Centralized vs. Decentralized HR management in DubaiMenaItech

For enterprises with myriad, geographically distributed locations, choosing whether or not to centralize HR management in Dubai is a decision with broad strategic and operational implications. A centralized HR management in Dubai enables a company to streamline its departmental functions across an intricate system. It also makes sure that all information is managed in a unified way and that HR policies are applied consistently all across the enterprise.

On the other hand, since diverse geographical locations are dictated by varied payroll tax and distinct human resources regulatory environments, in addition to unique recruiting cultures, this favors the argument for decentralization. Multi-location companies are often seen dwelling over the prospect of centralization across an amalgam of diverse entities, especially ones acquired through acquisition.

To Centralize or Not to Centralize

The first question for an organization to ponder over is whether the centralization of HR management in Dubai is mandated or not. Perhaps centralizing pertinent functions, such as corporate finance, might be required for legal compliance, compliance with safety and health can be managed even at the division level. Another variable to factor in to the equation is if the centralization adds significant value to your enterprise. If centralization is not mandated, it should only be considered if it adds value to the business.

On the other hand, determining the exact value can be a challenge, so instead, analyze if the proposed initiative boosts the profit of the corporation by 10%. Next, consider the risks involved. There are certain risks associated with centralization, such as distraction, bureaucracy, reduced motivation, and business rigidity, which are not worth the value created. Only proceed with centralization if the risks associated are lower than benefits.

An HR Perspective

Generally, the decision of centralization is an executive one, not involving the HR perspective. Thus, it comes as no surprise that while most CEO frameworks highlight the challenges involved with centralizing HR management in a multi-location company, they rarely address the cultural risks incurred with staying fragmented. Nor do they take in to factor the potential added value, derived in terms of employee satisfaction and productivity, of consistent vision and shared culture.

Every HR personnel know that fostering a shared culture and coherent core across the newly formed entity is the hardest challenge of post-acquisition. While managing labor law, recruiting cultures and multi-jurisdictional regulatory environments can be a logistical nightmare, Instilling shared values and nurturing a sense of solidarity and shared purpose across myriad locations can be an even bigger challenge.

Taking a Hybrid Approach

Inevitably, a question arises when companies aspire to determine which structure works best for them: Are decentralized and centralized approaches mutually exclusive? Not necessarily! The HR function may be integrated with a hybrid approach. This approach involves a network of local and corporate HR roles collaborating together to deliver the most viable HR functions across the organization.

The hybrid solution should be developed in collaboration with the Local and corporate HR teams. It requires all parties involved to garner a complete comprehension of the situation in each geographical location, such as development and training practices, culture, local workforce recruiting processes and characteristics, incumbent HR staff, technology and tools in use, local labor law, regulatory environment, and current HR practices and policies.