The Role of the Founders Personality for H&R Practices in SMEs - Essay Example

THE ROLE OF THE FOUNDERS PERSONALITY FOR H&R PRACTICES IN SMES Affiliation: THE ROLE OF THE FOUNDERS PERSONALITY FOR H&R PRACTICES IN SMES Introduction Personality traits refer to distinct characteristics displayed by different individuals. The traits may be inborn or acquired through learning and interactions with the environment. In entrepreneurship, there are specific traits that founders possess that determine the success of business ventures. These traits affect how a leader makes decisions, interacts with people, attain business growth and face challenges in the business environment. The personality of founders affects the success of human resource (H&R) practices. For example, tenacity is a personality trait that enables the founders to keep on and hold onto their businesses despite failure. Leaders with this trait will influence the H&R practices and systems. Since H&R practices mainly focus on employees, a tenacious leader will influence the employees to work hard and find new ways of achieving success despite failure in their current job roles and functions. This paper discusses the roles that a founder’s personality play on H&R practices in SMEs (Beckman, 2007). Theoretical framework/foundation Two major theories will dominate this analysis in discussing the role of founders’ personality in human resource practices. The resource base view theory argues that competitive advantage of any firm is determined by its resources that are unique and difficult to imitate/copy. This theory forms the fundamental aspect of explaining the value of attaining competitive advantage for firms that aspire to sustainable growth and success (Panayotopoulou, 2004). Sound H&R practices give a firm competitive advantage and differentiate it from others especially in service industries. A strong H&R system has competent people who have the right combination of skills, talent and experience in producing goods and offering quality and satisfactory services to the customers. Having a strong H&R system will allow the firm to steer forward, survive the competition and other environmental challenges. The competency of the founder to manage the human resources efficiently will determine the competence of H&R practices and values. The founders competency in relation to HR practices includes developing sound values, processes and systems to manage people in the organization. Trait theory of personality focuses on dimensions of human traits. Traits are defined as habitual and relatively stable patterns such as conduct, emotions and thought that influence a person’s behaviour. A person’s traits determine his behaviour. In entrepreneurship, this theory argues that business founders have specific characteristics that distinguish them from others. However, the critics of the theory argue that personality traits have varied overlapping factors that make it difficult to summarize them into a few traits. Despite the criticism, personality traits have been found to be very instrumental in how different founders achieve success in human resource practices (Ostroff, 2005). The traits under consideration include need for achievement, tenacity, risk taking ability, locus of control, tolerance for ambiguity, visionary and confidence among others. These traits determine how well a founder succeeds in his efforts especially while working with others. For example, the funders must possess good communication and interpersonal skills in order to influence human resources at their disposal. The Role of Personality Traits Human Resource Practices and Values The founders’ personality affects the success of H&R practices through company structures and processes such as HR values. If the founders have strong personalities and good decision making skills, they are able to put down sound structures and processes that govern the HR values. Sound HR principles, structures and processes enhance the effectiveness of the HR systems. Since human resources are a critical scarce resource, it is important for founders to make sound decisions and strategies to ensure their maximum utilisation and cost reduction (Cox & Blake 2001). These attributes are facilitated by a sound and comprehensive recruitment, training, and management. These attributes calls for founders to have insightful decision making skills and ability to make sound structures and processes to revolutionize H&R practices. For example, if the founders don’t put down strong H&R structures, uncoordinated and anyone can join the firm. There are no established authority structures and workers are free to do as they wish. The result would be a firm that is heading for failure since it is impossible to control and maximally use the scarce human resources. Communication skills play an important role in offering direction for H&R practices. Communication skills call for the founder to be fluent/ have the ability to communicate well in a business language that people generally conduct business with. The skills include the ability to articulate one’s thought, use of proper non-verbal communication cues, proper body mannerisms and reporting skills. If a founder is unable to express himself, the organisation lacks leadership and chaos and confusion rules the organizations. Communication skills enable the founder to communicate the HR values and practices such as the company’s culture, ethics and professional conduct, explain how the HR system work and how it helps achieve the firm’s goals, objectives and vision. In addition, the founder must know how to communicate his expectations of each employee, the reward systems and motivation mechanisms. In addition, the leader must know the right channels to pass instructions to employees. The ability to establishing clear channels of communication will help in clarifying instructions and other HR issues. Therefore, it is important for the leader to possess the right communication skills so that he can endorse H&R practices and offer directions to the human resource function. Interpersonal skills is a personality trait that play the role of coordinating the founders’ actions with the human resource practices. Interpersonal skills are skills that allow the leader to interact well with others in the firm. They include the ability to appreciate cultural diversity and interact with people of different cultures. The ability to accommodate different personalities, high tolerance of strange personalities, ability to accommodate other people’s ideas and be a team member and builder is beneficial. These traits will enable a founder to work well with people in the organization and understand the challenges they face in fulfilling the set targets. Working in a team allows he leader to blend well with the workers and coordinate his leadership function with the HR practices to achieve HR and company objectives (Boeker, 2007). As he works with his employees, a founder can see the strengths of the H&R practices and encourage their adoption. He also identifies weaknesses in the H&R practice and systems and suggests ways of eliminating them. Consequently, the H&R values, practices and systems are sound, efficient and strong enough to give the company a competitive advantage. Internal locus of control allows the founder to seize control of the firm’s critical resources especially the human resource. Rotter (1954) defines internal locus of control as the extent to which an entrepreneur believes he has control over his behaviour, circumstances and events he is involved in. Business people who possess this trait don’t believe in luck, rather, they take control of situations and influence their outcomes. They are consistent, with a strong desire and confidence to succeed in business functions. The trait enables the founder to control the human resources to ensure their maximum reduction (Colbert 2004). Controlling human resources is crucial because they are a core resource in achieving the company’s objectives. For example, controlling human resources will facilitate control of the firm’s core functions such as customer satisfaction and quality products. The founder control the human resource function by developing sound and credible HR values, principles and practices. Through these attributes, the founder can measure and control human resources and suggest ways improving practices that are less productive or cause inefficiencies in the human resource system. The need for achievement ensures that founders remain persistent in ensuring that human resource system are functioning efficiently and thus contribute to the firms overall success. Persistency enables the founders to work tirelessly to ensure that HR values and practices remain sound and relevant to the company’s major operations. The founders; need to achieve translates to a need to succeed in all areas of a business (Boeker 2009). This means that the founders work even harder to ensure that all the functions of the business are set for success. The need for achievement helps the founders to streamline the HR practices to ensure success. Since the leaders don’t tolerate failure in any business area, they work hard to ensure that the human resource systems function well, the practices are relevant to the business and the principles are owned and followed by all employees. Consequently, the HR function is coordinated, efficient and streamlined to facilitate success in core business functions. A pleasant personality trait allows the founder to motivate the employees and obtain feedback of the HR practices and system performance. A pleasant personality refers to a founder’s ability to remain good natured, friendly and easy going with employees. A pleasant leader motivates employees to give their best rather than coerce them to work because they fear the leader. For example, a pleasant founder will interact with an employee and ask in a kind way why the employee is unable to achieve targets (Blau & Schwartz, 2004). The employee, because he feels relaxed is able to explain any problems he finds with the HR system or any practices he finds unsuitable in his job function that hinder performance. For instance, it could be that the HR policies and procedures are too strict to allow the employee explore his creativity and device an innovation to facilitate his work. A pleasant manager will then work with the employee to cut relax the HR practices to facilitate creativity. If the founder is domineering, employees will fear him and avoid giving constructive criticism that will improve the HR practices and increase efficiency of the HR system. Tolerance of ambiguity helps the founders accommodate ambiguous human resource situations and turn them into successful positive events. Tolerance of ambiguity refers to the leader’s ability to make decisions with insufficient information. It is a constant personality which views risk, disorder, or challenges with a positive stance. It allows the entrepreneur to focus on success despite challenges and setbacks (Beckman 2007). The trait allows the founders to improve the HR practices and systems. For example, the introduction of a new HR system requires the entrepreneur to keep an open mind on the outcome. Although he anticipates success with the new system, the founder must consider from the probability of failure of the system. Failure could result from incompatibility of the new HR system with the firm’s core functions. Resistance from people or delay in adopting the new system are other uncertain events. The founder must have the ability to accommodate these uncertainties in order to effect any improvements in HR practices. Therefore, tolerance for ambiguity allows the founder to take risks that are needed to improve the HR practices and systems. Self-confidence plays a major role in ensuring that employees maintain an optimistic attitude when facing obstacles in HR practices. Then entrepreneur expresses confidence in enjoying the challenges he faces in running the business. Confidence allows him to remain focused and have a clear mind on how to solve the problems. The trait ensures that the founders think critically and strategic to find permanent solutions challenges. A confident leader inspires his employees to remain positive in the face of challenges and obstacles (Becker & Huselid, 2008). The employees are confident in the decisions that their leaders make because confidence makes the leaders seem capable and always right. Confidence makes the employees trust the HR practice decisions developed by founders to solve HR challenges. The Employees also gain confidence in solving the challenges they face while working. For example, employees approach with calm and insight, the human resource system challenges they face. This eliminates confusion and panic, and ensures that all employees remain in control despite any human resource obstacles. Creativity facilitates the innovation of more efficient and cost effective HR practices and systems. The founders must be creative in order to survive competition, adopt to environmental changes, retain and acquire new customers and streamline core functions of the firm. Creativity allows the founders to develop new technology to deal with HR issues and functions. For example, developing a system to measure employees’ performance per hour/day is more efficient that using job cards. Having a system check employee attendance by registering into the system after reporting to work will eliminate unexplained absence from work and instil work discipline in employees (Becker & Gerhart, 2006). Furthermore, using a system to track an employee work progress will help keep strict work schedules, observance of working hours and eliminate idle time. Creativity leads to efficient HR practices that allows work to be done with minimal human supervision and increases the adherence to work ethics, professionally and HR principles. Risk taking personality trait plays the role of driving the founders to take constructed HR risks with anticipated positive results for the firm. Entrepreneurs have a high appetite for risks and are willing to take calculated high risks that promise great returns. The trait enables the founders take HR risks. For example, hiring a new employee is a risky HR practice that the entrepreneur must be ready to take as often as the business requires new skills. The risk lies in that it is impossible for the HR manager to establish with certainty if the person chose has the right combination of skills, values and experiences that match the firm’s values and objectives (Baron & Hannan, 2002). The founders risk hiring an incompetent employee and use more resources to rehire a competitive person. Founders sometimes mitigate this risk by poaching reputable key employees from recognised companies. Although they pay more for this exercise, they are certain of his competence and value addition to the company. Risk is also involved in adopting new HR systems and practices. Conclusion Personality traits refer to characteristics that shape behaviour. Entrepreneurs poses personality traits that facilitate success in the business world. They include confidence, risk taking, communication and interpersonal traits, creativity, pleasant personality, need for achievement and tolerance of ambiguity. These traits play different roles in HR practices such as facilitating decision making, coordinating HR practices, improving HR practices and systems to increase efficiency and cost effectiveness among others. The resource base view theory is used to show how founders can streamline the HR practices to achieve a competitive advantage. 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