International Performance Management

Chapter Learning Objectives

After reading this chapter, you should be able to: discuss multinational performance management at the global and local level, including aspects such as noncomparable data, the volatility of the global environment, the effect of distance, and level of subsidiary maturity describe performance management as part of a MNEs control system

Chapter Learning Objectives

identify the factors associated with expatriate performance, including compensation package, task and role, headquarters support, host environment factors and cultural adjustment discuss performance management of expatriates and non-expatriates, and of those on non-standard tasks and assignments ( i.e. commuter and virtual) list issues related to the performance appraisal of international employees

Challenge for IHRM

Performance measurement and the creation of performance management processes that are simultaneously locally relevant and globally comparable diversity in productions and operations geographical dispersal varieties in modes of operations

Challenge for IHRM

monitoring performance and ensuring conformity to agreed-upon standards are significant elements in the managerial control system of a multinational firm

Performance Management
the process that enables the multinational to evaluate and continuously improve individual, subsidiary unit, and corporate performance, against clearly defined, preset goals and targets

MNE Performance Management: Perspectives, Issues, Actions and Consequences (Figure 11.1)

Multinational Performance Management

evaluating MNE performance against specific expectations for each of its foreign operations (i.e. market performance, profits and competitiveness) important to recognize various constraints

MNE Subsidiary Performance Constraints

1. 2. 3. 4. 5.

whole versus part non-comparable data volatility of the global environment separation by time and distance variable levels of subsidiary maturity

Whole vs. Part

decisions; the good of the whole is more important than one subsidiarys short-term profitability
IHRM; consider the consequences for global decisions for subsidiary management performance

Non-Comparable Data
Adequate quality control checks vary between countries neither interpretable nor reliable import tariffs can distort pricing schedules strike can delay supply local labour laws IHRM; complicates the appraisal of individual subsidiary mangers

Volatility of the Global Environment

take into account local changing conditions long-term goals must be flexible and realistic IHRM; involve regional and subsidiary managers in strategic planning to clarify local performance perceptions

Separation by Time and Distance

physical distances time-zone differences frequency of contact between the corporate head-office staff and subsidiary management

cost of the reporting system

Separation by Time and Distance

IHRM; consider country-specific factors worldwide communications systems face-to-face contacts HRIS articulated roles, processes, practices, criteria and purposes

Variable Levels of Subsidiary Maturity

more time to achieve results than is customary in a domestic market
IHRM; recognize slower developments in the performance management process

Control and Performance Management

performance management is a part of a MNEs control system formal and informal control mechanisms; corporate culture, performance targets, feedback MNE achieves consistency, coordination and compliance of desired behavior and outcomes to implement its global strategy

Beneficial to Individual and Organization

strong individual goal setting and appraisal training and development and performance-related pay

Variables affecting Expatriate Performance

compensation package task and role headquarters support environment cultural adjustment of individual and accompanying family

Variables Affecting Expatriate Performance

(Figure 11.3)

PCN Role Conception

(Figure 11.4)

TCN Role Conception

(Figure 11.5)

Performance CriteriaHard Goals

objective, quantifiable directly measured (i.e. return-oninvestment, market share, financial results, profits)

Performance CriteriaSoft Goals

are subjective, qualitative relationship or trait-based ( i.e. leadership style, interpersonal skills) complicated by culture

Performance Criteria- Contextual Goals

result from the situation in which performance occurs

Performance Appraisal of International Employees

Hard Data does not consider the way results are obtained and the behaviours used to obtain the results

Performance Appraisal of International Employees

Soft Data takes into account behaviours difficult to quantify

Performance Appraisal of International Employees

use multiple hard, soft and contextual criteria
builds upon the strengths while minimizing their disadvantages a job analysis must generate criteria that adequately captures the nature of international work

HCN Role Conception (Figure 11.6)

Discussion Questions
1. Discuss the major factors associated with appraisal of expatriate managerial performance. 2. Why is it important to include hard, soft and contextual goals when assessing managerial performance? 3. In what ways would the role of a manager working in a non-standard international assignment differ from that of a typical expatriate manager?