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Management Essay: Decentralisationof Human Resource Decisions


Task: You are required to write a management essay that will adopt a position, either agreeing with, or disagreeing with, the statement given below. You will be required to conduct independent research to find evidence that supports the position you have adopted. “Centralising HR decisions is necessary for MNEs to be successful on an international scale”


Centralisation of HR decisions mentioned in this management essay means engrossing the authority related to strategic planning and decision-making at the organisation’s uppermost level. Business expansion through different outlets in different location requires a process for making the decision. In the case of centralisation, alloutlets depend on the headquarters for decision making.Development of the business becomes stagnant, which can hamper the organisation at the root level. The involvement of executive-level and supervisory level is almost negligible, which hamper their productivity. Decentralising HR Decisions is the most appropriate way for an organisation to move forward with overall growth. Many examples can be illustrated to justify that decentralisation of HR decisions is the more advanced option if the organisation has to be successful on an international scale.

Every organisation desires to be a part of international trade, but it is impossible without proper implementation of strategies. Successful companies are working on domestic as well as international levels. A systematic performance of the organisation can only help the business to sustain itself. Decentralisation of HR decisions is one such way that can help in full utilisation of the potential of every level in the organisation. Decentralisation accelerates the expansion speed as all the employees working in the organisation can use their innovative ideas to accomplish the organisation and individual objective (Emmeneggeret al., 2019). Two globally recognised companies using decentralisation of HR decisions areMcDonald’s and Tesco. Macdonald’s is one of the most famous American fast-food companies in the entire world. It was found as a restaurant handled by Richard and Maurice McDonald. Using decentralisation HR decisions has made it one of the biggest and fascinating fast food centres in the world (Francis & Baum, 2018). Tesco is amongst the globally recognised supermarkets, which Jack Cohen discovered. In the period twenty years, Tesco increased its outlets and later, it was internationally recognised.

Global Integration VS Local Responsiveness
Decentralisation of HR decisions facilitates the business operation, which the company’s employees easily adopt. Tesco and Macdonald’s have done the same. Business operating onthe international level uses the same products and production methods for packing and selling in all nations worldwide. It is referred as global integration. Their branches in other areas have recruited the deserving local candidate for managing the business so that customisation related to that area can be done effortlessly. It provides flexibility in the decision-making process as customers feel more reliable when the products served to them by their locals. Formulating strategies can be quick and easy as they are already aware of the situation and can work accordingly without hampering the business’s reputation in other countries. In the above two companies, every area branch works on its policies as per the necessities of that place.

Promoting positive leadershipbetween Host and Subsidiary Company
Leadership is directly proportional to employees’ performance, as a leader has to initiate a strong relationship with the companies’ workers. There is a line of difference between dictatorship and effective leadership as a leader one has to motivate other co-workers and employees even in the most demanding period. The leader’s optimistic approach can work as a constructive process for the whole organisation (Úbedaet al., 2018). There are many qualities of a great leader like encouraging teamwork, providing the right guidance to the juniors and learners, ethically influencing people in work, removing barriers of discomfort between the parent and subsidiary company, and making the work done without any friction. Healthy leadership roles are also followed in the above two host companiesto create a sense of belonging for the subsidiary company.They can contribute to accomplishing the organisation’s goals.MNEs appoint expatriates from different regions as a leader tocapture the local market of another country easily.

The factor driving the Standardisation&Localisation
There are no complexities in instructing in a decentralised form of company; information can be easily communicated to the subordinates. They are cutting the old bureaucratic procedures followed for informing about any changes in the lower level of management (Ruël&Gbur, 2017). Standardisationis the process adoptedby MNEs for strategy making, corporate culture, size of the firm is done by HR. The policies made by HR can assist in accomplishing the single objective. Localisation creates effective global practice by including a diverse workforce and promoting communication. It assists in understanding the environment and allowing flexibility in the working schedule.

Increment in Regional Potential
The potential of expanding in an area can be done better through a local person who is already aware of the market’s discrepancies. When such companies had planned their expansion, they had gone through such difficulties. It chose to use the local human resource to expandits easy expansion (Grimshawet al., 2017). As the companies were not aware of other countries’ market, they used this potential of local people and reached the international market.

Cultural Context
When a company plans to trade across the country, it also trades across cultures of different nations. The way of communication, professional acceptance practised may vary from nation to nation. It is the most significant context a business has to deal with. It decides the company’s future in an international market, whether they can become as profound as they desired or not. Being open to changes is the only way through which a business can sustain itself at any place. Excellent networking expertise is required, and adaptive thinking can help overcome this (Latukhaet al., 2020). When decentralisation of decision-making HR is done, then the respective manager can work according to the area.

Enhanced innovation and challenges
Globalisation has innovated most of the two companies’ strategies as involving the subordinates as a team in the strategies making and other implementations of plans.MNEs face communication challenges and cultural differences. For instance, McDonald’s faced cultural differences in India, and they had to include vegetarian options and exclude beef and pork from the menu. Tesco faced a language barrier during the initial phase of expansion, and later each product packaging was named in the Malay language. In some of the cases, MNEs can face a shortage of funds like SMEs. Tesco applied different burger forms introduced by McDonald’s to compete through other local fast foods, and the same strategy by implementing natural and organic food items in their supermarkets (Kansal&Singhal, 2019).

The company that desires to enter and sustain itself in the international market has to use decentralisation of HR decisions to scale up there. Human resource is the most crucial part of any business to run successfully, so they need to feel like a part of the organisation and aim to fulfil the same goal. To enhance the process of effective and efficient management, development from the foundation level has to start. Human resource is fundamental of all the business, so it must be judged from cultural context as dissimilarities in taste and preference is commonly seen when geography changes. It can help in easy expansion of business, coordination with local customers can also be done effortlessly, quickly in making and implementing the decision, the rate of innovation is very high when it feels like a part of the organisation. The mission and vision of any organisation can be achieved through positive leadership roles over the subordinates.

Emmenegger, P., Graf, L., &Trampusch, C. (2019). The governance of decentralised cooperation in collective training systems: a review and conceptualisation. Journal of Vocational Education & Training, 71(1), 21-45. Retrieved from:

Francis, H., & Baum, T. (2018). HR transformation within the hotel industry: building capacity for change. Worldwide Hospitality and Tourism Themes. Retrieved from: Transformation_within_the_hotel_industry.pdf

Grimshaw, D., Johnson, M., Marino, S., &Rubery, J. (2017). Towards more disorganiseddecentralisation? Collective bargaining in the public sector under pay restraint. Industrial Relations Journal, 48(1), 22-41. Retrieved from: al_Industrial_Relations_Journal.pdf

Kansal, J., &Singhal, S. (2018). Development of a competency model for enhancing the organisational effectiveness in a knowledge-based organisation.

International Journal of Indian Culture and Business Management, 16(3), 287-301.Retrieved from: effectiveness_in_a_knowledge-based_organisation/links/5d126cab299bf1547c7f3114/Development-of-a-competency-model-for-enhancing-the-organisational-effectiveness-in-a-knowledge-based-organisation.pdf

Latukha, M., Poór, J., Mitskevich, E., &Linge, D. (2020). Human resource management practices transferring from foreign firms to Russia: The case of MNCs subsidiaries. Journal of Business Research, 108, 476-486. Retrieved from:

Ruël, H., &Gbur, M. (2017). HRM frames of HR managers and line managers: congruence, consequences and context. European Journal of International Management, 11(5), 557-580.Retrieved from: consequences_and_context/links/5dbefce34585151435e50e38/HRM-frames-of-HR-managers-and-line- managers-congruence-consequences-and-context.pdf

Úbeda-García, M., Claver-Cortés, E., Marco-Lajara, B., Zaragoza-Sáez, P., &García-Lillo, F. (2018). High performance work system and performance: Opening the black box through the organizational ambidexterity and human resource flexibility. Journal of Business Research, 88, 397-406.Retrieved from:


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