Why might a business decentralize its HR functions, and what risk could this create?

• A. To standardize policies across all locations; risk: slower decision-making
• B. To tailor HR to local needs and speed up decisions; risk: inconsistent policies and quality
• C. To centralize recruitment; risk: reduced local responsiveness
• D. To reduce training costs; risk: clearer policies

Answer: (B)

Decentralizing HR means giving local parts of the business the authority to manage people practices to fit their specific circumstances. The strength of this approach is that it lets HR tailor policies and programs to the local labour market, culture, and needs, and it usually speeds up decision-making because decisions don’t have to travel up to a central head office.

The best choice captures both advantages: it highlights tailoring HR to local needs and speeding up decisions. It also notes the main risk: when each location makes its own policies and standards, there can be inconsistencies in policies and quality across the business, making it harder to ensure fairness and a uniform employer image.

Why the other ideas don’t fit as well: focusing on standardizing policies across all locations describes a centralization goal, which tends to slow decisions. Centralizing recruitment is the opposite of decentralization, and the idea about reducing training costs with clearer policies doesn’t directly connect to the trade-offs of local autonomy.