Rationales for (de-)centralisation

HR respondents were asked for the reasons that HRM activities seemed to be

organised so differently in terms of centralisation and decentralisation of decision making. It

is interesting to see the diversity of elements that came up in their responses. First, those

HRM activities which had a direct impact on store payroll costs tended to be more

centralised. Indeed, payroll cost was a direct function of the size of a store’s management

structure, the amount of man-hours that are allocated to it, and the salary rates and bonus

paid:

it's about maintaining control of what is potentially an area of the business that could run away and become very very expensive if not careful

(HRM5)

In order to underscore the importance of controlling payroll cost, it is useful to recall

what was said in chapter 2 about the importance of managing retail margins, and how

achieving a constant proportion of payroll cost to revenues was highlighted in the company

annual reports as a significant element of the overall performance of the company.

Second, centralisation of some HRM activities helped achieve consistency and

fairness, which was in itself an important goal for members of the HR organisation, but also

protected the company from litigation, and may help line managers in their roles:

the advantage where we do get involved, is really to provide that approach of fairness and consistency and ensure that not only the stores are complying for the legal requirements […] but also that they reach consistent decisions […], because

sometimes stores will only deal with an issue once every couple of months, but we are dealing with those issues every day, because we are dealing with all of the stores, so we actually have much more consistent view of what we should be doing in certain situations, and what is fair and right to do

(HRM1)

we are very structured as a company and I believe a lot of our managers like that, sometimes I don't think that they think that they like it until they go and work somewhere else which isn't as structure and then they either come back or we hear “oh, it's great”, because they know what they can and cannot do, […] the

disadvantage of that is that sometimes they can feel it's a little bit too structured, we tell them what to do

(HRM3)

the biggest and the most obvious [advantage of centralisation] is consistency, we employ a lot of people in retail and many of the stores are side by side with each other, so if we were to allow individual stores to make their own decisions, very quickly we would be in a situation where we are poles apart in terms of decision making […] so consistency and being fair I think is the biggest reason, but also making sure […] that people are managing in accordance with procedures and policies that we set up for them to work by, […] if everybody was off doing their own thing, chaos would reign without doubt

(HRM4)

Third, some activities were decentralised because they depended on local

information. For instance, appointment decisions include elements about the job that are best known by the recruiting manager and which may be difficult to transmit to Head Office:

[line managers]are the people that have to work with those people day in day out, sometimes I don't even meet some of my managers, so it wouldn't be right for me to recruit and appoint on their behalf

(HRM3)

[line managers] know their branch, they know the other people they have work in their branch, that they're in a position there to judge whether this person's bringing skills in that they need to complement others', […] so they know just what the requirements are of their branch, we have to trust them to know that, and therefore we give them the power to make that appointment

(HRM5)

Finally, decentralising some HRM activities was a way of keeping the size – and

consequent overhead – of the HR department small:

the reason for [decentralisation] is the resources for the HR department, we couldn't assist stores in their day to day recruitment, […] we'll advise them if they're having problems recruiting, but […] with five six hundred stores across the company, we don't have the resources to help them with the recruitment on a daily basis, […] we've given them all the resources that they need to do the recruitment but we don't get involved often in that side of it

(HRM2)

it's a resource issue, because as a company if we were to get involved in all of the recruiting, then there would need to be a lot of us [HR managers], and from a cost point of view I don't think that would ever be achievable or possible

Chapter 5 – HR function and HRM system

5.6

Conclusion

HRM activities at the company were well structured and well known by managers in

the stores so that the general accounts of how each area of activity was configured did not

differ much from one respondent to another, or even from respondents in stores to

respondents in the HR organisation at Head Office. The activities can be classified as

centralised and decentralised. Centralised activities included store structure, staffing levels,

salaries and bonuses. For these activities, decisions were made at Head Office and then

communicated to the stores who had very limited opportunity to challenge or alter any of

them. These four areas of HRM activity are the major drivers of payroll costs in the stores

and that seems to be a major reason for their centralisation. Decentralised HRM activities,

on the other hand, had a high level of involvement from the stores. Decisions on who would

progress, to what position, etc. were mostly taken in the stores, and only exceptionally Head

Office would intervene. Likewise, decisions on acceptable performance, formal or informal

disciplining comprised many activities that were carried out in the stores, although in this

case, Head Office had significantly more involvement.

This chapter has provided a general overview of decentralised activities, which are the

focus of a much more detailed study in chapter 6 and 7. Whereas this chapter has aimed at

summarising the common elements of progression and performance management, chapter 6

and 7 deploy the diversity of courses of action that led to progression and performance