Chapter 10

Performance management

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

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

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including compensation package. headquarters¶ support. host environment factors and cultural adjustment ‡ performance management of expatriates and nonexpatriates.Chapter objectives (cont. and for those on non-standard assignments such as commuter and virtual ‡ issues related to the performance appraisal of international employees.) ‡ performance management as part of a multinational¶s control system ‡ factors associated with expatriate performance. task and role. Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/3 .

What is performance management? ‡ A process that enables the multinational to evaluate and continuously improve individual. preset goals and targets Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/4 . against clearly defined. subsidiary unit and corporate performance.

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 10/5 .

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 10/6 .

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 Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/7 . for example.

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 10/8 .

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 10/9 .

the person¶s ambitions.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. 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 10/10 . the interpretation of expectations.

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 10/11 .

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 10/12 .

IJV versus whollyowned subsidiary) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/13 .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.

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 10/14 .

weight gain. nervous anxiety. sleep disturbance. 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 10/15 . health (DVT.Non-expatriate performance management ‡ A seemingly neglected group ‡ Performance effects of factors associated with constant air travel ± Depression.

Performance appraisal ‡ Performance criteria ± Hard goals: objective. 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 10/16 . 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.

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 10/17 .

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 10/18 .

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 10/19 .

Cross-cultural interpersonal skills. national and international elements.Chapter summary Technical competence is a necessary but not sufficient condition for successful international performance. the organizational. Therefore. (cont. we have explored in this chapter: ‡ The basic components of performance management system that is conscious of and responds to. The added challenge is the effective management and appraisal of performance across all of the multinational¶s operations.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/20 . 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.

(cont.Chapter summary (cont. non-comparable data. ‡ Performance management as a control mechanism was briefly discussed. the effect of distance and the level of maturity. ‡ Factors associated with expatriate performance: the compensation package.) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/21 . task and role. the volatility of the global environment. host environment factors and cultural adjustment.) ‡ Multinational performance aspects: whole (global) versus part (subsidiary). headquarters¶ support.

) Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/22 . (cont. ‡ The issues relating to the performance appraisal of international employees.) ‡ 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. ‡ Appraisal of HCN employees in subsidiary operations.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.Chapter summary (cont. Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 10/23 .

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