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Chapter Eleven

Performance Management

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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


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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 nonexpatriates, and of those on non-standard tasks and assignments ( i.e. commuter and virtual) list issues related to the performance appraisal of international employees
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Terms
non-comparable data sales on consignment face-to-face going native role clarity work adjustment 360-degree feedback saving face Assignments: technical developmental strategic functional Expatriate tasks: chief executive officer structure reproducer troubleshooter operative

IAS IJV FCPA

customized performance appraisal form performance feedback

formal control mechanisms international employees corporate governance psychologically distant host environment cultural adjustment performance appraisal
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OpeningVignette
When Sales Figures Dont Tell The Whole Truth Modification of performance management for international operations

appraisal criteria the roles of various actors in the processes processes

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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

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Challenge for IHRM

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

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Performance Management

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

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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

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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

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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

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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
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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

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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
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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

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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

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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
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Beneficial to Individual and Organization


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

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MNE Control and Performance


(Figure 11.2)

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Expatriate Performance Management


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

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Variables Affecting Expatriate Performance (Figure 11.3)

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PCN Role Conception

(Figure 11.4)

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TCN Role Conception

(Figure 11.5)

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Performance CriteriaHard Goals


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

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Performance CriteriaSoft Goals


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

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Performance CriteriaContextual Goals

result from the situation in which performance occurs

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Performance Appraisal of International Employees

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

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Performance Appraisal of International Employees

Soft Data
takes into account behaviours difficult to quantify

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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
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HCN Role Conception (Figure 11.6)

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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?
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Case: A Rainy Expatriate Performance Appraisal


1. At the very beginning of his expatriate assignment what could and/or should Richard have done differently in terms of formulating and discussing his objectives.

2. What went wrong with Richards appraisal process?


3. Does this case illustrate a need for standardized appraisal forms and processes? Why?

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