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HRM – Best Practices and RBV

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    Due to the ever increasing rivalry between organisations, managers have been forced to develop strategies to allow them to compete in the competitive business environment and to provide the organization with a sustainable competitive advantage. This is where HRM, and the topic of best practice models appear.

    Although, there is no real definition of best practice model, Johnson (2000) put it best when he said “Best Practice’ or ‘high performance’ work practices are described as HR methods and systems that have universal, additive, and positive effects on organisational performance. ” In other words, these practices must compliment and enrich each other , and add to the performance of the organization.

    Delaney and Huselid (1996) outlined that, “HRM best practices are designed to enhance the overall performance of employees within the organisation, ultimately resulting in increased organisational performance.” They also went on to say that commitment, by both employer and employee, plays an important role with best practices. This is because with increased commitment comes increased performance. However, commitment is not the only factor needed to promote best practices. Competence, motivation and effective job design are also needed to promote positive employee behaviours. Simply, best practices are aimed at:

    1. Developing employees
    2. Improving organisational performance and create a sustainable competitive advantage.

    A. HARVARD MODEL (Beer at al 1984)
    Example: Google
    According to Armstrong (2003), the framework is based on the belief that, the problems of historical personnel management can only be solved when
    general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise, and of what HRM policies and practices may achieve these goals.

    To simplify the Harvard Model:
    1. There are multiple stakeholders (employees, government and community at large) 2. Emphasizes that employees are equally important in influencing organizational outcomes 3. HRM Policy Choices :
    Employee Influence – delegated levels of authority, responsibility power Human Resource Flow – recruitment, selection, appraisals, promotion Reward System – pay systems, awards, employee of the month

    Work System – design of work and alignment of people.

    4. The achievement of the crucial HR outcomes has got an impact on long term consequences, increased productivity and organizational effectiveness which will in turn influence shareholder interests and situational factors hence making it a cycle.

    5. It is thus important to note that the Harvard model is premised on the belief that it is the organization’s human resources that give competitive advantage through treating them as assets and not costs.

    Encourages employees and gains maximum performance from them Helps employee to turn their work environment to a better place and minimizes stress. Creates equal chance for opportunity to each individual in the company.  Eliminates procrastination and monotony.  Increases productivity and creativity by decentralizing company structure. Enables long-term communication and collaboration

    It might not suit to most organizations because employees aren’t ready for change.
    Not all employees are motivated by being giving more responsiblity
    Requires great understanding and application capability through business and its employees. between employee and management Employs right people for the necessities of business projects and achievements.

    There is no real definition of the partnership model and whether or not it deals with the relationshop between the organisation and the individual or the organisation and the trade union. However, there are 6 key principles to note:


    Shared commitment for the organisations success
    Interests of the partners may differ
    Employment security
    Quality of working life
    Openness and willingness to listen to and discuss alternative strategies Add value

    Angelo Pesce of Pesce and Associates Human Resources Consultants.

    Managers (line and supervisors):
    • Knowledge of the operation
    • Knowledge of their employees
    • Authority to make decisions

    Specialised knowledge and expertise
    Innovative approaches to dealing with people

    • Help facilitate change
    • Negotiates with employees and employeers
    • Promotes employee satisfaction

    Training of line manager with the help of HR, can help promote motivation and efficiency among employees
    Improved decision making with the help of both HR, Unions , Managers and Employee input
    Increased satisfaction due to the interactions with the organisation and unions
    Organisations can use unions as a means of communicating the needs and wants of both employees and employers

    Not everyone will be cooperative, ie line manager, unions and even HR personnel.
    Because of differing views, deciding upon a decision may be difficult
    Lack or commitment and congruence by partners can cause for poor communication and decision making.

    Example: Steve Jobs
    (Henry 2008) “The resource based view emphasises the internal capabilities of the organisation in formulating strategy to achieve a sustainable competitive advantage in its markets and industries.” These “resources” (inputs that are used to carry out the organization’s activities) are developed in order to achieve competitive advantage. The resource-based view (RBV) of the firm concentrates on its internal resources, strategy and business performance, where the contribution of a firm’s human resources is to promote competitive advantage through developing ‘human capital’ . According to Henry 20008, an organisation’s resources must have four attributes to provide the potential for a sustained competitive advantage. They are:

    • Valuable resources
    • Rare/Unique resources
    • Can the resource be imitated?
    • Substitutability
    Therefore, focusing on human capital and developing it, will help the company to achieve sustained competitive advantage. This is because:
    • firms with employees with high average levels of cognitive ability in relation to their competitors are both valuable and rare.
    • social complexity, casual ambiguity and path dependency leaves it difficult or impossible to be reproduced.
    • Although it may be substituted in the short term, it will not allow for sustained competitive advantage. NB: HR is needed in order to implement the RBV of HRM. This is because, human capital are seen as assets and not as an expense.

    More efficient means of accomplishing tasks Greater capacity to respond to external changes and developing strategies to adapt to it Development of high quality human capital

    The RBV says little about how resources can change or develop over time
    Lacks detail and is difficult to understand (Priem and Buttler 2001)
    Does it relate to the entirety of human capital or just senior managers?

    1. Johnson, E. (2000). The practice of Human Resource Management in New Zealand: Strategic and Best Practice? Asia Pacific Journal of Human Resources 2. Delaney, J., & Huselid, M. (1996). The impact of human resource management practices on perceptions of organisational performance. Academy of Management Journal 3. A, Henry (2008). Understand Strategic Management . Oxford University Press.

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