Centralized vs Decentralized Recruitment: How to Choose the Right Model for Your HR Department

Centralized vs Decentralized Recruitment: How to Choose the Right Model for Your HR Department

Recruiters are the “people” people—the ones responsible for putting the right individuals in the right roles at the right times to help companies grow and thrive. And for this “machine” to work properly, your HR governance model needs to be not only clear but also adapted to your organization’s specifics.

There are multiple ways to structure the recruitment function in an organization, and there’s really no right or wrong answer: The best recruitment model for your company depends on your current growth stage and plans for the future. 

So let’s explore the three potential recruitment models — centralized, decentralized, and hybrid — and highlight the advantages and disadvantages of each one.

What’s in?

What is centralized vs. decentralized recruitment?

Choosing whether to centralize recruiting, decentralize recruiting, or take a hybrid approach is a challenging decision for many organizations. Let’s define centralized vs. decentralized recruitment and how the models differ:

Centralized recruitment

In a centralized recruitment model, all hiring decisions and recruitment responsibilities fall on a single unit for the entire company. That means one corporate human resources (HR) department has sole decision-making authority regarding recruiting.

For organizations with centralized recruitment, this group is exclusively responsible for standardizing and overseeing the whole recruitment and hiring process.

Decentralized recruitment

On the other hand, with a decentralized recruiting process, each manager — or a dedicated recruiter dispersed to each business unit based on department or geography — is solely responsible for making recruitment decisions within their unit and can choose their own employees based on different criteria.

Decentralized recruitment processes vary from unit to unit and allow for a lot of freedom in recruiting strategy. Additionally, some companies take a hybrid approach by having both centralized and decentralized recruiting functions, with some decisions and policies deployed across the organization while others are implemented locally.

Before you continue

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Why and when should you centralize the recruiting function? 

Today, about 50% of HR organizations have a centralized recruitment structure. Samsung is an example of an organization that operates with a centralized structure, which works well for the communications company because it allows for extensive product development oversight at the corporate level.

Of course, much like the other types of organizational structures, there are both advantages and disadvantages to centralizing the recruiting function:

Advantages of centralizing recruitment

Centralized recruitment is popular among employers for a number of different reasons.

Operating with a centralized structure allows recruiting teams to develop consistent policies and universal standards for recruitment and hiring across the organization. Usually, that means the central HR department houses all of the valuable recruitment data and uses the same tech stack to operate as one recruitment powerhouse.

  • For a lot of companies — especially large corporations — a centralized process tends to be faster and more cost-effective.
  • Centralizing responsibilities to one unit allows for better efficiency and lower costs overall, as specific employees focus on recruitment rather than individual department leads, who may be less qualified to recruit and more distracted by other responsibilities. 
  • A centralized recruitment function can also help ensure fair hiring practices with equal opportunities for every candidate.
  • Standardizing recruiting requirements means every applicant has to follow the same process instead of it varying by business unit or physical location. As a result, the candidate experience for every individual is more likely to be fair and unbiased.

Disadvantages of centralizing recruitment 

Like anything, centralizing your recruitment function presents a few disadvantages as well.

  • In most cases, there is a lack of flexibility when it comes to hiring and recruitment decisions—especially if a change needs to happen fast due to something like high turnover or a sudden increase in one team’s responsibilities.
  • On top of that, a centralized recruitment team often has a limited understanding of the unique needs of each specific business unit or local market.
  • Unfortunately, this can result in the recruitment team making ill-fitting hires due to a poor understanding of department staffing needs, mismanaging candidate expectations for open roles, or both.

That’s why much of the time, a centralized recruitment structure is ineffective for more geographically diverse organizations with specific, localized hiring needs.

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Why and when should you decentralize recruitment? 

Only around 15% of organizations operate with a fully decentralized recruitment model without any input or oversight from their corporate headquarters.

However, while decentralizing the recruitment function doesn’t make sense for every company, it makes perfect sense for some. For example, Johnson & Johnson uses a decentralized recruiting function to accommodate their geographically dispersed structure. 

On their website, here’s how Johnson & Johnson explains their decentralized approach

“Each of our operating companies functions as its own small business. They are strongly entrepreneurial in character, and they know that their success depends on anticipating customers’ needs and delivering meaningful, high-quality solutions. While our people operate in a small company setting, they also have access to the know-how and resources of a Fortune 50 company. It’s like having dozens of strategic partners at their fingertips.”

Most retail companies also rely on a decentralized model. Let’s talk about the pros and cons of decentralized recruitment to see if it makes sense for your organization:

Advantages of a decentralized recruitment process

With a decentralized recruiting process, policies can be tailored to each business unit and/or local market’s unit needs and priorities. That means a decentralized process offers better recruiting flexibility, which can sometimes lead to faster hiring—especially when you need to fill a position quickly. 

In the case of decentralized recruitment, hiring managers benefit from firsthand knowledge of the working environment and a better understanding of departmental or local market needs.

That personal touch can really go a long way when it comes to making the right hires at the right moments. It also empowers hiring managers with localized experience to operate independently of corporate headquarters.

Here’s how professor Carolyn Deller of University of Pennsylvania’s Wharton School of Business explained the pros and cons to each:

It can be difficult for HQs to understand the nuances of what is needed to serve customers of different demographics. Centralized hiring could be beneficial for employees to feel like they’re part of the organization. But the local managers’ informational advantage trumps any possible benefits of any centralized hiring.

– Carolyn Deller, University of Pennsylvania’s Wharton School of Business

Disadvantages of a decentralized recruitment process

Decentralized recruiting does have its disadvantages.

  • For one thing, there’s often a lack of consistency and standardization across various business units. This can create a really fragmented, disorganized hiring process with different recruitment standards, varying policies and pay grades, and a lack of coordination across the board. 
  • Plus, in a decentralized recruiting model, it’s hard for company leaders to ensure hiring practices are fair, unbiased, and ethical across the board, for every department and location. This can result in interviewer bias, whether conscious or unconscious and prevent decentralized companies from building inclusive teams.

In many cases, a decentralized recruiting function also results in really limited record-keeping because there’s often not a sole database like an applicant tracking system used to track candidates. Typically this also results in little-to-no recruitment data being stored, and ultimately a lack of corporate visibility into different stages of the hiring process. 

The best of both worlds: A hybrid recruitment structure

The remaining 35% of organizations have embraced a hybrid recruitment model, operating with both a centralized and decentralized component. Recruiters are dispersed across various departments, but also maintain a close relationship with the central recruitment function at headquarters.

Coca Cola is an example of a well-known organization that operates with a hybrid HR model by centralizing and decentralizing various elements of their recruiting function.

While Coca Cola’s global headquarters retains its overall decision-making, the corporation is divided into various regions and geographic territories, following what some refer to as “decentralization within centralization” or hybrid model.

Subway is another company that gives local stores control over hiring for those specific markets, but also staffs a centralized recruitment department at headquarters to oversee the process and put universal standards and policies in place.

Advantages of a hybrid recruitment structure

A lot of successful companies are transitioning to hybrid recruiting models. A hybrid approach allows the central recruitment team to establish universal tools, policies, and methods for recruiters to follow and standardize with training. This helps ensure fair and ethical hiring practices, centralized data collection, and employer branding consistency.

At the same time, a hybrid model enables companies to also tailor local recruitment functions to address specific market needs as they come up—all while ensuring a consistent, efficient, organized recruitment strategy and process company wide.

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Disadvantages of a hybrid recruitment structure

Without the right strategy and technology to support a hybrid approach to recruiting, coordinating your efforts between the central headquarters and dispersed business units may be difficult. To organize and coordinate your recruitment processes, you need the right tools at your disposal.

Next steps

Recruiting technology can help connect the dots in any of these recruitment models, whether your organization is centralized, decentralized, or a mix of both.

With the right software at your fingertips, you can automate manual recruitment tasks, house all of your applicants in a centralized database, and track the right metrics to create a successful, data-driven recruitment function—and put the right people in the right roles to help your company excel.

If you’d like to see how Harver can support you in streamlining your high volume recruitment process, you can book a demo below.

Ready to transform your hiring process?

Heather

Heather

Heather Bates is an experienced writer with a focus on HR, recruitment, and tech-related topics. When she’s not writing, you’ll find her taking photos, wire-wrapping crystals, and/or drinking iced coffee.
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