HRM centralization or autonomy Essay
At the same time, as corporations grow larger and expand their business internationally, they face a dilemma of choosing between HRM centralization and autonomy. In fact, today, many specialists (Fenton-O’Creevy, et al., 2008) insist on the development of HRM autonomy because it provides larger opportunities for organizations to develop flexible policies. Therefore, organizations will be able to respond fast and effectively to changes in their business environment. For instance, if a corporation operates at the international level, it naturally needs to adapt to changes that occur at the moment at different parts of the world, where it operates. The autonomy of HRM provides the organization with the possibility to elaborate flexible HRM policies, which meet current needs of employees and business environment in different parts of the world. Hence, the corporation can reach the high level of employees’ performance and improve organizational performance consistently.
On the other hand, centralization of HRM will maintain the control over human resources from the headquarter of the organization. In such a way, corporations will be able to control their human resources and to elaborate standard, universal HRM strategies. However, specialists (Fenton-O’Creevy, et al., 2008) argue that, today, centralization of HRM makes corporations rigid and unable to respond to changes in the contemporary business environment. As a result, corporations using the centralization of HRM turn out to be in a disadvantageous position compared to corporations using the autonomy of HRM.
At the same time, the development of HRM autonomy implies that both strategic and institutional context is important determinants of subsidiary autonomy. The strongest determinant of subsidiary autonomy in regard to HRM is strategic, in the sense of whether the subsidiary is serving a purely domestic market or whether it is serving international markets (Fenton-O’Creevy, et al., 2008). What is meant here is the fact that subsidiaries should have autonomy, if they have to take decisions fast and independently of the mother company and when their decisions will not affect consistently other subsidiaries.
Furthermore, subsidiary autonomy is determined not only by the relationship of the head office to its subsidiaries, but also by the nature of the local institutional environment in which the subsidiary operates. Specialists argue that the nature of local legal conditions, the cultural environment, and the influence of the local authorities will all impinge on the degree to which subsidiaries have local control over their HRM systems (Fenton-O’Creevy, et al., 2008). In such a way, the autonomy of HRM will decrease the impact and control over HRM in subsidiaries. Obviously, the HRM autonomy may have both positive and negative effects discussed above but specialists (Fenton-O’Creevy, et al., 2008) argue that still corporations should provide subsidiaries with a larger autonomy to provide them with better opportunities to respond fast and adequately to changes in their business environment.
