1. Performance management
Chapter 10
Performance management

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 those 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:
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
(cont.)

3. Chapter objectives (cont.)
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.

4. What is 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

5. Figure 10-1: Basic components of performance management

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

7. Control and performance management
Performance management is part of the multinational’s control system
Performance targets, for example, are part of formal control
Performance management contributes to shaping corporate culture

8. Figure 10-3: Variables affecting expatriate performance

9. Individual performance management
The task:
Chief executive officer
Structure reproducer
Troubleshooter
Operative
Task variables more under the control of the multinational than environmental factors

10. Roles
A role is the organized set of behaviours assigned to a particular position
Effective role behaviour is an interaction between the concept of the role, the interpretation of expectations, the person’s ambitions, and the norms inherent in the role
(refer back to Chapter 7 – the role of the repatriate)

11. Figure 10-4: PCN role conception Figure 10-5: TCN role conception

12. Expatriate performance
The support of headquarters is important – both to the individual expatriate and accompanying family members – as a performance variable

13. The host environment
The external context can be a major determinant of expatriate performance
Differing demands in terms of context:
Societal
Legal
Economic
Technical
Physical
Type of operation involved (eg. IJV versus wholly-owned subsidiary)

14. Figure 10-6: Contextual model of expatriate performance management

15. Non-expatriate performance management
A seemingly neglected group
Performance effects of factors associated with constant air travel
Depression, nervous anxiety, sleep disturbance, health (DVT, weight gain, poor diet)
Stress associated with frequent absences and effect on family relationships
Non-standard assignments such as commuter arrangements and virtual assignments share these aspects

16. 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

17. 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

18. 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

19. Figure 10-7: HCN role conception

20. Chapter summary
Technical competence is a necessary but not sufficient condition for successful international performance. Cross-cultural interpersonal skills, sensitivity to foreign norms and values and ease of adaptation to unfamiliar environments are just a few of the managerial characteristics most multinational firms seek when selecting international managers. The added challenge is the effective management and appraisal of performance across all of the
multinational’s operations. Therefore, 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.
(cont.)

21. Chapter summary (cont.)
Multinational performance aspects: 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 was briefly discussed.
Factors associated with expatriate performance: the compensation package; task and role; headquarters’ support; host environment factors and cultural adjustment.
(cont.)

22. Chapter summary (cont.)
The performance management of non-expatriates and those on non-standard assignments. We used the virtual assignment as an illustration of some of the aspects that need to be considered in these non-traditional assignment types.
The issues relating to the performance appraisal of international employees.
Appraisal of HCN employees in subsidiary operations.
(cont.)

23. 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.