Essay Title:

Advantages and disadvantages to a firm in attempting to

pursue a uniform system of performance management
across its international operations.

Module:
Strategic International Human Resources
 Advantages and Disadvantages of Uniform System of
Performance Management

Introduction
Performance Management
Advantage of Uniform System of Performance Management
Disadvantage of Uniform System of Performance Management
Conclusion
Introduction:
To perform successfully in today’s business environment, companies need to
have a well-formulated company strategy directed towards creating and
sustaining competitive advantage. Even more importantly, they need to have
employee possessing the potential, the capabilities and motivation to execute
organizational strategies effectively and efficiently- and they need to be able to
manage the employees effectively (Scullion and Linehan, 2005).
In this context, performance management (PM) is one of key HR process, which
can help companies to bring strategy to individual employees, and turn
employees potential into the desire result (Delery and Doty, 1996). The process
become more central due to the increasing global integration needs in MNCs
(Scullion and Linehan, 2005). Hence, in order to succeed in such global
integration, supporting global HR systems such as PM system needs to be
developed.
Performance Management:
Performance management (PM) is a crucial human resource (HR) process for the
global organization (Slavić, Berber and Leković, 2014). Performance
management is a continuous process, which aimed at increasing the
effectiveness of organizations by improving the performance of the people who
worked in them and by developing the capabilities of team and individual
contributors (Armstrong and Baron, 1998).
Dowling et al. (1999) state that international performance management is a
strategic HRM process that enables the MNC to evaluate and continuously
improve individual, subsidiary unit and corporate performance against clearly
defined, pre‐set objectives that are directly linked to international strategy.
Furthermore, International performance management is a design implemented
and evaluated intervention of an MNE for the purpose of managing the
performance of a global workforce so that performance (at the individual, team,
and organizational level) contributes to the attainment of strategic global
objectives and results in overall MNE desired performance.

Clarification
Set expectations, define
performance measures and
align organizational and
individuals goal

Evaluate the
performance Monitor performance Management
management process commitment

Communication

Provide support and

reward good Review and feedback
performance
Figure: A performance management model (Iles and Zhang, 2013)

Performance management system has been used since decades to measure and
manage employee performance. Over the years, changing business scenario,
shorter cycle times, changing workforce demographics, ever-increasing demand
on performance has pushed organizations to come up with innovative ways to
measure and manage employee performance. In order to manage these
challenges, performance management system has emerged as a powerful
workforce management tool especially in new age growing multinational
organizations. Competitive landscape, increasing pressure on business objectives
and demand on productivity has over the period of years placed strong emphasis
on measuring and managing individual performance (Devarajan R., Maheshwari
and Vohra, 2016).
In well-functioning PM process, the elements are ultimately derived from the
organizational goals and activities. When operated successfully, PM will give the
means for evaluating and continuously improving both individual and company
performance against predefined business goal. A good performance management
provide a company with a basis for managing the business of today and for
developing it into the future through the performance if its people. It has even
stated that if implemented appropriately, performance management is an area of
HRM, which has the potential to make the most significant contribution to
organizational effectiveness and growth. The scope of performance management
in MNCs is much more boarder and more complicated than PM in domestic
companies, where local employees are managed within the local political, legal
and cultural environment within only one national boundaries. MNCs, on the
other hand operate in three country categories: the parent country where the
firm usually headquartered; the host country where a subsidiary may be located;
and other countries, which may be the source of labor, finance or research
development (Scullion and Linehan, 2005).

Performance management on one hand links people to business (De Waal,

Goedegebuure & Geradts, 2011) and on the other interacts with other HR sub-
systems such as compensation, learning and development, career management,
growth, succession planning and workforce planning inputs to create an
integrated Human resources platform in any firm (Chand & Katou, 2007).

In considering performance management in practice, it is useful to think about

the aspect of HR policies and practices through which performance is controlled
and directed in order to achieve the organizational goals (Beardwell and
Thompson, 2014). HR policies are-
 Integration
 Recruitment
 Selection
 Training and development
 Performance management
 Reward management
 Employee relation
A critical issue faced by host-country nationals with respect to HR management
is the degree to which Multinational Companies (MNCs) include parent HR
policies as part of global HR policies. However, HR policies are affected by
various factors that these MNCs need to incorporate once they start operating in
host countries. Different factors that determine the trade-off between integration
and adaptation, such as: legal and regulatory constraints, industry, technology,
parent country culture, cultural distance, social system, work force composition,
type of subsidiary establishment and dependence of the host country on the
MNC.
Moreover, the degree of differentiation among host countries and their
environment, culture and social system can shape and constrain diffusion of HR
practices within multinational company. Also culture and social system of host
nations can make a big impact on international organization and performance
management. In this context, Hofstede (1980) divided the cultural dimensions of
a country into five areas. Then the evaluation of a country‘s cultural problem is
in accordance with these five areas to carry out rating and scoring.

Table: Hofstede’s cultural dimension.

From this typology, it is easy to see how a nation’s culture might impact on
practices related to PMs. For example, the United States scores 40 on power
distance, meaning low acceptance of status and hierarchy differences, while
India score rather high 77 when measured against the world average of 56.5.
Thus, in this instance, individual are more likely to accept, often without
argument, downward supervisor feedback in India, than they are in United
States. So, a company operates in both nations will have to have to adapt its PMS
practices and feedback mechanism as managers are less likely to be willing to
receive upward feedback in India. Similarly, in a country like China, that is
known for collectivistic values, people prefer group based, rather than
individual-focused training and may respond better to group-based, rather than
individual-focused feedback. Culture can influence how supervisors evaluate
their subordinates. For example, in India managers gave significantly higher
ratings to employees that they liked, awarding substantially beyond the amount
warranted by their performance. Such as behaviour is often motivated by
culturally accepted practices, such as the need to protect and support member’s
of one’s in-group, even though their performance may not warrant high rating
awarded. In a similar vein, in China are likely to go out of their way to help those
subordinates with whom they share high quality relationships.
Clearly, the culture of a nation can have a significant impact on how performance
is viewed, managed and evaluated. Thus, organizations would do well to take
this into account when they designing their PMS for different cultures (Harzing
and Pinnington, n.d.).

Here company has two basic approaches: standardization (that is

standardization of all the major HRM practices internationally) and localization
(the use of locally developed HRM practices). This decision is in turn connected
to the total business strategy: that is HR activities must support the business
aims. For example, the global strategy approach implies a focus on similar,
uniform, standardization, homogenization, concentration, and coordination on a
worldwide basis (Svensson, 2001). This kind of global strategy and globalization
of business activities may lead to a substantial competitive advantage in the
market place (Keegan and Green, 2000).

Uniform PM practice approach mutual learning, so that an effective practice

discovered in one location can be spread across the world, without the costly and
often ineffective need for each subsidiary to re-invent the wheel. In addition,
global alignment of system will facilitate an international labour market and
make expatriation and other forms of cross-border movement of personal less
complicated (Almond et al., 2003). Common system of PMS may then be easier to
control and monitor from headquarters. Alongside these benefits, With uniform
performance system ensure ethical consideration of equity and fair treatment for
all employees. Furthermore,

Beside these benefits there are disadvantages, too. Companies policies and and
practices may not be seen as legitimate, or even be legal, in some countries and
the approaches of companies from around the world in relation to issue of
gender, ethnic or age discrimination will be very different. For example, an MNC
may have adopted a task-oriented approach to production organization, but
where it locates within a host country that has a strong tradition of high
discretion system of work organization, then it may find that emplyees become
dissatisfied with its attempts to limit the scope they have in influencing how
work is to be undertaken (Geppert and Matten, 2006). In some host country
environments the MNC may also aim to develop higher trust employment
relation than those normally prevailing in domestic firms if they are to
implement work systems that are reliant on worker commitment and
involvement. Uniform PMS practices cannot work in the local environment
because of cultural or philosophical differences and/or that the extra-national
MNC does not understand the local constraints (strategic driver of expertise).
Also local culture and political-legal systems may make some aspects of MNEs
uniform PM practices either inappropriate or illegal (CHEN and Wilson, 2003).
PMS is designed to help organizations gain the best out of their employees, by
enabling individual employees to perform at optimal levels. However, as we can
see the execution of such systems is not easy, and thus performance
management practices frequently do not achieve their goals with the result that
both employees and their supervisors are often dissatisfied with the system. In
other words, if the system is not used properly, evaluations can lead to
frustration, anger and lowered levels of motivation, rather than encouraging
employees to perform better (Harzing and Pinnington, n.d.).

Conclusion:
Almost every HR systems and practices are context specific, but performance
related systems are even more so, as performance may not be defined same way
in different location and in different organization. Practitioners should judge the
sustainability of the systems and adapt or modify them again and again, as
necessary. It is really difficult to come up with a perfect PMS, so instead spending
time to create perfect PMS they need to adapt ‘Glocal’ (globally consistent and
locally appropriate) system in an effort to continually motivate the best
employee performance.
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