Chapter 10

Performance management

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 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.)

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 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.

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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

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Figure 10-1: Basic components of performance management

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 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

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 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

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Figure 10-3: Variables affecting expatriate performance

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

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 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)

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

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

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 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)
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Figure 10-6: Contextual model of expatriate performance management

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 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
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 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
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 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

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 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

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 Figure 10-7: HCN role conception

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 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.)
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 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.)

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 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.)

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 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.

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