CENTRALIZED HR MANAGEMENT IN REGIONAL SUBORDINATE ORGANIZATIONS

Abstract

Introduction. Regional governance of subordinate organizations is generally based on the principles of decentralization, despite the fact that financial responsibility, control powers, and political accountability for the use of budgetary resources are concentrated at the regional level. At the same time, one of the least structured areas of regional governance is the organization of human resource (HR) and payroll processes. This raises the question of the feasibility of centralizing HR processes within the system of regional governance, using the Czech Republic as a case for analyzing the associated institutional and economic effects. The purpose of this article is to analyze the impact of HR process centralization implemented through the introduction of a unified HR and payroll software solution across all subordinate organizations, followed by the consolidation of data and process regulations at the regional level.

Materials and Methods. The methodological framework of the study is based on institutional analysis, a process-oriented approach, and inductive method (generalized practice of regional governance practices in the Czech Republic). These methods are used to substantiate and explicate the content of a centralized model for organizing HR and payroll processes. The underlying research problem stems from the high degree of fragmentation of personnel and payroll processes within subordinate organizations, which, under a decentralized governance model (“Region 1.0”), leads to limited cost governability, increased transaction costs, reduced transparency, and the dilution of managerial responsibility.

Results and Conclusions. The article proposes an original justification for the transition from the decentralized “Region 1.0” model to a centralized “Region 2.0” architecture aimed at optimizing regional governance of subordinate organizations in the Czech Republic and provides a qualitative assessment of its impact on control, efficiency, and cost management. The findings indicate that the centralization of HR processes in regional governance is predominantly institutional rather than purely technological in nature. It contributes to reducing organizational fragmentation, increasing the auditability and reproducibility of managerial procedures, and creating conditions for a more rational use of budgetary resources. Centralization is not viewed as a substitution for local HR management, but rather as a mechanism for unifying key administrative, control, and analytical functions while preserving the operational specificity of subordinate organizations. The study also identifies limitations of centralization related to institutional inertia, organizational heterogeneity, and differences in the level of digital maturity among subordinate organizations. The “Region 2.0” model is presented as an institutional transition from fragmented, reactive, and person-dependent governance to a system based on data, processes, and predictable accountability, thereby enhancing the effectiveness of public administration.

Discussion. The study further identifies institutional conditions under which management centralization does not constrain the functional autonomy of organizations but, on the contrary, enhances their governability. It is demonstrated that a key element of the economic rationality of the “Region 2.0” model lies in the transformation of the role of the human factor in HR and payroll processes. Centralization does not eliminate human labor; rather, it economizes it by reducing duplicative functions, increasing interchangeability, and shifting the focus from routine operations to control, analytical, and methodological tasks. This reduces the system’s dependence on individual performers and strengthens its institutional resilience.