Chapter 10

Performance Management

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Chapter Objectives
 The aim of this chapter is to draw together the
relevant literature on performance management in
the international context as it relates to IHRM.
 The focus is on identifying aspects that require a
substantial modification of traditional performance
management (especially appraisal criteria and
processes) that are imposed by international
operations.
 We specifically address the following aspects:
Cont.

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Chapter Objectives (cont.)
 Multinational performance management at the global and
local level: Considering aspects such as non-comparable
data, the volatility of the global environment, the effect of
distance and level of subsidiary maturity
 Performance management as part of a multinational’s control
system
 Factors associated with expatriate performance, including
compensation package, task and role, headquarters’ support,
host environment factors and cultural adjustment
 Performance management of expatriates and non-
expatriates, and for those on non-standard assignments such
as commuter and virtual
 Issues related to the performance appraisal of international
employees.
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Performance Management
 A process that enables the multinational
to evaluate and continuously improve
individual, subsidiary unit, and corporate
performance, against clearly defined,
pre-set goals and targets

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Basic Components of Performance
Management

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Evaluating Subsidiary Performance

 Factors to consider:
 Whole versus part
 Non-comparable data
 Volatility of the global environment
 Separation by time and distance
 Variable levels of maturity

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Control and Performance
Management
 Performance management is part of the
multinational’s control system.
 Performance targets are part of formal control.
 Performance management contributes to
shaping corporate culture, e.g.
 Who conducts performance appraisal
 Tangible versus intangible criteria
 Individual versus team based appraisal
 How results linked to HR decisions, e.g.,
compensation and promotion

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Variables Affecting Expatriate
Performance
Cultural adjustment – self and family

Host environment

Headquarters’ support

Task

Compensation
package

Expatriate
Performance
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Individual Performance Management

 The task:
 Chief executive officer
 Structure reproducer
 Troubleshooter
 Operative
 Task variables are generally considered
more under the control of the multinational
than environmental factors.

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Roles
 A role is the organized set of behaviors assigned
to a particular position.
 Effective role behavior is an interaction between
the concept of the role, the interpretation of
expectations, the person’s ambitions, and the
norms inherent in the role.
 The difficulty for the expatriate manager is that the
role may be defined in one country, but performed
in another.

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PCN Role Conception

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TCN Role Conception

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Headquarters’ Support
 The support of headquarters is important
– both to the individual expatriate and
accompanying family members – as a
performance variable

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The Host Environment
 The external context can be a major determinant
of expatriate performance
 Differing demands in terms of the context:
 Societal
 Legal
 Economic
 Technical
 Physical
 Type of operation involved (e.g. IJV versus wholly-
owned subsidiary)

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Contextual Model of Expatriate Performance
Management

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Non-expatriate Performance
Management
 Effects of factors associated with constant air
travel, e.g.
 Depression, anxiety, sleep disturbance, health
 Stress associated with frequent absences and
effect on family relationships
 Non-standard assignments share these aspects,
e.g.
 Commuter arrangements
 Virtual assignments

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Performance Appraisal
 Performance criteria
 Hard goals: objective, quantifiable and can be
directly measured
 Soft goals: relationship or trait-based
 Contextual goals: factors that result from the
situation in which performance occurs
 An appraisal system that uses hard, soft
and contextual criteria is advocated

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Other Factors Affecting Appraisal
 Who conducts the performance appraisal
 Use of standardized or customized
appraisal form
 Frequency of appraisal
 Performance feedback
 Timely
 Geographical distance affects

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Appraisal of HCNs
 The practice itself confronts the issue of
cultural applicability.
 May be necessary to use local staff and a
customized form.
 Level of position involved is an important
consideration.

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HCN Role Conception

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Chapter Summary
 Technical competence is a necessary but insufficient
condition for successful international performance.
 Most multinational firms seek managerial
characteristics when selecting international
managers, e.g.
 Cross-cultural interpersonal skills
 Sensitivity to foreign norms and values and
 Ease of adaptation to unfamiliar environments
 The added challenge is the effective management
and appraisal of performance across all of the
multinational’s operations.
Cont.
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Chapter Summary (cont.)
 We have explored in this chapter:
 The basic components of performance management
system that is conscious of and responds to the
organizational, national and international elements.
 Multinational performance aspects such as whole (global)
versus part (subsidiary), non-comparable data, the volatility
of the global environment, the effect of distance, and the
level of maturity.
 Performance management as a control mechanism
 Factors associated with expatriate performance: the
compensation package; task and role; headquarters’
support; host environment factors and cultural adjustment.
(cont.)
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Chapter Summary (cont.)
 Performance management of non-expatriates and
those on non-standard assignments, e.g.
 Virtual assignments as an illustration of some of the
aspects that need to be considered in non-traditional
types of assignments.
 Specific issues relating to the performance
appraisal of international employees
 Appraisal of HCN employees in subsidiary
operations.
(cont.)

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Chapter Summary (cont.)
 Broadening out the discussion to the multinational
level and addressing performance management
and appraisal concerns related to non-expatriates
and those on non-standard assignments has been
useful to remind us that there are many dimensions
to international business operations that need to be
considered when designing an effective
performance management system in the
multinational context.

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