The devolution of the human resources function in South African multinational companies

Abstract

Understanding how multinationals devolve decision-making within their human resources (HR) function to their subsidiaries in Africa is becoming increasingly important as the continent grows in significance in the global economy. The research examines the extent of HR devolution by South African multinational companies; how it is affected by the availability of capacity, skills and resources and the role that distance plays in this devolution. Qualitative research was conducted involving 13 South African multinationals operating in eight industries and multiple countries. We find that South African multinationals primarily devolve transactional functions to their foreign subsidiaries while retaining control of transformational ones. However, this appears to be in transition, with transactional items increasingly outsourced to third parties or in-sourced to shared service centres or employee self-service. Certain transformational items were gradually being moved to the subsidiaries, subject to skills and resource availability, along with the employment of more skilled HR professionals and the establishment of Centres of Excellence at headquarters (HQ). As regards the dimensions of distance, we find that the impact of geographic distance was minimized, but the greater the cultural, economic and administrative distance between HQ and the foreign subsidiary the greater the devolution of functions down to the subsidiary.

Keywords::

• Africa
• devolution
• human resources
• multinational companies
• South Africa

Disclosure statement

No potential conflict of interest was reported by the authors.