Advantages & Disadvantages of Decentralizing Human Resource Management

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The decentralization of human resources management delegates human resources tasks to individual departments, business units or branch offices rather than a central office. For businesses with multiple offices spread across the country or with separate departments with very specific needs, decentralization can have its advantages. However, the lack of a central authority on human resources decisions can also lead to conflicts and miscommunication.

Faster Response

Decentralizing human resources tasks makes the operational processes of reacting to local market conditions faster and easier. When a local branch office feels the need to add more employees, a decentralized structure gives the HR staff in that office the ability to add those employees more quickly. These branch offices can go through the entire process of locating, recruiting, interviewing and hiring new talent without waiting on authorization from a central hiring authority.

Local Empowerment

The decentralization of these tasks also gives local offices the power to make decisions on hiring, termination, pay raises and disciplinary actions. The decision-making authority stems from the branch office or department head, rather than from higher in the corporate structure. This empowerment also enables local HR managers to maintain closer ties with their employees. Since these local managers are often with the employee throughout their time in that office or department, they can deliver more accurate assessments on employee performance.

Inconsistent Messages

A major disadvantage to human resources decentralization is that each office or department may have its own rules or procedures, which can lead to inconsistent messages to employees. Managers can employ different rules for hiring qualifications, pay raises, motivational tools or termination notices. For instance, an employee who transfers from the New York office to the Chicago branch can find that the rules for pay raises in his previous posting were completely different in his new setting.

Increased Inefficiency

Another drawback to decentralization is duplication of effort. Instead of one central processing point for all employees, each office or department has its own procedures. When the procedures in one office are the same as those of another, they lead to several employees doing the tasks that would require fewer workers under a centralized structure. When the procedures among offices conflict with each other, a central authority must step in to resolve any conflicts.