1. Performance Management
Chapter 10
Performance Management
IBUS 618 Dr. Yang

2. 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.
IBUS 618 Dr. Yang

3. 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.
IBUS 618 Dr. Yang

4. 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
IBUS 618 Dr. Yang

5. Basic Components of Performance Management
IBUS 618 Dr. Yang

6. 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
IBUS 618 Dr. Yang

7. 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
IBUS 618 Dr. Yang

8. Expatriate Performance
Variables Affecting Expatriate Performance
Cultural adjustment – self and family
Host environment
Headquarters’ support
Task
Compensation package
Expatriate Performance
IBUS 618 Dr. Yang

9. 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.
IBUS 618 Dr. Yang

10. 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.
IBUS 618 Dr. Yang

11. PCN Role Conception
IBUS 618 Dr. Yang

12. TCN Role Conception
IBUS 618 Dr. Yang

13. Headquarters’ Support
The support of headquarters is important – both to the individual expatriate and accompanying family members – as a performance variable
IBUS 618 Dr. Yang

14. 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)
IBUS 618 Dr. Yang

15. Contextual Model of Expatriate Performance Management
IBUS 618 Dr. Yang

16. 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
IBUS 618 Dr. Yang

17. 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
IBUS 618 Dr. Yang

18. 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
IBUS 618 Dr. Yang

19. 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.
IBUS 618 Dr. Yang

20. HCN Role Conception
IBUS 618 Dr. Yang

21. 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.
IBUS 618 Dr. Yang

22. 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.)
IBUS 618 Dr. Yang

23. 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.)
IBUS 618 Dr. Yang

24. 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.
IBUS 618 Dr. Yang