Centralized human resources means HR professionals oversee primary employee management functions from a main office. Hiring and firing processes, training and orientation, pay and benefits and general motivational strategies are among the areas guided by specialists in a central HR office. Centralizing HR has certain advantages relative to a decentralized approach that leaves management of these processes to local business unit leaders.


A main reason companies centralized HR is to consolidate human resource decisions and activities in the hands of highly qualified individuals. Employees in this department typically have degrees and training specific to human resources. Knowledgeable leadership in this functional area not only helps your company hire and motivate top performing employees, it also provides better protection against the legal risks that come with hiring and managing people.

Strategic Involvement

Since HR was incorporated into strategic planning in the early 21st century, companies have increasingly opted for centralized human resources. Traditionally, companies viewed HR as another functional area within the company. Now, businesses include HR directors on executive teams to participate in strategic planning decisions. The goal is to align the company's hiring and retention strategies with the overall vision and direction the organization is headed.

Cost Efficiency

By consolidating HR processes in one central location, your business can generally operate more efficiently. You have a lower potential for process redundancy, and HR professionals can plan ways to manage costs in human resources for the entire business. A systematic approach that is consistently applied throughout the organization also means you have consistency in labor and training costs since all local managers follow the same compensation and training programs.


The easiest ways to build and maintain brand consistency is to have all business units on the same page. Providing direction from a central office that is disseminated throughout the units improves the likelihood for this to happen. If employees are paid, trained and motivated using consistently applied approaches, your customers are more likely to have similar experiences at each office or store. Employee abilities and morale should be relatively constant, assuming you have qualified managers to implement HR programs at the local level.