by Neil Kokemuller
The role of human resources in a decentralized system is fairly similar to that in to a centralized one. However, the way in which HR operates is quite different. Activities are more spread out in a decentralized system, as each business unit or store HR manager oversees its own HR processes as opposed to having a centralized human resources department managing all activities for the organization. Each approach offers pros and cons.
Hiring and Firing
In a decentralized system, hiring and firing decisions are made at the local business unit level. This cuts down the number of interviews and time involved in hiring new employees. It also allows the local manager to hire based on the needs and expectations in his local market. A drawback is less consistent oversight on legal processes in hiring and monitoring bad behavior, which could lead to discrimination or wrongful termination claims. Coordination among business-level HR personnel in how they implement these processes helps avoid such issues.
In a decentralized system , payroll checks are issued by each business unit rather than from central headquarters. This typically means employees receive payments sooner because their paychecks or direct deposits occur closer to where they are issued. Local managers may more control over pay decisions with new hires and raises for existing employees. When decisions are made, they are more easily implemented in the payroll system because there are no requirements for communication with a central payroll department.
Policies and Training
The ability to develop sensible policies and training for local stores is a primary benefit of decentralized HR. Human resources professionals in each area can evaluate the laws, ethics and business norms in their territories to create policies and training processes that work. Different levels of available talent and different customer bases in each market also give credence to the idea of having training procedures tailored to the needs of each business unit.
The nature of work for HR professionals is usually more generalized in a decentralized system. Whereas centralized operations usually have specialists for benefits, policies and hiring, decentralized HR professionals usually must oversee all aspects of human resource management. In smaller companies, local business units may have only one or a few HR professionals. This means each professional needs a broader range of educational and practical experience than those in a more specialized role.
Neil Kokemuller has been an active writer and content media website developer since 2007. He wrote regular feature articles for LiveCharts for three years and has been a college marketing professor since 2004. He has four years of additional professional experience in marketing, retail and small business, and he holds a Master of Business Administration from Iowa State University.