Best fit versus best practice compensation strategy

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Best fit versus best practice compensation strategy

Best Practice or Best Fit? Often the question is posed; what are the Best Practices and should we implement them? Best Practice assumes that there is one ultimate practice better than the rest, a one size that fits all. This one-size-fits-all approach presents a conundrum, on one hand we believe that Best Practice is a tried and tested recipe for business success and that comparing ourselves to metrics and others in our industry can result in increased competitiveness.

On the other hand we also believe that creating and sustaining competitive advantage is the key to business success and growth.


Yet achieving competitive advantage requires business to implement activities which are rare, and difficult to imitate — quite the opposite to Best Practice.

A great example of the potential downfall of benchmarking within the same industry is illustrated by Southwest Airlines. Dallas-based Southwest Airlines benchmarked its refueling processes against other airlines, it found it was already one of the leaders in the industry. They realized that a quantum leap for improvement was needed, so they looked outside the airline industry for the most efficient refuelers in the world — Formula One racing.

Adopting the turnaround processes used during pit stops, Southwest Airlines can now refuel their aircraft in 12 minutes. Should we benchmark our organisation to others in the industry? Or should we keep abreast of our competitors activities and strive for or own continuous improvement?

So what does this mean for how we develop our HR strategy and initiatives? In our experience, the most effective HR programs are those that are tailored to the organisation and fit the culture, practices and overall business strategy. In practice, this typically involves looking at the current programs or practices, evaluating the desired future state gaining various opinions and considering Best Practice and creating programs that form a pathway to the desired future state.

Often Best Practices fall short when they are not able to be implemented as completely as the case studies suggest, this is typically due to the dramatic change required for the organisation.

Perhaps when embarking on the developing of our HR strategies and activities for the year, the question should be not what is Best Practice but rather what is the best practice to fit our organisation and how will we implement it?

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HR outsourcing lets small businesses delegate employee management tasks, such as benefits administration, payroll, recruiting, or training, to a professional HR firm instead of hiring internal HR staff. Best Fit Versus Best Practice Compensation Strategy. According to its proponents, the ‘best practice’ school of thought is the route to organizational success.

If that is the case, why is ‘best practice’ not standard HR practice within all organizations? Proper management of human resources is a critical variable affecting an organization’s .

The best-fit approach presumes that one size does not fit all. Managing compensation strategically means fitting the compensation system to the business and environmental conditions. In contract, the best-practices approach assumes a universal best way exists%(43).

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Best fit versus best practice compensation strategy

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Lincoln is applying a best fit strategy which aims at enhancing employees’ abilities, technical and business knowledge through a significant investment in globally recognized best practice training methods (Marchington & Grugulis ).

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