To centralize or decentralize HR? That is not the question

How head office and line HR work together

HR professionals who work within line units often see things differently from those at head office. Chameleon-like, they blend into their surroundings, behaving like the people they work with.

People who work directly with the end customer and those at the top of the organization are different, not only in title and work location but also in beliefs and values about the organization. Carried to the extreme, one group pushes integration, consistency and alignment, while the other identifies with the line business.

This will affect the way HR services are delivered and how the department’s business objectives are achieved, so decisions about how the HR department is structured should not be taken lightly.

Guiding principles for HR practitioners include objectivity and an appreciation of a client’s business and way of looking at things. When an HR person is located within a clients’ business unit, he begins to feel, think and act as one of them. There is a real benefit for the HR person to be identified by the client as a member of the line business. At the same time, however, there is the risk of over-identification — of the HR person becoming captive to the client. This can result in the HR person bending the rules too much, neglecting consistent practices or taking sides and losing objectivity in the context of overall organizational goals.

The same thing happens to the HR practitioners located in the central unit when they over-identify with the organization’s policies, rules and procedures. They sacrifice outcomes for activities, speed for consistency, and appropriate measures for ease of data collection. They are seen as lacking in flexibility or empathy to the challenges and opportunities of the business.

Having a structure in which there are people holding different points of view is not necessarily bad; in fact it can be quite constructive. Two differing points of view can actually hold each other in check, each providing balance for the other.

Experience has shown, however, that differences in perspective are not always well-managed. When line HR practitioners over-identify with their clients, subjectivity and bias lead to win-lose battles, blaming or turf protection. The situation is compounded when two camps are formed: HR practitioners from central on one side and their counterparts in the line business on the other, each rallying power to build their positions and discredit each other.

There are four approaches that tend to be used to bring balance to organizations with centralized and decentralized HR staff.

Switching back and forth from centralization to decentralization: Some leaders view the organizational structure, itself, as the problem. As a result, they centralize and then decentralize, and back again, unintentionally enabling one perspective to win over the other. It is not uncommon to see one reorganization follow shortly after another, swinging everyone from one end of the pendulum to the other. The result: Issues will likely arise again and again because perspectives from both central office and the line business are required to ensure sound business decisions.

Focusing on teamwork: This intervention assumes that clarifying roles and responsibilities or establishing team charters will resolve the problems. Activities are built around team learning and development. Teamwork is important, but employees’ behaviour may not reflect this. Results tend to be mixed, depending on the extent of people’s misunderstandings and the willingness of the parties to collaborate.

Redistributing power: Whenever there is a vacuum, power and politics generally come into play. When power games are not mediated, dysfunction occurs. These games can be civilized through negotiation, reciprocity, and the trade-off of roles and resources. The result: A redistribution of power can work, as long as the leadership is strong enough to make the tough executive decisions necessary to shift the balance.

Shifting people’s perceptions: People will collaborate if they find meaning in doing so. With this approach, the idea is to reframe employees’ perceptions to enable them to find new meaning in their work and value in co-operating with their colleagues. Dialogue, appreciative inquiry, and a round table approach are commonly used to encourage groups with different values to work together. The result: This is a time-consuming process requiring the faith and commitment of senior management, but one that ultimately can work.

HR professionals are familiar with these interventions and many have used them successfully with departments other than their own. Why, then, have they not be able to solve their own problems with centralized versus decentralized HR people? Perhaps the problem is seeing it as a problem. In fact, it is more of a dichotomy to be managed rather than a problem to be solved. Any organizational system requires input from both the business and the central units to be successful. Any one dominant view will stifle the organization. To centralize or decentralize HR is not the question. The question is, how to ensure that HR professionals in both areas of the company are working together in a balanced way.

One way is to create empathy by having workers in each type of situation do the work of their colleagues. Assign corporate HR managers regional tasks and have line HR managers spend a certain percentage of their time undertaking corporate initiatives.

Some companies adopt an action-learning approach by assigning managers to solve unfamiliar problems in unfamiliar situations, including seconding them to another company. Another way of seconding employees is to physically relocate them into the region or to head office. Whatever approach is used, the intention is to prevent people from being captured by a particular client group or by a specific world view. This polarity, this dynamic tension, must be managed — it is not a problem to be solved.

Aaron Pun is a strategist, human resources development specialist and organizational development practitioner. He is currently employed as a senior HR consultant in Canada’s largest municipal government. He can be reached at [email protected].

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