Article

Journal of Industrial Relations

2015, Vol. 57(2) 210–231
Performance and reward ! Australian Labour and
Employment Relations Association

practices of multinational (ALERA) 2015

SAGE Publications Ltd,

corporations operating in Los Angeles, London, New Delhi,

Singapore and Washington DC
DOI: 10.1177/0022185614564372
Australia jir.sagepub.com

Timothy Bartram
La Trobe University, Australia

Brendan Boyle
University of Newcastle, Australia

Pauline Stanton
RMIT, Australia

Gitika Sablok
Victoria University, Australia

John Burgess
Curtin University, Australia

Abstract
This paper examines the performance management and reward practices of multinational
corporations operating in Australia. Drawing on a representative sample of 211 multi-
national corporations, we examine the uptake and determinants of performance man-
agement and reward practices used by multinational corporations in Australia. We
investigate the influence of established contextual and organisational factors on perform-
ance management and rewards and explore the use of such practices amongst managers
relative to the largest occupational group. Our findings suggest that overall multinational
corporations operating in Australia use a wide range of performance management and
reward practices. Findings indicate that multinational corporations are higher users of
such practices for managers relative to the largest occupational group. Logistic regression
results demonstrate that multinational corporations with higher use of human resource-
shared services and global human resource integration are more likely to use the mea-
sured performance management and reward practices for both the largest occupational
group and managers, suggesting some level of global integration around human resource

Corresponding author:
Timothy Bartram, La Trobe University, Bundoora, Victoria 3086, Australia.
Email: t.bartram@latrobe.edu.au
Bartram et al. 211

activities. There is also greater likelihood of the use of these practices where there is low
union recognition for the purpose of collective bargaining for the largest occupational
group. The implications of these findings are discussed.

Keywords
Human resource management, multinational corporations, performance management,
reward practices, unions

Introduction
Performance management (PM) consistently appears as a key issue in the human
resource management (HRM) literature and a number of empirical studies have
articulated a clear link between employee PM and organisational performance
(Den Hartog et al., 2004; Kuvaas, 2006). Employee PM and reward systems can
lead to the development of a skilled workforce required by organisations (Kuvaas,
2006) and evidence suggests that effective PM is linked to financial performance
(Kuvaas, 2006; Latham et al., 2005). Research has also identified some dissatisfac-
tion with PM schemes (Fletcher, 2001; Nankervis and Crompton, 2006; Nankervis
and Stanton, 2012), and gaps between the rhetoric and practice (Nankervis and
Stanton, 2012). However, studies have focussed narrowly on the measurement
aspects of performance appraisal (Budworth and Mann, 2011). Recently, in PM
research, there has been a move to also examine related reward practices (Aguinis
and Pierce, 2008) including performance pay and share options (Ferner and
Almond, 2012).
PM has also been linked to facilitating organisational integration and creating a
unified organisational culture (Haines and St Onge, 2011) and motivating employees
to improve performance. Discussing reward systems motivated by similar goals, such
as commitment, ‘belonging’ and retention (Pendleton et al., 2002), scholars have
noted an aligned growth in the use and importance of employee financial participa-
tion as a form of reward (e.g., share ownership, share options and profit sharing)
(Poutsma et al., 2012). Poutsma et al. (2012: 1513) explain ‘financial participation has
emerged as a normal attribute of the employment relationship in important corners
of the world’. These practices are covering an increasing number of employee cate-
gories and they can be found across many types of organisations (Poutsma et al.,
2003). This paper seeks to contribute to the research agenda on the use of such
practices in Australia, amongst different categories of employees (managers vs. lar-
gest occupational group (LOG)) and in multinational corporations (MNCs).
MNCs are an important component of the Australian economy and research
suggests that they employ at least one quarter of all employees in Australia
(McDonnell et al., 2011). MNCs are also regarded as an important conduit for
the transmission of innovative human resource (HR) practices (Gooderham et al.,
2006; Walsh, 2001). Therefore, through our sample of 211 Australian-based
212 Journal of Industrial Relations 57(2)

MNCs, we can provide insights into an important component of the economy and
an influential category of organisation.
In relation to PM and particularly rewards, we argue that the value of such
practices (and related outcomes discussed above such as ‘belonging’, a ‘unified cul-
ture’ and ‘organisational integration’) is potentially amplified in the multinational
form of organisation and consequently, we would expect MNCs to be intensive users
of a range of sophisticated PM and reward practices. We argue this on the basis that
certain rewards, such as financial participation, could contribute to addressing
intrinsic integrative needs of an MNC (Bartlett and Goshal, 1989), and perhaps
attenuating ‘foreignness’ in their relationship with their Australian subsidiary work-
force (a recognised liability for MNCs – Zaheer, 1995). Therefore, MNCs in par-
ticular should deploy these practices in subsidiaries.
Following from our measure of the incidences of such practices, we seek to
explain the determinants of MNCs’ approaches to PM in Australia, guided by the
following research question: What are the determinants of PM and reward practices
of MNCs operating in Australia and what employees are covered by these practices?
Cognisant that ‘a key challenge for researchers in this field is the lack of repli-
cation studies making valid comparisons [of MNC employment practice] very dif-
ficult’ (McDonnell et al., 2014: 376), our Australian study builds on Ferner and
Almond’s UK study (2012), in that we identify a similar range of PM and reward
practices utilised by MNCs and compare their utilisation on both managers and the
LOG. These practices include regular performance appraisal, forced distribution
(FD), 360 feedback, employee share ownership, profit sharing and share options.
We then carry out logistical regression modelling of a range of variables identified
as significant in the literature with specific focus on strategic HRM and HR global
integration and union recognition to explain the use of such practices. We also
examine the role of country of origin (COO) as a key determinant of MNC prac-
tices and consider the broader organisational context as control variables. Through
our intentional alignment with comparative international projects, this paper con-
tributes to both our understanding of the explanatory power of these predictors of
MNC practice in multiple contexts and specifically, in the ‘hybrid’ employment
relations system in Australia (Townsend et al., 2013).
This paper is organised as follows. First, we outline literature on PM and reward
and MNCs, COO effects, strategic HRM and trade union influence on PM and
reward. Second, the methodology and regression models are outlined, followed by
the presentation of the results. Finally, we present our discussion and conclusions.

PM, reward practices and MNCs

Performance appraisal is a key element in PM. However, there are a range of tools
and mechanisms that can be utilised. We follow Ferner and Almond (2012) and
focus on FD and 360 feedback. FD means that appraisers must place proportions
of appraised staff across all performance categories or grades. It is often seen as a
top–down and controlling device. Multi-rater or 360 feedback appraisals take a
Bartram et al. 213

more developmental approach. Individual employees receive feedback from their

supervisor, peers and subordinates to strengthen their skills, competencies and
performance (McDonnell et al., 2011). In relation to reward, again building on
Ferner and Almond (2012), we examine employee share ownership programs,
profit sharing and share options. US MNCs in particular have traditionally
sought to bind their employees into ‘shareholder capitalism’ through the use of
employee share ownership schemes.
In light of the above, the role of COO in determining PM and reward, MNC
integrative needs and distinctions between managers and employees are worthy of
particular attention.

COO effects
Despite a considerable body of literature on COO effects and host-country effects
relative to them in the study of MNCs (Almond, 2011), contemporary research con-
tinues to unpack the influence of both for HR practices, in terms of the nature of these
effects and their manifestations in multiple contexts (Brewster et al., 2008; Zhu et al.,
2014). COO is a major influencing factor in regard to MNC PM and reward policies.
For example, US MNCs in particular are known for developments in performance-
based pay and individual and employee share ownership (e.g. Gunnigle et al., 1997; Vo
and Stanton, 2011). In light of this, we propose that the use of PM and rewards by
MNCs in Australia will be influenced by COO of the MNC. McGraw and Harley
(2003) utilising data from the Australian Workplace Industrial Relations Survey
(AWIRS) 1990 and 1995 in Australian and foreign-owned workplaces concluded
that in Australia ‘there is a pronounced divergence in the HR practices of overseas
workplaces when compared with locals’, with foreign-owned MNCs utilising a more
sophisticated range of HR practices. However, Gooderham et al. (2006) using data
from the 1999 Cranet survey found ‘considerable use of calculative HR practices’ such
as performance appraisal by Australian firms and ‘even greater use’ by US MNCs. The
authors suggested that the legislative changes in Australia during the 1990s led to more
favourable operating conditions for MNCs. As Townsend et al. (2013) argue,
Australia might now be classified as having a hybrid industrial relations system,
with MNCs having considerable choice around their employment practices, COO
effects may be pronounced as the host environment provides less pressure to adapt
to domestic practices. The absence of such pressure that would lead to a more adaptive
approach in the host context makes it easier to isolate COO effects, and recent evidence
examining other practices in MNCs suggests variation across foreign MNCs in
Australia can be expected (Sablok et al., 2013).

MNC integration and distinctions between managers and

employees
Contemporary research on MNC HR practices has focussed attention on organ-
isational characteristics that have a considerable impact on the employment
214 Journal of Industrial Relations 57(2)

practices in MNC subsidiaries (see Edwards et al., 2013; Ferner et al., 2004). Not
surprisingly, the degree to which subsidiaries are integrated with the rest of the
MNCs network has been found to be an important factor. However, while inte-
grative goals are certainly an explanation for the replication of employment prac-
tice across subsidiaries, integration may also be an intrinsic underlying objective in
employment practices deployed more generally in MNCs. For example, cognisant
that PM practices can play a key role in communicating a shared vision of a firm’s
overall strategies (Kuvaas, 2006; Latham et al., 2005), it might be argued that in an
MNC, the intrinsic value of PM as a type of ‘normative integration’ is increased
(Cicekli, 2011). However, research on subsidiary integration, which highlights a
complex set of challenges and motivations for integration (e.g. Taggart, 1997), has
explicitly flagged the limits of formal structures. This has, in turn, led to a greater
discussion of the ‘normative’ means of integration amongst international HR scho-
lars commonly in research on staffing (e.g., Collings et al., 2009). PM practices can
play a key role in communicating and creating a shared vision of the organisation
(Kuvaas, 2006; Latham et al., 2005) and in a similar vein, rewards such as financial
participation practices are believed to contribute to a ‘sense of belonging’ in add-
ition to the more direct incentive effects (Pendleton et al., 2002). Therefore, in light
of potential value of such practices to MNCs, we would expect them to be intensive
users of practices that can contribute to addressing intrinsic integrative needs. As
decision makers in the subsidiary, managers would rationally be expected to be
most important in this regard. Consequently, while examining the incidence of PM
and reward practices, we propose that it is important to investigate differences
between the managers and other employees in the subsidiary (in this study, the
distinction is made relative to the largest occupation group –LOG). The integration
of managers in particular with MNC goals through PM and their ‘internalisation’
through financial participation may reflect Lepak and Snell’s (1999) predication for
an organisation-focussed employment relationship, characterised by incentives tied
to the organisation.

Strategic HRM, shared services, HIRS and a global approach

to HR policy
In light of the potential value of PM and reward as a means to build a sense of
belonging and to assimilate subsidiaries employees to the MNC, we would expect
that a strategic and global approach to HR policy should drive these practices in
MNCs. In a MNC, strategic HR should not only stress the integration of the
subsidiary practice with corporate strategy, but the deployment of HR practices
(including PM and reward) that can help facilitate this integration (Boxall and
Purcell, 2011). Other practices that may facilitate greater integration include
shared services and the use of human resource information systems (HRIS).
Edwards et al. (2007) suggest that data on the existence of ‘shared services’
across countries can indicate the extent of the international integration of HR
function. Shared services centres can be used to provide both administrative and
Bartram et al. 215

strategic advantages (Beulin, 2009) by efficiently communicating and aligning a

whole variety of HR activities.
In MNCs, the integration of HR across the organisation through the use of
shared services and information technologies may serve functions beyond efficiency,
as they facilitate greater centralisation and leveraging of centralised expertise.
Although MNCs’ strategies differ in the levels of integration they seek, they do
share the common assumption, that the MNC is able to leverage centralised
resources to some degree in international markets (Tallman and Fladmoe-
Lindquist, 2002). In the HR context, shared services centres have been key develop-
ments to enable centralised service provision opening up new possibilities to deliver
services on a global scope (Evans et al., 2011). Shared service centres will be sup-
ported by the use of global HRIS. HRIS will make global HR integration more
feasible. Finally, the HR function itself may be globally integrated through global
policy or HR managers being engaged with policy on a regional or global basis.
In light of the above, we propose that shared service centres and/or a global HR
integration (represented by a global policy making) are likely to be positively
related to the presence of PM and reward practices in MNCs as the capacity
and motivation to share effective practice across the MNC are increased.

Trade union influence, PM and rewards

Predicating the relationship between union influence and PM and reward is not
straightforward, especially in MNC subsidiaries that have greater discretion to
avoid unions due to their ability to relocate or to establish greenfield sites. For
example, in relation to rewards, union presence might explain an avoidance of
financial participation as it may undermine employee support for union member-
ship and potentially remove part of the negotiable remuneration from collective
forms of pay determination (Pendleton et al., 2002). However, as financial partici-
pation stimulates greater involvement by employee representation and a more
equitable distribution of wealth, studies indicate that employee representation
and financial participation schemes are mutually reinforcing (McNabb and
Whitfield, 1998 cited in Pendleton et al., 2002).
The potential influence of union presence on PM practices of MNCs is also
complex. Taylor (2012) notes that the philosophy underpinning this mainstream
perspective of PM is one of a mutuality of interest (Torrington et al., 2011;
Armstrong, 2009), while Torrington et al. (2011: 269) note an ‘emerging of per-
formance management which centres on ‘‘dialogue,’’ ‘‘shared understanding’’ and
‘‘mutual commitment’’’. On the face of it, such aspirations may appear to align well
with trade union goals and therefore union influence on the use of such practices
could be positive. However, Taylor (2012) and others warn that both academics
and practitioners have argued that PM goals are often compromised and used for
conflicting purposes (Beardwell and Claydon, 2010; Callahan, 2007). Complicating
things further, in MNCs of diverse nationality and in a foreign host environment,
conflicting interpretations of the practice might be expected. For example, the
216 Journal of Industrial Relations 57(2)

‘harder edge’ to PM and appraisal that emerged in US MNCs (Bach, 2005 cited in
Taylor, 2012) may be interpreted very differently in subsidiaries with a union pres-
ence. Therefore, on balance it might be expected that the recognition of trade
unions in the subsidiaries of MNCs will have a negative association with the use
of PM and rewards particularly for employees.

Research methodology
The data for this study comes from a large-scale survey of employment practices of
MNCs in Australia. The criteria applied and the methodology that was used fol-
lowed the protocols set out in the Investigation of Transnationals’ Employment
Practices: an International Database (INTREPID) international project assessing
employment practices of MNCs across several countries (McDonnell et al., 2011).
Foreign MNCs were defined as those that employed at least 100 in their Australian
operations and 500 or more worldwide. Australian MNCs employ at least 500 with
at least 100 in external operations. A total population of 1008 MNCs operating in
Australia was developed utilising more than 20 different company-listing sources
(McDonnell et al., 2011). From this population, a stratified random sample of 549
MNCs was selected according to COO and primary sector of operation. We lost 22
firms due to delisting, bankruptcy or merger and had a final sample of 527 MNCs.
From this sample, interviews were held with 211 HRM managers (a response rate
of 40%) between mid-December 2009 and February 2011. A total of 171 firms were
foreign-owned MNCs and the remaining 40 firms were Australian owned. The
questionnaire was administered by face-to-face interviews with the most senior
HR practitioner able to answer questions for the entire Australian operation.
Thus, this is an organisational rather than workplace-level study.

Variables used in the analysis

Dependent variables
In the interests of international comparison, the dependent variables mirror those
used in other international studies (i.e. Ferner and Almond, 2012 in the UK).
Performance and reward management variables included regular formal perform-
ance appraisals, FD, 360 appraisals, employee share ownership, profit sharing and
share options. These variables were coded as dummy variables (e.g., practice used
at the organisation ¼ 1; practice not used at the organisation ¼ 0). Each question
was asked with respect to the LOG and managers.

Predictor variables
Country of origin. We constructed four dummy variables to examine the effects of
European, Australian, Rest of the World, and US COO effects (e.g., 1 ¼ US COO
and 0 ¼ Rest). We used US COO as the referent category.
Bartram et al. 217

Strategic human resource management (SHRM) approach. To ascertain if SHRM was

used in the foreign MNC’s Australian operations and the Australian MNC’s local
operations, participants were asked to respond using a Likert-type scale, ranging
from 1 ¼ ‘strongly disagree’ to 5 ¼ ‘strongly agree’ to the following items: ‘To what
extent do you agree or disagree with the following statements regarding the
Australian Operations’, participants were asked to rate each of the statements.
‘There is a distinct HR strategy in the company’, ‘The HR strategy is effectively
integrated with corporate strategy’, ‘The HR strategy has a sufficient input influ-
ence on corporate strategy’ and ‘Our HR practices are integrated and consistent
with each other’. Principal components analysis with varimax rotation was con-
ducted to assess the factor structure of the measure. All four items loaded satis-
factorily onto one factor. Reliability analysis was also conducted on the four items
(a ¼ .82). The measure was coded as ‘SHRM’.

HRIS. Respondents were asked ‘Does the ultimate controlling company utilise a
HR information system that holds data relating to the firm’s international work-
force?’. A dummy variable was created (Yes ¼ 1, No ¼ 0).

Australian HR representative. We also asked managers the following questions: ‘Is

there a body within the ultimate controlling company, such as a committee of
senior managers that develops HR policies which apply across countries?’ If the
respondent selected yes, they were also asked ‘Is there someone from the Australian
operations on this committee?’ The responses to these two questions were com-
bined and developed into a variable that was dummy coded as ‘Australian HR
Rep’ (Australian HR rep on body ¼ 1, no HR policy formulation body exists but
no Australian rep ¼ 0).

Shared HR services. We asked respondents about whether their HR function in

Australia used ‘shared service’ centres. This variable was coded as a dummy vari-
able ‘Shared HR Services’ (Yes ¼ 1, No ¼ 0).

Trade union recognition. Participants were asked, ‘In Australia, are trade unions
recognised for the purpose of collective employee representation at?’, The following
options were provided to respondents: ‘No sites’; ‘All sites’; ‘Most sites’; ‘Some
sites’; and ‘The company’s single Australian site’. The company’s single Australian
site and all sites were combined to create a dummy variable (all sites ¼ 1; Rest ¼ 0).
The rest of the variables were also coded as dummy variables. The ‘No sites’
dummy variable was used as the referent category.

Global integration. Participants were asked ‘Are any of the components, products or
services of the Australian operations produced for operations in the ultimate con-
trolling company based outside of Australia?’ A dummy variable was created
(Yes ¼ 1; No ¼ 0).
218 Journal of Industrial Relations 57(2)

Controls
Industry. We developed three categories that represented the industry sector: man-
ufacturing and construction, service, and primary industries. Each category was
dummy coded as follows: manufacturing ¼ 1; rest ¼ 0; services ¼ 1; rest ¼ 0; pri-
mary ¼ 1; rest ¼ 0). The service industry was used as a reference category in the
logistic regression analysis.

Date of establishment of MNC’s Australian operations. Participants were asked to answer

the following single-item question: ‘When did the company establish in Australia?’
This variable was coded as a continuous variable date of establishment (e.g., 1957,
1989, etc.).

Establishment size. Participants were asked to respond to the question:

‘Approximately how many employees work within the Australian operations?’
Empsize was coded as a dummy variable (>500 employees ¼ 1; <499
employees ¼ 0).

Shares. Participants were asked: ‘Are the shares of the company privately owned or
publicly traded?’ This is coded as a dummy variable (privately owned ¼ 0; publicly
traded ¼ 1).

Business strategy. We also used a variable regarding how the ultimate controlling
company competes internationally based on Bartlett and Goshals’ (1989) MNCs
strategic typology. We created dummy variables of the four broad strategic types
described in that typology: localisation strategy, a low-cost strategy, combination
of localisation and low-cost strategy and a replication strategy. This control was
added to complement the integration variable. We sought to control for pressure
on MNCs to adapt to local conditions (localisation strategy) versus pressure to
integrate (represented by the other strategies to varying degrees).

Organisational learning. Participants were asked: ‘How important is this mechanism

to the following organisational learning outcomes – dissemination of best practices
internationally’. The single-item measure was represented on a Likert-type scale
(from not important (1) to very important (5)).

Findings
To assess the use of PM and reward practices by the LOG and managers of MNCs
operating in Australia, and the influence of the COO, we present frequencies and
cross-tabulations.
Table 1 reports Cramer’s V (CV) tests for proportion differences between the use
of PM and remuneration practices by the LOG of MNCs operating in Australia.
Bartram et al. 219

Table 1. Cramer’s V tests on PM and remuneration practices versus country of origin of

MNC for LOG.
Practices US Europe Australia ROW

Regular performance appraisal 66 (81.5%) 44 (86.3%) 35 (87.5%) 28 (71.8%)

Forced distribution 28 (42.4%) 8 (18.2%) 5 (14.3%) 5 (17.9%)
360 feedback 22 (33.3%) 15 (34.1%) 4 (11.4%) 7 (25%)
Employee share ownership programs 20 (24.7%) 11 (21.6%) 20 (51.3%) 1 (2.6%)
Profit sharing 17 (21%) 10 (19.6%) 7 (17.5%) 7 (17.9%)
Share options 8 (9.9%) 7 (13.7%) 6 (15%) 2 (5.1%)
Note: PM, performance management; LOG, largest occupational group.
N ¼ 211.

Results indicate that there was a significant difference in FD applied to the results of
performance appraisals for the LOG among MNCs operating in Australia
(CV ¼ .28, p < .01). The US MNCs operating in Australia tend to be the highest
users of FD of the results of performance appraisals for the LOG and employee
share ownership programs. The analysis reveals that 360 feedback also differs
depending on COO (CV ¼ .20, p < .10) with US and European the highest users of
such practices. The analysis also shows that the provision of employee share own-
ership programs (ESOPS) by LOG differs significantly among foreign-owned MNCs
(CV ¼ .35, p < .01) with Australian MNCs the heaviest users of such practices.
Table 2 reports CV tests for proportion differences between the use of PM and
remuneration management practices by managers of MNCs operating in Australia.
Results indicate that there was a significant difference in FD applied to the results
of performance appraisals for managers among MNCs operating in Australia
(CV ¼ .32, p < .01). US MNCs were the greatest users of FD of results of perform-
ance appraisals for managers. The analyses also show that the provision of
employee share ownership programs by managers differs among MNCs
(CV ¼ .37, p < .01). Australian MNCs were the heaviest users of ESOPS followed
by the US and European MNCs. Moreover, there was a significant difference in the
provision of share options for managers (CV ¼ .26, p < .01). European MNCs were
the greatest users of share options for managers, closely followed by Australian
MNCs.
In Table 3, the frequencies for PM and reward of LOG are presented. Regular
performance appraisals are used by most MNCs for the LOG and most MNCs in
our sample did not use other PM and reward practices such as FD, share options
and 360 feedback.
From Table 4, regular performance appraisals are used by most MNCs
operating in Australia for managers. Interestingly, our MNC sample tended to
be more prolific users of PM and reward practices for managers as compared to
their LOG.
220 Journal of Industrial Relations 57(2)

Table 2. Cramer’s V tests on performance management and remuneration practices versus

country of origin of MNC for managers.
Practices US Europe Australia ROW

Regular performance appraisal 80 (98.8%) 50 (98%) 40 (100%) 38 (97.4%)

Forced distribution 41 (51.3%) 11 (22%) 7 (17.5%) 9 (23.7%)
360 feedback 50 (62.5%) 26 (52%) 18 (45%) 22 (57.9%)
Employee share ownership programs 42 (51.9%) 24 (47.1%) 28 (71.8%) 5 (12.8%)
Profit sharing 27 (33.3%) 19 (37.3%) 11 (27.5%) 14 (35.9%)
Share options 32 (39.5%) 25 (49%) 19 (47.5%) 5 (12.8%)
MNC, multinational corporations.
N ¼ 211.

Table 3. Frequencies for the use of PM and

reward by LOG.
Practices %

Regular performance appraisal 82

Forced distribution 21.8
360 feedback 22.7
Employee share ownership programs 24.6
Profit sharing 19.4
Share options 10.9
Note: PM, performance management; LOG, largest occu-
pational group.
N ¼ 211.

Table 4. Frequencies for the use of the mea-

sured PM and reward for managers.
Practices %

Regular performance appraisal 98.6

Forced distribution 32.2
360 feedback 55
Employee share ownership programs 46.9
Profit sharing 33.6
Share options 38.4
Note: PM, performance management.
N ¼ 211.
Bartram et al. 221

The logistic regression model

The logistic regression model is as follows:
PM&R ¼ a + b1Australia + b2Europe + b3Rest of the World + b4SHRM +
b5HRIS + b6HR global + b7Shared HR services + b8Organisation learning +
b9Unions recognised at all sites + b10Unions recognised at most sites +
b11Unions recognised at some sites + b12Industry Sector + b13Employment Size
(log) + b14Date of Establishment + b15Shares + b16Global integration + b17glo-
bal business strategy + 2.
We test this model using five logistic regressions. The first model (Model 1) tests
the predictors of regular performance appraisal. However, this analysis was not
performed for managers as there is an absence of variance in the data. The second
model (Model 2) tests the predictors of FD. The third model (Model 3) tests the
predictors of 360 feedback. The fourth model (Model 4) tests the predictors of
employee share ownership programs. The fifth model (Model 5) tests the predictors
of profit sharing. We did not test for the predictors of share options due to absence
of variance in the data – too few MNCs used share option for the LOG. Table 5
shows the logistic regression results for all five models for the LOG and Table 6
shows the logistic regression results for the five models for managers.
A total of 173 cases (after allowing for missing cases) were included in the
logistic regression analysis. Model 1 for the LOG accounted for 48.6% of the
variance for regular performance appraisal (Nagelkerke R2). Table 5 shows stand-
ard errors and exponential beta values for each of the independent variables. Of the
20 determinants investigated in the logistic regression, ‘unions recognised at all
sites’ (p < .01), ‘unions recognised at most sites’ (p < .05) and ‘unions recognised
at some sites’ (p < .05) were statistically significant. Moreover, ‘primary sector’
(p < .10), ‘manufacturing sector’ (p < .05) and ‘HR global’ were statistically signifi-
cant at p < .10. These results indicated that large MNCs were more likely to have a
system of regular formal performance appraisal for the LOG. MNCs in the pri-
mary and manufacturing sector as compared with those in the service sector, and
MNCs that recognise trade unions at all sites, most sites and some sites for the
purpose of collective employee representation relative to those that did not recog-
nise unions at all were less likely to have a system of regular formal performance
appraisal for the LOG. The MNC ultimate controlling company that possessed a
body that develops HR policies relating to the MNCs’ international workforce was
more likely to use formal performance appraisals.
Model 2 for the LOG and managers accounted for 28.3% and 22.1% of the
variance for FD, respectively (Nagelkerke R2). Four determinants investigated in
the logistic regression were statistically significant for LOG. ‘European MNCs’
were less likely relative to US MNCs to use FD approaches to performance apprai-
sal (p < .05). ‘HR global’, ‘primary sector’ (p < .10) and ‘manufacturing sector’
(p < .05) were statistically significant (p < .10). This indicates that MNCs operating
in the ‘primary’ and ‘manufacturing sectors’ as compared with those in the ‘service
sector’ are less likely to use FD for the LOG. Moreover, the MNC ultimate
Table 5. Results of logistic regression analysis for performance management and rewards for LOG.
Model 1 Model 2 Model 3 Model 4 Model 5 222

Regular performance Forced 360 Employee share

appraisal distribution feedback ownership programs Profit sharing

Variables SE Exp (B) SE Exp (B) SE Exp (B) SE Exp (B) SE Exp (B)

Australian MNCs .964 .481 .802 .330 1.043 .182 .774 5.982** .786 1.911
European MNCs .749 3.308 .598 .229** .591 .836 .591 .765 .579 1.530
ROW MNCs .846 .652 .838 .441 .765 1.564 1.194 .077** .768 4.762**
SHRM .087 1.036 .080 .956 .080 1.149* .081 .991 .078 1.082
HRIS .613 2.259 .577 2.094 .585 3.960** .563 1.814 .573 2.923*
HR global .730 4.063* .874 4.223* .836 2.656 .905 6.273** .768 4.796**
Shared HR services .640 2.084 .488 1.890 .482 1.007 .518 .521 .479 2.739**
Organisational learning .321 1.470 .269 1.035 .260 .755 .296 1.546 .265 .894
Unions recognised at all sites 1.101 .018*** .741 1.962 .759 .237* .723 1.204 .696 .342*
Unions recognised at most sites 1.154 .032** .815 2.431 .848 .589 .912 .225 .913 .194
Unions recognised at some sites .975 .036** .633 1.320 .683 .546 .598 1.889 .570 1.576
Primary sector 1.125 .111* 1.162 .146* .952 1.158 .885 2.006 1.176 .136*
Manufacturing sector .652 .136** .565 .300** .549 .550 .560 1.415 .543 .354*
Employment size (log) .605 2.322 .459 .655 .473 .856 .477 3.245** .446 .943
Date of establishment .008 .989 .006 1.000 .007 .989 .006 1.007 .007 1.006
Shares .645 1.442 .594 .920 .565 1.611 .676 .352 .533 1.942
Global integration .591 .479 .493 .487 .462 .859 .488 .836 .453 .713
Localisation strategy .898 4.883* .675 .390 .716 2.027 .662 1.208 .667 1.028
Low-cost strategy .957 3.420 .761 .384 .816 1.453 .959 .196* .725 1.592
Combination strategy .780 1.835 .589 .715 620 3.159* .605 1.677 .575 1.486
2LLR 101.952 144.000 139.290 136.646 149.225
Nagelkerke R2 .486 .283 .296 .419 .249
Journal of Industrial Relations 57(2)

Note: LOG, largest occupational group; MNC, multinational corporations; HRIS, human resource information systems; HR, human resource.
N ¼ 173. *p < .10. **p < .05. ***p < .01.
Table 6. Results of logistic regression analysis for performance management and rewards for managers.
Model 2 Model 3 Model 4 Model 5 Model 6

Employee share
Forced distribution 360 feedback ownership programs Profit sharing Share options
Bartram et al.

Variables SE Exp (B) SE Exp (B) SE Exp (B) SE Exp (B) SE Exp (B)

Australian MNCs .783 .113*** .625 .584 .694 1.267 .631 .933 .688 1.029
European MNCs .517 .152*** .454 .686 .486 .755 .463 1.265 .518 2.376*
ROW MNCs .668 .200** .606 2.236 .682 .172*** .591 2.773* .739 .255*
SHRM .065 .992 .061 1.100 .066 .956 .060 1.065 .069 .895
HRIS .463 1.521 .412 2.641** .444 .918 .430 2.332** .458 1.411
HR global .630 2.252 .532 3.039** .625 4.256** .535 2.294 .658 2.828
Shared HR services .413 1.222 .389 .732 .422 .523 .389 1.769 .432 .943
Organisational learning .225 .918 .205 .812 .217 1.078 .206 .832 .221 1.239
Unions recognised at all sites .650 2.986* .564 .850 .614 .979 .563 .745 .648 1.162
Unions recognised at most sites .669 4.425** .621 .930 .674 1.120 .630 1.009 .689 3.290*
Unions recognised at some sites .542 2.564* .494 1.201 .522 2.403 .480 1.701 .521 2.032
Primary sector .949 .107** .743 .491 .818 .744 .890 .153** .832 2.896
Manufacturing sector .449 .445* .419 .913 .449 .649 .425 .351** .473 .669
Employment size (log) .420 1.129 .372 1.276 .426 2.666** .367 1.147 .421 1.696
Date of establishment .005 .999 .005 .999 .005 1.004 .005 1.007 .005 1.008
Shares .502 .587 .443 .486 .519 .204*** .442 1.580 .689 .088**
Global integration .413 .604 .380 .816 .404 1.734 .367 .812 .420 1.028
Localisation strategy .588 .490 .535 2.030 .579 .794 .542 1.325 .588 .727
Low-cost strategy .637 .524 .585 .799 .631 .772 .600 1.743 .641 1.127
Combination strategy .507 1.175 .479 1.985 .519 1.742 .482 1.609 .530 2.342
2LLR 181.024 204.075 183.197 205.752 174.285
Nagelkerke R2 .308 .221 .372 .184 .379
223

Note: LOG, largest occupational group; MNC, multinational corporations; HRIS, human resource information systems; HR, human resource.
N ¼ 173. *p < .10. **p < .05. ***p < .01.
224 Journal of Industrial Relations 57(2)

controlling company that possessed a body that develops HR policies relating to

the MNCs international workforce was more likely to use FDs for the LOG.
Model 2 for managers indicated that ‘Australian’ (p < .01), ‘European’ (p < .01)
and ‘rest of world (ROW) MNCs’ (p < .05) were less likely relative to ‘US MNCs’
to use FD. Moreover, ‘Unions recognised at some’ (p < .10), ‘at most’ (p < .05) and
‘at all sites’ (p < .10) were more likely relative to those MNCs that did not recognise
unions to use FD for managers. FD for managers was less likely to be used by
MNCs operating in both the ‘primary’ (p < .05) and ‘manufacturing sectors’
(p < .10) relative to their ‘service sector’ counterparts.
Model 3 for the LOG and managers accounted for 29.6% and 22.1% of the
variance for 360 feedback, respectively (Nagelkerke R2). For the LOG, ‘SHRM’
(p < .10) and ‘HRIS’ (p < .05) were statistically significant. Moreover, ‘union rec-
ognition at all sites’ (p < .10) was also negatively significant. MNCs using a ‘com-
bination strategy’ (p < .10) were more likely to use 360 feedback relative to those
using a replication strategy. These results indicate that MNCs using a SHRM
approach and possessing a HRIS were more likely to use 360 feedback. MNCs
that recognised unions at all sites were less likely to use 360 feedback relative to
those that did not recognise unions. For the managers, ‘HRIS’ (p < .05) and ‘HR
global’ (p < .05) were both positively significant. Once again the MNC ultimate
controlling company that possessed a body that develops HR policies relating to
the MNCs international workforce was more likely to use 360 feedback for
managers.
Model 4 for the LOG and managers accounted for 41.9% and 37.2% of the
variance for employee share ownership programs, respectively (Nagelkerke R2).
For the LOG, ‘Australian MNCs’ (p < .05) were more likely relative to ‘US
MNCs’, whilst ‘ROW MNCs’ (p < .05) were less likely relative to ‘US MNCs’ to
use employee share ownership programs. ‘HR global’ (p < .05) and ‘employment
size’ (p < .05) were significant. Results also show that larger MNCs are more likely
to use ESOPS. Employment size (p < .01), ‘shares’ (p < .01) were statistically sig-
nificant at a 99% confidence level (p < .01). ‘HR global’ (p < .05) was significant for
managers. These results suggest that large MNCs, MNCs with shares that were
publicly traded and MNCs with HR global were more likely to use ESOPS for their
managers.
Model 5 for LOG and managers accounted for 24.9% and 18.4% of the vari-
ance for profit sharing, respectively (Nagelkerke R2). Of the 20 investigated in the
logistic regression, ‘ROW MNCs’ (p < .05), ‘HRIS’ (p < .10), ‘HR global’ (p < .05),
and ‘shared HR services’ (p < .05) were statistically significant. Moreover, MNCs
with ‘union recognition at all sites’ (p < .10) were less likely to use profit sharing for
the LOG. These results show that ROW MNCs were more likely to use profit
sharing as compared with US MNCs operating in Australia. MNCs that use
share service centres and the ultimate controlling company of MNCs that pos-
sessed a body that develops HR policies relating to the MNCs’ international work-
force were more likely to use profit sharing for the LOG. Conversely, for the
manager cohort, ‘ROW MNCs’ (p < .10) were more likely to use profit sharing
Bartram et al. 225

relative to ‘US MNCs’. Moreover, ‘HRIS’ (p < .05) was statistically significant.
MNCs operating in the ‘primary’ and ‘manufacturing sectors’ were less likely rela-
tive to MNCs operating in the ‘service sector’ to use profit sharing.
Model 6 for managers accounted for 37.9% of the variance for share options
(Nagelkerke R2). ‘European MNCs’ (p < .10) were more likely to use ‘share
options’ for managers relative to their US counterparts. ‘ROW MNCs’ (p < .10)
were less likely to use such rewards in comparison to ‘US MNCs’. MNCs that
‘recognised unions at most sites’ (p < .10) were more likely to use share options for
managers. ‘Shares’ was statistically significant (p < .05), that is, MNCs with shares
that were publicly traded were more likely to use share options for managers.

Discussion and conclusions

In this paper, we set out to examine the use of PM and reward practices of MNCs
operating in Australia, examine the determinants of these practices and identify the
class of employees that are covered by these practices. In the following sections, we
discuss the key results in terms of their scholarly and internationally comparative
implications to articulate the contribution of this paper.
First, this paper contributes to addressing the need for more studies that adopt
comparable measures of MNC practices in multiple contexts. For example, our
findings in the Australian context concur with many of Ferner and Almond’s
(2012) conclusions for the UK examining similar practices. Both studies show
MNCs to be users of a suite of PM and reward practices, both reveal important
distinctions in the application of these practices between the LOG and managers,
and both studies fail to find significant results around comparable measures of
international operational integration. That is, in the not dissimilar host environ-
ment of Australia, similar MNC practices that were evident is far from inconse-
quential, as such findings contribute to the practice convergence thesis that there
are ‘best-practices’ common to MNCs (i.e. both across contexts and irrespective of
COO). This thesis suggests the MNC is less bound by host or home norms
(Kostova et al., 2008), but rather by global ‘isomorphic pressures’ (Ferner and
Quintanilla, 1998). Indeed, MNCs’ isomorphism through similar practices is best
studied through replicating findings in multiple contexts. In light of this, compar-
able findings between the UK and Australia are an important contribution to
understanding the explanatory power of predictors of management practice in
multiple contexts.
However, despite commonalities in the presence of a range of PM and reward
practices amongst MNCs, we found distinct evidence of COO effects relating to
these specific practices. For example, despite the fact that US firms were higher
users of FD relative to other COO categories, Australian and European MNCs
were more likely to use ESOPs relative to US firms and are also higher users of
share options for managers. These findings are significant in that they provide
insights into ‘best-practice’ that is not US led and also challenge the idea that
corporations that originate in shareholder contexts are more likely to use share
226 Journal of Industrial Relations 57(2)

owner options. The findings reveal COO variation as predicated at the outset, but
notably, this variation does not reflect a dominance of individualistic practices in
US MNCs. This finding has important theoretical implications for two reasons.
Firstly, extant research suggests that ‘if convergence is assumed, an orientation
toward the U.S. model is the prime focus’ (Festing, 2012: 39), but while this
study provides evidence of the use of such practices, it casts doubt on whether
such ‘individualistic practices’ should still be understood as primarily ‘American-
practice’ (Pudelko and Harzing, 2007). Secondly, the dominate theoretical frame-
works used to explain COO effects, cultural and institutional theory (Zhu et al.,
2014) stress the transfer of home practice as their principle manifestation and ‘that
for an MNC from a dominant country such as the US, COO effects are more likely
to be relatively strong’ (Almond, 2011: 263), especially so in a liberal host context
like Australia. The mixed finding relating to COO presented from this study (using
US MNCs as the reference for analysis) lends support to calls for more nuanced
examinations of specific practices and behaviours rather than abstract conceptual-
isations of the effect. This supports Ferner and Almond’s (2012: 19) conclusion that
‘the notion of national distinctiveness ‘‘in the round’’ is of limited usefulness’.
Second, this paper contributes to the enduring interest in distinguishing the
application of these PM and reward practices between the workforce and managers
(Ferner and Almond, 2012). For example, whilst all MNCs use performance
appraisal for LOG, many do not use both FD and 360 appraisal for LOG and
managers. In relation to reward practices for the LOG, MNCs operating in
Australia are not extensive users of ESOPS, profit sharing and share options.
However, they make greater use of these practices for managers, suggesting a
differentiated HR architecture for employee groups (Lepak and Snell, 1999). The
rationale of MNCs may include using PM and rewards as a mechanism of con-
trolling managerial behaviour and integrating reward more closely with head quar-
ters practices (Roth and O’Donnell, 1996). From an employment relations
perspective, data highlighting distinctions in the management of the LOG and
managers has the broader implication of placing important conditions on more
general interpretations of MNCs’ as ‘adopters of good management practices in
almost every country in which they operate’ (Bloom et al., 2012: 14). Through
analysis of the categories of employees to which ‘good practices’ apply, we begin
to unpack important discrepancies in the application of ‘good practice’ for the
people who work in MNCs.
Third, it is ‘striking’ (Ferner and Almond, 2012: 258) that, as in the UK, meas-
ures of international unit integration were poor predictors of PM and reward in
Australian-based MNCs. Moreover, efforts to control for a link with the broader
strategic typologies of MNCs (Bartlett and Goshal, 1989), which had not been
undertaken in Ferner and Almond, also failed to yield a significant result.
However, in light of our findings that in MNCs whose ultimate controlling com-
pany possessed a body that develops HR policies relating to the international
workforce were more likely to use the PM and reward practices for both the
LOG and managers, we would suggest that functional integration may occur
Bartram et al. 227

despite a lack of evidence of ‘strategic’ integration in the corporate sense. To test

this, the impact on the MNC’s full suite of HR practices would need to be mea-
sured. However, our evidence of a relationship between HR integration mechan-
isms (such as shared services, global HR and HIRS) and PM and reward practices
that can address integrative needs (as argued at the outset) implies some normative
integration through HR policy, despite an absence of evidence that this is linked to
structural needs of the MNC (i.e. unit integration). Although no significant result
was found against the strategic HR variable, our overall findings give credence to
the proposition that PM and reward may be linked to integrative needs of MNCs
through HR practices. Future research that investigates the degree to which these
practices are replicated throughout MNC units and/or research which seeks to
directly measure the degree to which they are positively associated with an
increased ‘sense of belonging’ (Pendleton et al., 2002) could shed light on both
the use of PM and reward, as well as other HR integrating mechanisms for nor-
mative integration.
Fourth, this paper provides important insights into the impact of trade union
presence on PM and reward practices as measured by union recognition for the
purpose of collective bargaining. We find that there is greater likelihood of more
extensive use of these practices (i.e., especially performance appraisal, 360 feed-
back and profit sharing) where there is low union recognition for the purpose of
collective bargaining for the LOG. Our findings support the literature that suggests
that unions often oppose these schemes (Pendleton et al., 2002; Taylor, 2012). In
contrast, we find greater likelihood of the use of PM and reward for managers,
particularly FD and share options, when MNCs recognise unions. It is possible
that heavily unionised organisations might be more hostile environments to exer-
cise managerial prerogative, hence managers might need stronger carrots (share
options) and sticks (FD) to improve their performance. Performance appraisal and
performance-based rewards are contentious areas for trade unions as they threaten
to undermine collective behaviour and promote individual effort and bargaining –
hence challenging the very heart of union solidarity. Our findings suggest that
despite union decline in Australia, unions still have some influence over managerial
policy, in particular in the manufacturing and primary industries. The implication
of these findings is that unions in Australia do not perhaps see PM practices as
‘sharing understanding’ and ‘mutual commitment’ (Torrington, 2011). Or if they
do, they see such developments as a threat to their influence. In turn, this could
mean that employers see unions as blocks that hinder the development of more
performance-based practices and improvements in productivity, hence risking
future investment as employers seek out a more compliant workforce.
These findings also have important implications for comparative analysis of MNC
practice. Ferner and Almond (2012) reported that bargaining coverage has no influ-
ence on profit sharing in the UK, noting that their finding supports Kersley et al.’s
(2006) conclusion that such practices are common in unionised firms. However, as we
found MNCs with union recognition at all sites for the purpose of bargaining were less
likely to use profit sharing for the LOG, caution is warranted in concluding that
228 Journal of Industrial Relations 57(2)

‘commonly found practices’ are immune to union influence. This finding raises the
prospect that the ‘hybrid’ system in Australia and the tradition of unionism
(Townsend et al., 2013) have a greater influence than in the ‘permissive’ UK
context. Future research across comparable host contexts could provide a better
understanding of the fault-line between host countries’ ‘permissiveness’ to
common MNC practice and when and where unions still have scope to influence them.
Finally, we acknowledge the limitations to this study. First, this is a cross-sec-
tional study which represents a snapshot of MNC practices at one point in time.
Second, the study only measured the perceptions of the most senior HR manager
and did not include the views of other important organisational participants.
Third, as we have no reference point in terms of the non-MNC population, we
cannot say to what extent the PM and reward practices of MNCs deviate from that
found in non MNCs. Fourth, while a more detailed questionnaire design may have
provided for better insights into the skill and knowledge of the workforce, as well
as job design, as factors that impact on PM and reward, our survey was designed
for comparability (i.e. with the INTREPID network as discussed in our methods
section). We would encourage future researchers to delve deeper into the variations
in the use of PM and reward inside MNCs in Australia based on further categor-
isation of employees beyond management and the LOG.

Declaration of conflicting interests

The authors declare that there is no conflict of interest.

Funding
We acknowledge the support of the Australian Research Council (DP120103071).

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Biographical notes
Timothy Bartram, School of Management, La Trobe University has an extensive
research record in the area of HRM and employment relations. Having published
in various international and domestic journals he is also currently the co-editor
of the Asia pacific journal of Human Resources and co-author of Human
Resource Management: Strategy, People, Performance textbook, 4th Edition
(t.bartram@latrobe.edu.au).

Brendan Boyle, University of Newcastle, Newcastle Business School. Dr Boyle’s

research interests include international management and international business. He
has published extensively in leading international journals such as Human
Relations and the International Journal of Human Resource Management
(brendan.boyle@newcastle.edu.au).

Pauline Stanton, School of Management, RMIT University has over eighty peer
reviewed publications in a wide range of international and domestic journals.
Professor Stanton’s research focuses on high performance work systems, perfor-
mance management and employee voice (pauline.stanton@rmit.edu.au).

Gitika Sablok, School of Management, RMIT University. Her research interests

include HRM, international management and employee voice. She holds a DipBus
and BBus Honours from La Trobe University (gitika.sablok@rmit.edu.au).

John Burgess, School of Management, Curtin University of Technology has an

extensive research record on employment developments, HRM, the labour
market, gender and work and labor regulation. John has published extensively
in outlets including the international journal of human resource management,
Personnel review and has co-edited 15 special journal issues
(john.burgess@curtin.edu.au).