Advantages Of Decentralization Of Human Resource Management

Decentralization of Human Resource Management

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

The sacrifices are often consistency, expertise, cost, and efficiency. A decentralized human resource approach is not as efficient as a centralized department, just as individual production is not as efficient as mass production. With a centralized human resource department, personnel specialists specialize in one area of human resources. Therefore, they make less mistakes and are more cost effective. Whereas, when personnel generalists are functioning independently in a decentralized approach, policies and procedures may not be as well understood or followed. So, if every personnel generalist is understanding or applying the rules differently without supervision, there are often inconsistencies in the way human resource functions are executed. This can sometimes lead to serious repercussions, even lawsuits, especially in the realm of hiring and firing (for example, “nepotism and favouritism”) (Kolehmainen, R., and L.