What is decentralization?
Decentralization is a broad term with many applications, especially in government and business. First used in 1846, it is defined as “the dispersion or distribution of functions and powers; specifically: the delegation of power from a central authority to regional and local authorities” (“Decentralization”). Decentralization is often hard to understand without discussing centralization. Centralization is defined as all decision making power concentrated in the hands of a primary authority. So, a centralized government is a single individual or small political group making all the decisions, such as in a dictatorship. But a decentralized government spreads the decision making power over multiple territorial and local administrations, such as in a republic. In business, decentralization involves “the transfer of authorities, functions, rights, duties, powers and accountability of the top level management to the middle or low-level management. . .” (Surbhi).
How Does It Apply to Human Resource Management?
Therefore, decentralization of human resource management involves transferring human resource functions to a distributed group of human resource personnel. These human resource personnel are called personnel generalists and are trained in all duties of human resource management. They are each positioned under individual division managers (a division is a “logical element or segment of a company, such as accounting, production, marketing, etc. representing a specific business function, and a definite place on the organizational chart, under the domain of a manager”) (“Division”) (see Figure 2 below).
This decentralized organization of personnel generalists i...
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.... .[Also] Pressure will develop to set global standards. As barriers fall between cross-border interaction, global standards will make the exchange of information and the execution of company policies, standards and objectives easier (“What drives...”).
In the future, global companies could benefit from understanding the strengths (flexibility and accessibility—saving time) and weaknesses (inefficiency and inconsistency—costing money) of decentralization. Many businesses are already considering these possibilities and choosing to decentralize some aspects of human resources and centralize others. These businesses want to take advantage of the strengths of both decentralization and centralization. They want the best of both approaches to human resource management. Only time will tell what decentralization of human resource management will mean to the next generation.
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