of which are small informal groups. Each of these components works towards achieving the objective of the organisation – all of the processes are connected to each other. The main ‘system’ is the organisation, and this includes the interrelated and interdependent subsystems.The system thinking approach can be divided into an ‘open system' which refers to systems that take information from the environment, and a ‘closed system' whereby the system does not have any relationship with the environment. It is important for IHR Managers to remain firmly within an ‘open system’. They are required to start a dialogue with their environment and constantly adjust internally to remain buoyant and in balance with the external factors. It is interesting to consider an aspect of ‘systems thinking’ referred to as both ‘Hard Systems Thinking’ (HST) and ‘Soft Systems Thinking’ (SST).Within HST, humans are c onsidered as an objective resource. Its purpose is to pinpoint the ideal solution for predicting and controlling the use of existing resources. Once this ideal solution has been identified, the role of HRM then focuses on enforcing compliance with the designed regime. The difficulty with HST however, is that it is incapable of taking into consideration any kind of human misunderstanding or conflict which may hinder goal achievement. On the other hand, SST as proposed by Checkland (1980), is available to help tackle those problems which could not be handled by HST.SST has seven stages, which focus heavily on wide participation to create ownership of the outcome. Firstly, one must enter the problem situation, secondly express the problem in a â€Å"rich picture†, thirdly Formulate Root Definitions so that one can create precise perspectives of the participant system, fourthly Build Conceptual Models to understand better what each system does, fifthly, compare these models with reality, sixthly identify possible changes and seventhly take firm action to improve the situation. The benefits of SST are that it truly is able to recognise that problems occur due to differences of opinion.Its chief aim is to develop a sense of mutual understanding and preserving the existing state of affairs. Another aspect of ‘systems thinking’ is ‘Critical Systems Thinking’ (CST). According to Jackson (1991), CST accumulates five main components: critical awareness, social awareness, and dedication to human emancipation, complementarism at the theoretical level and complementarism at the methodological level. Midgeley (1995) stresses that CST developed around three areas of thought: improvement, critical awareness, and methodological pluralism.Improvement is able to be easily monitored through value systems, critical awareness considers participation factors and boundary judgements while methodological pluralism reflects on the range of methodologies available to temper communication and observation in order to supply an improvement, offer mutual understanding and involve a decision making process. Both Jackson and Midgeley show that CST is able to satisfy the three key human interests that were identified by Habermas in 1970 as being the technical interest, the practical interest and the emancipatory interest. 3. Best PracticeThe concept of ‘best practice’ falls under the category of a strategic human resource management technique (SHRM). It is also an example of ‘high commitment’ HRM. The idea behind ‘best-practice’ SHRM is that if an organisation adopts a particular selection of HR practices that are considered ‘best’ or most effective, then this will allow that organisation to enjoy an improved performance; both in terms of organisational productivity and output, and employee satisfaction. It is argued that with the ideal set of ‘best practices’, any company or organisation will benefit if they implement these practices fully (ie. ith a level of ‘high commitment’). There has been much research into the perfect set of ‘best practices’; since without knowing what constitutes the ideal universal set, it is impossible to claim any is really a ‘best’ set. Pfeffer (1994) provides one of the most commonly considered set of HR practices – a collection of sixteen HR principles designed for â€Å"competitive advantage through people†. These sixteen were then later simplified in 1998 into seven practices for â€Å"building profits by putting people first†.Marchington and Wilkinson later tweaked these practices for the benefit of the UK populace in 2002. The simple act of Pfeffer’s work needing to be altered to better fit a UK audience, suggests that the original principles were not relevant and consequently, not universal. If, the concept of ‘best practice’ is for an org anisation to follow a set of universal practices as closely as possible, with the idea being the more closely followed, the better the performance, then these principles need to be applicable to a universal audience to begin with.Guest (1987) expands on this by noting that since lists of ‘best-practices’ vary wildly in their inclusions it is difficult for there to be any rigorous evidence that supports any kind of universal application. Youndt et al. (1996) provide a generalised acknowledgement of what most models of ‘best-practice’ seem to focus on. In this research it is claimed that most focus on â€Å"enhancing the skill base of employees†. Extensive training of staff is undoubtedly important for many sets of ‘best-practice’, with most providing at least induction training and/or performance appraisals.Similarly Youndt’s recognition that many practices â€Å"promote empowerment, participative problem-solving and teamwork† which we can see reflected in examples such as Huselid’s (1995) stress on information sharing, Kochan and Osterman’s (1994) problem-solving groups, and Arthur’s (1994) suggestion of social events respectively. Youndt et al. goes some way towards establishing a more universal set of ‘best practices’, by taking the most commonly appearing practices and collecting them into a likely looking set of the most popular practices.In doing so, one could hopefully assume that the principles are relatable to a vast majority of organisations if not, ideally, all. Considering the difficulty in pinning down a firm set of ‘best practices’ acknowledged and agreed upon by all, it is interesting then that Capelli and Crocket-Hefter (1996:7) believe that in place of a single set of practices, which they believe to be â€Å"overstated†, it is rather the â€Å"distinctive human resource practices† that cause progression and enhancement of or ganisation.A type of practice that is thus distinguishing and characteristic or a particular workplace cannot be considered universal, but rather a focused set of practices that are applicable in a specific work environment. A final aspect to consider with ‘best-practice’ is the notion put forward by Storey, 1992, that single practices will be less affective if they are executed individually. MacDuffie, 1995, expands on this further by suggesting that it is essential for each practice to be grouped together into with complementary practices.This concept is known as ‘horizontal integration’. It is recognised that this type of integration allows some practices to be added or left out, as long as there are a core set of highly committed principles to adhere to. Although this too has problems, since in Guest et al. ’s analysis of the WERS data in 2000, they found that â€Å"the only combination of practices that made any sense was as straightforward cou nt of all the practices†. 4. Best Fit ‘Best-fit’ is also an example of SHRM.It is a concept which is rooted in ‘vertical integration’; the idea that a company’s business and HR strategies are aligned and cohesive. The suggestion being that an organisation becomes increasingly efficient when its HR department and the overall aims, goals and mission of the company are tailor fit. There are three models of ‘best-fit’ that explore this vertically integrated relationship, firstly the ‘life-cycle models’ (Kochan and Barocci, 1985), secondly the ‘competitive advantage models’ (Miles and Snow, 1978 and Schuler and Jackson, 1987) and thirdly the ‘configurational models’. . 1. Life-Cycle Models This model tries to link the vertical relationship between HR practices and company policy to a metaphoric ‘life-cycle’ of a company, from its start-up phase through to decline. Baird and Mershoulam (1988) states that â€Å"human resource management’s effectiveness depends on its fit with the organisation’s stage of development†. The inference is that as a company grows, changes, progresses etc. so must its complementary HR department. During the start-up phase, the emphasis for the HR department is flexibility and informality.As the company grows (growth phase), so must the HR policies. With the assumed increase in staff it is necessary for there to be a more rigid and formal HR department to cope with this. It is a perfect opportunity to foster innovation. The next stage is the maturity stage whereby a company is more established. During this time the HR role is about stability and control, and about perfecting practices already in place. Finally the decline stage considers HR’s role in matters such as redundancy and generally reducing company size. 5. 2. Competitive Advantage ModelsThis model usually applies to the research conducted by Porter (19 85), in which three bases of competitive advantage were identified: cost leadership, quality of service, and focus or innovation (i. e. being the sole provider of a product or service). Schuler and Jackson (1987) expand on this research by defining HR practices that ‘fit’ Porter’s three bases. Within each base (which can be referred to as a market strategy) there is an ideal set of employee roles alongside a reinforcing set of HRM policies. If the two are able to align efficiently, then it is presumed a higher level of performance will incur. 5. 3.Configurational Models The configurational model was proposed by Delery and Doty (1996). It attempts to rectify the problem that the best-fit school is often levelled with, that it oversimplifies the organisational reality. It does not take into consideration the ways in which a company is expected to grow and change in accordance with external factors (economic, political, social). The configurational approach aims to steer clear from linear thinking, and allows for the prospect that a company/organisation may be subject to many independent variables and may be focusing on multiple performance strategies at any given time.In short, the configurational model’s aim is to simultaneously achieve both horizontal and vertical integration. It responds to the truth that it is necessary for a company to be able to integrate it’s HR policies both horizontally and vertically (i. e. in accordance with the company’s overall direction but also with a set of practices that provide employee satisfaction and growth) in order for it to survive. This concept is easily visualised through Miles and Snow’s (1978) ‘defender’ and ‘prospector’ categories.The ‘defender’ category refers to a system that operates in a stable and predictable environment, while the ‘prospector’ category is conversely unpredictable and hurried. Each category is nec essary for the progression of the company (vertical integration), while the varying characteristics of both allow for a set of fairly general HR practices designed to secure employee satisfaction (horizontal) while adhering to the needs of both categories. 5. Discussion The three systems that have been discussed address HRM in vastly different ways.What is interesting to note is that despite this incongruence, they each prove to be successful and efficient systems. It is necessary however to discuss each system a little more critically in order to assess which system would be the most useful and effective in a work environment. 6. 1. ‘Systems Thinking’ ‘Systems thinking’ is a highly beneficial process for the IHR Manager. What is unique about its application is that it is able to take a very complex, perhaps global, situation and conceptualise it in such a way that it becomes clear how it can be manipulated by external factors.The manager is able to witness how the environment can affect the subsystems and consequently implement changes that react with the environment so as to produce a dialogue that is able to breathe and develop organically. For the IHR Manager it is essential for such complex dynamics to be simplified to an extent that it becomes easily manageable and they are able to grasp the bigger picture, whilst remaining in tune with the intricacies of the subsystems that are flexible to change. It is this ‘open system’ that makes ‘systems thinking’ so unique.Furthermore, the concepts of HST and SST are equally beneficial within ‘systems thinking’. HST is perfect for workforce planning and optimising resources, while SST is excellent for agreeing goals, performance feedback and participation. However, ‘systems thinking’ finds its downfall in the fact that while HST and SST are effective systems, they are only able to work independently of each other. Ideally, one would merge the two to provide an all encompassing system both in tune to the personal needs as well as the technical aspects. Another limitation of most ‘systems thinking’ in general is that it is primarily oriented towards ethodology, and is fundamentally rationalist. Flood (2001) argues that when focused on human existence, â€Å"systemic thinking helps people to sense a deep holistic or spiritual quality†, but arguably perhaps only if the idea of ‘systems thinking’ can be expanded to become part of a worldview, rather than just a discipline or methodology. In short, ‘systems thinking’ is at risk of only seeing the bigger picture to the detriment of the particulars. 6. 2. ‘Best-Practice’ The concept of ‘best-practice’ is one that takes into consideration the specifics of HRM.It encompasses some of the most commonly used principles of HR by identifying key policies that are essential to HRM. The advantages of this system lie in its simplicity. It is able to present a firm, established and tested selection of HR principles that will undoubtedly be beneficial to an organisation. The problems with ‘best-practice’ arise centred around the word ‘best’, however if one concurs with Capelli and Crocker-Hefter (1996), that these practices would be better referred to as ‘distinctive’, then we are faced with a healthy abundance of productive systems, ready to be implemented.An HR Manager in this instance need only choose a set of principles which they feel is most applicable to their situation and organisation and start using the immediately. Since there are so many ‘best-practice’ systems, it is arguable that one could alter and tailor-make a set of ‘best practices’ that are specific and unique to a particular organisation. The technique of horizontal integration, or ‘bundling’ allows complementary systems to be implemented alongsi de each other and heightens a sense of congruence and cohesion, as asserted by Wright and McMahan (1999).Furthermore there is evidence to support the idea that the ‘high-commitment’ strategy behind ‘best-practice’ (i. e. an organisation should aim to follow all systems within a ‘best-practice’ set) creates a higher achieving organisation. While horizontal integration can be considered beneficial, frustrations may arise due to the fact that ideally no single practice should be pulled out of a system and used individually as its efficacy will drop considerably. Additionally, the ‘best-practice’ system is only effective on a non-universal plane.Since there is such an abundance of systems it is impossible to select just one set as being the only ‘best-practice’. Consequently for an organisation on an international level, the ‘best-practice’ system would not be beneficial and could potentially neglect certain i mportant aspects if it is not catered towards the specifics of that organisation. On the other hand, Youndt et al. (1996) were able to briefly collect a sample of some of the most commonly appearing policies, which could provide a sound starting point for any HRM. 6. 3. Best-Fit’ When considering the ‘best-fit’ model it is plain that its main advantage is its use of vertical integration. By paying close attention to the overall aims and goals of the company, the ‘best-fit’ system is able to create a set of HR policies that work in complete cohesion with those aims in order to fully maximise the potential of the staff and consequently the business. Every aspect of the organisation works with the focus of the same goals. The various models within the ‘best-fit’ system each have their own benefits too.The ‘life-cycle model’ is able to vividly explore the natural progression of a company and alters it’s HR policies in tan dem with this progression. However, it is difficult to know throughout this model which HR strategies are able to secure the type of human resources that are necessary to continued viabilities, even when industries develop, and which are more likely to contribute to sustainable competitive advantage through the life cycle? (Boxall and Purcell, 2003). The ‘life-cycle’ model is unique also since it is able to allow the HR Management master the present while pre-empting the future.However, it is incapable of allowing for unexpected incidents and relies on an organisation not veering away from the pre-planned cycle. The ‘competitive advantage model’ is useful since it focuses on company gain and edge and tries to set an organisation apart from the other by an awareness of Porter’s three key bases (1985). Finally, the ‘configurational model’ allows both horizontal and vertical integration, which ideally allows the full potential of a company to be realised, whilst expanding and enhancing staff prospects. The difficulties of the ‘best-fit’ system lie in its common criticism, that it oversimplifies the matter entirely.It does not take into consideration internal turmoil or conflict which needs to be sensitively addressed. It assumes that everyone’s best interests are with the overall aims of the business, and provides a rather harsh reality of working life. It forces HR into a submissive system that fits into the overall goal, and implies that within this model HR is a secondary factor. On balance, on an advisory level for an IHR Manager, ‘systems thinking’ would be the most beneficial, since it offers the opportunity to assess the situation on a larger scale and implement strategies that can be manipulated in harmony with the external influence.However, when considering a start-up company or a localised company, it would appear that the ‘best practice’ model is the most viabl e. While it is not able to be fully universally applied, it is able to provide an excellent basis for most businesses. For the discerning HR Manager, a set of ‘best-practices’ can be established specific to that organisation that can be assessed and manipulated as the company progresses with time. 6. Summary and Conclusion In conclusion, this assignment is able to consider the complexities of HRM through the investigation of three strategic systems.It is apparent that each system has many benefits, and each is certainly applicable in various situations. Each HR system is designed with a certain business model in mind. The ‘system thinking’ approach is clearly catered towards a more internationally based institution, while the ‘best-fit’ approach takes into consideration the start-up company. It is only really the ‘best-practice’ system (in this study) that offers a middle ground option for the largest sector of businesses.It is evi dently important for the HR Manager to keep on top of their chosen system, as the ever changing environment, especially nowadays, leaves businesses vulnerable to external factors (most apparent in the form of political, social and economic factors). 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