Discussion 1





Discussion 1

The best-fit approach suggests that companies should align their compensation to their business strategy and to their environmental conditions. Those who advocate for this approach point out that it enables the organization to maximize its competitive advantage. The best practices approach proposes the idea of using one set of best pay practices, which are applicable in different sectors and can be used by any organization irrespective of its strategy. They suggest that this form of compensation attracts superior employees who benefit the organization by creating a winning strategy. The two approaches differ in their perception of competitive advantage. The best fit approach that an organization creates a competitive advantage through its strategy. On the other hand, the best practices approach suggests that the employees are the key to the company’s competitive strategy. Therefore, attracting the best and most qualified employees will give the firm a competitive advantage.

The best practices approach suggests that there is a set of known best practices, which organizations should implement. However, the best-fit approach recognizes that all organizations are different and that one package cannot be suitable for all companies. Many employees are not only concerned with the pay system, but they examine other factors before deciding to join a company. For instance, many workers are concerned about their job security. By having a set of best practices, the workers will know what to expect in an organization. Therefore, the company’s set of best practices can be instrumental in attracting highly qualified employees. Having superior employees can increase the organizations effectiveness. The employees will use their skills for the benefit of the company and this will increase its competitiveness. They will determine the strategy that the organization adopts. Therefore, if I were a human resource manager I would recommend the best practices approach.


Although strategy is important, a company can only execute it if it has the best employees to do so. A company can have an impressive strategy but it will not realize any level of success if it does not have qualified employees. The best practices approach ensures that firms are able to attract the best people to work for them. These employees can help in developing strategies that are more effective for the company. Although the best-fit approach gives workers a chance to advance in their careers, organizations that adopt this type of approach often have high turnover rates. On the other hand, companies using the best-fit approach often have a low turnover rate, which is good as it helps in reducing the costs associated with recruiting, selecting, and training other new employees. Companies are able to achieve this by ensuring that they hire the best employees (Morris and Maloney 6).

Organizations have to change their best-fit approach if they change their strategy. Organizations can adopt a diverse range of best practices. These practices usually depend on different factors. Because companies want to attract the best employees, they will offer them certain appealing incentives. Some of the best practices include extensive training and employment security. The best practices approach is effective because it manages to save costs in the end. Companies using the best-fit approach have to ensure that their compensation package is beyond their rivals in the industry and they end up experiencing high turnover rates if they are not able to meet such demands. On the other hand, organizations that depend on the best practices approach can depend on other incentives to retain their workers (Morris and Maloney 6).

Work Cited:

Morris, David and Maureen Maloney. “Strategic Reward Systems: Understanding the difference between ‘Best Fit’ and ‘Best Practices’.” Manchester Metropolitan University Business School. 2005. Web. 30 April 2014.

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