Centralized Vs. Decentralized HR

Recruitment is one of the most important functions to ensure a company’s success. The relationship between human relations, management and the employees is a critical one and requires a good balance. How to approach hiring can depend on an organization’s HR structure as well as its approach to recruitment and staffing.

Centralized human resources and centralized recruitment is the philosophy of having one system to use throughout an entire company. For example, a business would have one central HR or IT department that would deal with issues from all other departments. This department would have a standard set of rules, shared central values and a standard approach to their work.

• Advantages: Consistency of methods and policies; high economies of scale, meaning fewer employees are necessary; better efficiency within the department.
  
  
• Disadvantages: Lack of regional understanding, lack of flexibility.

Decentralization gives authority to individual departments or divisions to make decisions. For example, a business consisting of three main pieces may have separate IT, HR and even safety departments that focus specifically on that particular location or division. The focus would then be meeting the differing needs of each location.

• Advantages: Policies tailored to local needs and priorities, more effective management of issues, better flexibility.
  
  
• Disadvantages: Lack of consistency, lack of organization.

As an example, consider the critical process of recruitment as a centralized or decentralized function. Decentralization might seem to make more sense. Department heads select their own candidates, meaning that interviews can be more specialized to their specific needs, and hires can be made with more intent toward a specific skill set needed within that department. There’s also an efficiency advantage because many department heads take care of their own recruitment, which splits the work among many.

However, this decentralized approach can end up inadvertently sending an inconsistent message across the organization if different departments have differing standards or hire using different pay grades. In these cases, centralization can help standardize the recruitment process across the board to ensure that all applicants have an equal chance during evaluation.

Centralization also lowers costs overall by having specific employees who work on recruitment rather than many department heads spending time on the process. The downside to centralization is that hierarchy reaches a point where upper management won’t be familiar with the specific skill sets required to fill a position.

No matter which structure ends up being the best fit, the hiring process also must consider staffing requirements in certain fields. For example, areas like nursing or public schools may require specific staffing grids that spell out the mathematical relationships between providers and clientele. This ensures, for example, the proper ratio of nurses to patients or teachers to students to provide the ideal level of service.

If hiring is a concern within an organization, there are recognized ways of improving the process:

• Improve a job description by asking the position’s co-workers and colleagues to review the description and suggest changes.
  
  
• Focus on the goals management has for this position, how these goals can be met and what that means for the employee’s career with the company.
  
  
• Work in a skills test by including some sort of problem-solving question related to the workload of that position. A correct answer isn’t always required, but watching the candidate respond can tell the interviewers how a candidate thinks.

Each company has separate needs and will require an effective HR system tailored to its own business model and company culture. When recruitment is an issue, take a look at the relationship between HR, management and employees and consider whether changes may be necessary.