The five-factor framework was an original proposal by David Kreps and James Baron. The framework as some relations with the five-force model used to analyze business by Michael Porter (Porter, 1980). Notably, every organization’s HR policies are influenced by each of the five factors. The factors are so crucial in the sense that any inadequacy would lead to failure in the HR policies (Daft, 2006). Each of the five factors is described in detail below.
The organization’s strategy in terms of long-term goals and distinctive competencies should be taken into consideration before introducing or making changes to the HR policies. The organization should identify if its strategy would fully support the new HR policies. This would require the recognition of the HR policies as key in the company’s strategy and as a crucial element in the decision-making process.
The success of HR policies will depend on the acceptability of the company’s corporate decision-makers. For a company to utilize the HR policies as intended, it would require the top managers’ support. They would need to be in touch with the workers to make sound decisions that would propel the company to greater heights of achievement.
It is very unfortunate that most companies ignore the HR policies or place them secondary to other concerns. This makes it impossible to put in place a reliable process of formulating effective strategies to manage the human resources of a company. This is a clear indication that the corporate decision-makers need to recognize the HR policy formulation and implementation as an essential part of running the company.
A survey conducted to find out the opinion of company top managers on the influence of HR policies in the company’s strategies revealed varied opinions on the matter. They expressed both offensive and defensive opinions on the topic. However, the majority acknowledged the importance of spending time and resources on HR policy activities. This opened a window whereby the workers are comfortable with the company and strive to produce the best quality products. Companies that put HR policies as part of their strategies experienced higher employee satisfaction and improved performance.
Though the findings of the survey are promising to a great extent, there still exist hurdles emanating from less managerial support within a few companies in the successful formulation and implementation of HR policies. Several factors hinder the managers from fully supporting these strategies. Firstly, some managers do not know the importance of HR policies or lack the know-how in implementing them. Secondly, some managers are likely to overlook issues about the successful implementation of the policies. This may be due to ignorance or perceived loss because of the additional costs involved. Finally, the management may develop preconceived notions that may marginalize efforts to develop effective HR policies.
The workforce is another important element in the five-factor framework. It concerns factors dealing with the demographics such as homogeneity of the workforce. The HR policies should ensure that the workforce is fully supported to produce desired results. This like uniformity will consider issues to do with education, work experience, and skills possessed by the workers during their service. The demographic factors may have serious implications on the HR policies if not looked into carefully.
The skills possessed by the workforce are essential for the success of the company. This requires the company management to be able to understand what is needed by the workforce for effective production. This will avoid the management from creating ambiguous HR policies by involving the personnel in their formulation and implementation. Successful implementation of the policies will enable the management to avoid constant interference of the workers in a bid to give guidelines. This will minimize confusion emanating from either too much or too little guidance by the management. Therefore, an effective HR policy will ensure that the level of direction from the management is effective in making the workforce produce optimally.
The HR policies help plan the workforce effectively. This enhances team performance as every worker is geared towards the achievement of a specific goal. It enables workers to gain greater concern for the interests of the company and their colleagues. With proper planning, a company is set to deliver as required by the market hence fulfilling the overall goal.
The human resources department must possess excellent communication and organizational skills. This will ensure success in playing their role of developing and implementing effective HR policies within the organization. Moreover, the human resources department needs to develop effective networks within the company that will capture the views of the workforce. This will help in decision-making by the top management regarding the workforce. It would also create an avenue for relaying important information to the workforce regarding company requirements. The feedback system will monitor the reactions and views that can then be communicated to the top management for review.
All members of the human resources department need to acquire certain skills to effectively deliver the HR policies to the workforce (Klikauer, 2007). It is essential for them to be creative and resourceful, and have a passion to dig deep into issues relating to the personnel. They should also be able to deliver important insights that can be utilized in policy formulation. This will need the incorporation of a broad array of expertise in the department through the inclusion of persons with different educational and work backgrounds. This will ensure that the experts produce unbiased HR policies targeting the workforce.
According to Baron and Kreps (1999), the culture within an organization refers to the work attitudes, norms of conduct, and the assumptions or values that influence or direct behavior in the company. The HR policies are hugely based on the cultural aspects of an organization. Many companies claim that HR policies are an integral part of the business due to their cultural structure (Schein, 1999). However, there are discrepancies when it comes to the implementation and proper utilization of the policies.
More often than not, most departments within an organization may fail to understand the crucial role played by the human resources department. They may have a general picture but often lack the details. The policies formulated by this department do affect all the workers in a given organization. The department provides staff and manages their affairs during their service in the company. This includes the essential function of formulating policies. However, most organizations fail to fully recognize this essential function.
A threat faced by the policy formulating body is a lack of cooperation from other departments. Since the findings may influence the company’s strategy, some departments may give false information that exaggerates matters on the ground. This arises as a result of a lack of proper knowledge of the policy formulation function.
The organ dealing with policy formulation under the HR department may not have a sufficient number of staff. This results in overworking of the existing staff, who are often under-trained and are given other responsibilities in addition to their direct job duties. In some cases, fewer funds, materials, and equipment are allocated to this function making the employees fail to adequately deliver their mandate.
Sometimes other departments fail to communicate their needs to the HR department clearly. For the formulation of effective HR policies, extensive information networks must exist within the organization. The networks within a department must not specialize only with what is affecting their department but should utilize the views from other departments as well. This will ensure the formulated policies harmonize the needs of the company in question. However, many departments develop a sense of ownership that makes them generate views that are not a complete representation of the company. This may distract the HR policy formulation process.
To overcome the challenges, a company may need to inculcate a culture of strong leadership. This will ensure that the organization speaks in one voice. The management also needs to develop a credibility culture. This will make the workforce share genuine views on what needs to be included in the HR policies. The result will be respected by professionals in the entire organization.
This is yet another essential element of the five-factor framework that includes a broad spectrum of ideas. Technology as an element is concerned with the conversion of labor inputs to outputs. This means that it seeks to identify the organization and coordination of tasks. It identifies required skills for employees, monitors the personnel, and contemplates the task creativity and ambiguity (Baron & Kreps, 1999).
For one to be included in the human resource function dealing with policies, one has to be fully trained in areas that would make them deliver their mandate. At the present moment, recruitment to the human resources department is highly competitive due to the high number of graduates with proper qualifications. However, the company needs not only to get the best for the job but also invest inappropriate and extensive training for HR policies function to succeed.
The employees will require excellent presentation skills, knowledge of international business and culture, interpersonal skills, computer literacy, linguistic, analytical, and research abilities. These skills will help them execute their duties effectively when formulating and implementing the HR policies.
Monitoring and evaluation will be essential to prevent moments of failure (Shore, 2012). This will require HR to keep track of its functions regarding policies. To do so, the HR department will need to monitor the employees’ reaction to policies, overall quality of work, level of effort, and more importantly, the feedback from customers. Similar to all effective operations, the HR department will require a control system that would ensure the productivity of the employees. However, the control mechanisms need not constrain employee activities. This may inhibit creativity.
Customer feedback is very important as a measuring tool of the effectiveness of the HR policies. Customers’ comments will help the management make necessary adjustments to the policies promptly. The feedback will determine whether the policies are aligned with the customer's expectations. The system will also enable the HR department to understand policy contributions and assist in the justification of the budget, role, and position.
The human resource department requires unique individuals who will effectively carry out the duty of policy development and implementation. The team is crucial and the members will be charged with the responsibility of formulating policies that will challenge conventional thinking, counter-cultural attitudes, and provide a solution that will include the competitive environment.
However, it is difficult to control performance due to a high level of job ambiguity (Baron & Kreps, 1999). This is so because tight control does inhibit creativity. To avert failure, the HR department may introduce controls on the scope of policies it formulates. This will ensure a clear understanding of what is expected under given policies. The management of the HR department must ensure that the policies are clearly outlined, given the deliverables and boundaries. It will help the company maintain realistic expectations upon implementation of policies.
The external environment is the final element of the five-factor framework. It considers economic, legal, political, and social forces. Societal forces are based on widespread norms and acceptances. It also includes the corporate social responsibility of a given company or organization (Ferris, Rosen, & Barnum, 1995). Political forces include expectations of both the government and the corporation. Legal forces concern the legislation requirements that the corporation needs to adhere to. This includes the rights of workers both as individuals and as a group. The economic forces constitute conditions in the market that may influence the competitive economy and the extent of labor mobility, among other economic pressures faced by the organization. These environmental factors do influence policy formation by the HR department. It especially influences corporate ethics and the ability to maintain ethical standards.
It is a common misconception that HR policies are aimed to legitimize illegal business competitive practices. This paints a picture of unfair competition by the company in a bid to pressurise the workers to produce outcomes. As a result, many people view the policies negatively jeopardizing effective implementation. However, such public opinions often have fewer repercussions on the performance of the company. This is because the policies establish outlined code of conduct to be observed by the workforce (Barling, 2008). It is important to note that policies that introduce unethical practices create confusion, disgruntlement, and misaligned judgment (Marchington, Wilkinson, & Sargeant, 2005). Subjecting employees to such practices may force them to produce less quality work or resign from the workforce.
Political and legal forces are essential when formulating policies in the HR department. However, it is difficult for legislation to cover all the areas outlined in a policy. This leaves room that may lead to the introduction of unethical practices. It is at the jurisdiction of the management to adopt ethical methodologies or provide guides that support ethical conduct when creating the HR policies (Trevino & Weaver, 1997).
Economic forces are pertinent in the formation of HR policies. Since companies are in a competitive environment, there is the need to establish an effective HR department. Even though labor turnover and mobility are high in the HR department, a perceptive firm will not cease making additional investments through the training of its employees. It is a common practice for companies to lure workers to join their HR departments. This has detrimental effects on the original company. This will require reinvestment of resources in replacing and training new staff. Overall, a company has to formulate policies that will steer its production to greater heights. It has to strategically position the company in the market so as it can maintain or improve its performance in the market.
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