Chapter 10 Performance management Use with International Human

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Chapter 10 Performance management Use with International Human Resource Management ISBN 1 -84480013 -X

Chapter 10 Performance management Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 10/1

Chapter objectives The aim of this chapter is to draw together the relevant literature

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. ) Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 2

Chapter objectives (cont. ) • performance management as part of a multinational’s control system

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 nonexpatriates, and for those on non-standard assignments such as commuter and virtual • issues related to the performance appraisal of international employees. Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 3

What is performance management? • A process that enables the multinational to evaluate and

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 4

Figure 10 -1: Basic components of performance management Use with International Human Resource Management

Figure 10 -1: Basic components of performance management Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 5

Evaluating subsidiary performance • Factors to consider: – Whole versus part – Non-comparable data

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 6

Control and performance management • Performance management is part of the multinational’s control system

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 7

Figure 10 -3: Variables affecting expatriate performance Use with International Human Resource Management ISBN

Figure 10 -3: Variables affecting expatriate performance Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 8

Individual performance management • The task: – Chief executive officer – Structure reproducer –

Individual performance management • The task: – Chief executive officer – Structure reproducer – Troubleshooter – Operative • Task variables more under the control of the multinational than environmental factors Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 9

Roles • A role is the organized set of behaviours assigned to a particular

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) Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 10

Figure 10 -4: PCN role conception Figure 10 -5: TCN role conception Use with

Figure 10 -4: PCN role conception Figure 10 -5: TCN role conception Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 11

Expatriate performance • The support of headquarters is important – both to the individual

Expatriate performance • The support of headquarters is important – both to the individual expatriate and accompanying family members – as a performance variable Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 12

The host environment • The external context can be a major determinant of expatriate

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 whollyowned subsidiary) Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 13

Figure 10 -6: Contextual model of expatriate performance management Use with International Human Resource

Figure 10 -6: Contextual model of expatriate performance management Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 14

Non-expatriate performance management • A seemingly neglected group • Performance effects of factors associated

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 15

Performance appraisal • Performance criteria – Hard goals: objective, quantifiable and can be directly

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 16

Other factors affecting appraisal • Who conducts the performance appraisal • Use of standardized

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 17

Appraisal of HCNs • The practice itself confronts the issue of cultural applicability •

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 Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 18

Figure 10 -7: HCN role conception Use with International Human Resource Management ISBN 1

Figure 10 -7: HCN role conception Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 19

Chapter summary Technical competence is a necessary but not sufficient condition for successful international

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. ) Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 20

Chapter summary (cont. ) • Multinational performance aspects: whole (global) versus part (subsidiary); non-comparable

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. ) Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 21

Chapter summary (cont. ) • The performance management of non-expatriates and those on non-standard

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. ) Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 22

Chapter summary (cont. ) Broadening out the discussion to the multinational level and addressing

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. Use with International Human Resource Management ISBN 1 -84480013 -X Published by Thomson Learning © Peter Dowling and Denice Welch 23