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A key decision for any International Human Resource Management (IHRM) director is the choice between centralization and decentralization. Centralization is the integration of authority and decision-making at the apex of the organization. Decentralization is the spreading out of authority and decision-making across the length and breadth of the organization to make it more locally alert. This choice between the two IHRM organizational structures affects the IHRM director who develops and implements integrative policies or dispersive policies (Briscoe, Schuler, & Tarique, 2012).
As an IHRM director, my decision to have operations centralized or decentralized will depend on a number of factors. Organizational size is a key determinant of the choice between centralization and decentralization of IHRM operations. It is prudent to have some level of centralization to achieve uniformity across the organization when the multinational corporation’s magnitude is very large. The level of financial and technical resource investment by the parent corporation will also determine how centralized or decentralized IHRM operations are. The greater such investment is, the greater control over prevention of wastage and misuse the organization would want to attain. Similarly, how integrative or dispersed IHRM operational policies will depend on the level of competition in the international market. When the organization faces constant and substantial competitive pressures, quick localized thinking becomes an asset. Thus, decentralization helps more in such situations. These are some factors that affect decisions about centralized versus decentralized IHRM operations (Sengupta & Bhattacharya, 2007).
The role of the IHRM director in centralized operations is to lead and manage a sizeable HR department that has ample resources at its command. Such centralized IHRM operations involve maintaining control over strategically important positions like major unit and subsidiary heads. Centralized IHRM operations are usually responsible for planning international assignments and global performance management. Contrastingly, the role of the IHRM director in decentralized operations is to support and assist subsidiary personnel to whom HR responsibilities have been devolved. Many factors influence the IHRM director’s decision to choose either centralization or decentralization of operations. It is vital to consider all these factors before making the decision to go for IHRM integration or dispersion.
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