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Title: Comprehensive Analysis Of The Impact Of Austrian

And Australian Culture On Performance Appraisal Systems
Student Number:
Word Count: 2129
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Table of Contents

Table of Figures......................................................................................................................................3

Introduction..............................................................................................................................................4

Understanding The Austrian Culture and Its Impact On Performance Appraisal...................5

Understanding The Australian Culture and Its Impact On Performance Appraisal...............7

Comparative Analysis of Austrian and Australian Performance Appraisal Systems............9

Integrating Murphy And Denisi’s (2008) Model Of Performance Appraisal Into Real-World

Application In Performance Management......................................................................................10

Recommendations for Performance Appraisal Systems in Austria........................................11

Recommendations for Performance Appraisal Systems in Australia.....................................11

Conclusion.............................................................................................................................................11

References.............................................................................................................................................12
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Table of Figures

Fig 1 Hofstede’s Dimension of Culture Applied to Austria.....................................................5

Fig 2 Hofstede’s Dimension of Culture Applied to Australia..................................................8

Fig 3 Comparative Analysis of Australian and Austrian dimensions of Culture.................10

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Introduction
This is a detailed report that analyses the impact of the cultural dimensions and cultural
differences of two international markets targeted for market entry– Austria and Australia,
on international appraisal systems to be employed for effective performance
management.

The overall endgame of performance management is to create and facilitate a high

performance and efficiency-centric culture among employees and to drive teams within
an organisation to take a proactive approach toward the unceasing development of
business practices and processes, individual skills and contributions to the
organisation’s vision within a practical leadership-provided framework (Tardi 2021). Put
simply, Performance Management is the alignment of personal goals and aspirations
with organisational objectives to uphold the organisation’s core values and ensure an
efficient business process (Armstrong, 2006).

Performance Appraisal, an integral aspect of performance management, is a tool used

by management to periodically evaluate and assess employee performance and overall
contribution to the company (Kodi and Kumar 2021). Alternatively referred to as an
annual review, a performance review, or an employee appraisal, performance appraisal
is used to track and evaluate employee growth, achievements, skills and lapses.
Performance appraisals are used to provide employees with comprehensive feedback
on their work and performance as well as used to justify a promotion, bonus allocations,
demotions and termination decisions (Hayes 2021). However, performance appraisal
across borders, while dependent on management-employee interactions(Yahiaoui et
al., 2021), can encounter bottlenecks due to prevailing cultural differences, which can
make appraisals inconsequential, inaccurate or redundant .

Culture, which Merriam-Webster defines as the social forms, customary beliefs, and
material traits exhibited by a religious, social or racial group, is a non-negligible variable
of every market or industry as it can influence buying behaviours, and marketing
strategies and employee work ethic. Therefore it is paramount that the culture of every
target market is sufficiently understood to efficiently manage employees’ performance
and overall productivity within the organisation.
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Geert Hofstede, a former Human Resources Manager for IBM, while he had access to
data from over 50 different countries, conducted research on culture and proposed six
dimensions that can be used to properly understand the cultures of each every country
(Agozdo 2014). These dimensions can be used to understand the cultures of Austria
and Australia before market entry, how the inherent cultural differences can impact
performance appraisal and help us extrapolate strategies to mitigate these effects and
ensure an efficient and productive organisational process.

Understanding The Austrian Culture and Its Impact On Performance

Appraisal.
Austria, a landlocked country sharing its borders with eight other countries in South-
central Europe, is popularly known for its laidback nature, strong coffee, and pursuit of
Gemütlichkeit (Warmth or Happiness). Using Hofstede’s dimensions of culture
(Hofstede 1983), we can get an in-depth understanding of Austria and its people.

Fig 1 Hofstede’s Dimension of Culture Applied to Austria

Source: https://www.hofstede-insights.com/country-comparison/austria/

Power Distance: Defined as the degree to which the lower tier members of a
community, organisation, or society are accepting of an uneven distribution of power,
Austria scores very low on this parameter. This means that Austrians place a high value
on Independence, hierarchy within organisations is primarily for convenience, and
employees have equal rights across board. The leaders or superiors within
organisations in an Austrian organisation are more accessible than in countries with
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high power distance levels, the primary leadership style is coaching, and management
are set up to facilitate and empower employees. The power within the organisation or
society is decentralised, and communication is more direct (Hofstede’s Insights 2022).
Performance appraisal can be positively impacted by low power distance levels as there
is a low percentage of supervisory roles, and high performance and productivity are
driven by employee participation in management decisions (Sale 2004).

Uncertainty Avoidance: This dimension covers the extent to which members of a

group or society dread the unknown. Austria has predominantly high levels of
uncertainty avoidance, which can be interpreted that they would baulk at innovative
concepts and sacrifice novelty to maintain the status quo. Employee churn within these
cultures is relatively low as job tenure is usually high, and managers’ power is
dependent on their ability to manage and control uncertainty (Sale 2004). Performance
appraisal might face some bottlenecks as a result of this culture, as employees and
managers might be resistant to innovative approaches and concepts proposed by
employee appraisal.

Individualism vs Collectivism: These are opposing concepts of culture that deal

closely with the value that society places on relationships and collaborations. In
Individualist cultures, like Austria was discovered to have, the ties between individuals
in the community are relatively loose, with a “me-consciousness” mindset being
prevalent within the society (Sale 2004). Employee-employer relationships are purely
transactional, tasks and business trump relationships, and reward allocation is based
solely on merit. This impacts performance appraisal as a direct individual appraisal
would yield higher productivity.

Masculinity vs Femininity: This dimension discusses the degree to which emotional

roles are distributed within a community (Hofstede 2019). In a Masculine-centric culture,
the value is placed more on the quantity of things, while Feminine-centric cultures focus
more on the quality of life. Austrian culture, which is predominantly masculine, is
primarily characterised by assertiveness, ambition, and material success. Men
predominantly fill top management positions (Fening and Beyer 2014). Being a
Masculine society, Austria is a success-driven, highly competitive, and equity-pursuing
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nation (Hofstede’s Insights 2022). This trait can impact specific appraisal approaches
such as 360-degree feedback, as fierce competition might lead to biased feedback
during appraisal.

Long Term Orientation: This dimension is used to describe the attitude of a group of
people or society towards the future and present with respect to their past. Cultures that
score high on this scale, like Austria, are said to be long term oriented and take a more
pragmatic approach towards life and work. They have high levels of adaptation to
change and extraordinary inclinations towards saving and investments.

Indulgence: The degree to which people try to curb or indulge their impulses and
desires is termed Indulgence. Austria is such an indulgent country that it has become a
part of its identity. Gemütlichkeit (warmth or happiness) is one of Austria’s core values
and a key indicator of their level of indulgence (Hofstede 2022). Indulgence can impact
performance appraisal as employees in an indulgent society value pleasure and
impulses more than work.

Understanding The Australian Culture and Its Impact On Performance

Appraisal.
Australia, home to over 24 million people and located on the smallest continent on the
globe, is the 6th largest country in the world. Commonly called the ‘Lucky Country’
among its nationals due to the level of luxury and high quality of life they enjoy,
Australians have an optimistic outlook on life and place values on authenticity, humour
and leisure (Culture Atlas 2022). Their culture can be further understood using Geert
Hofstede’s six dimensions of culture, and the impacts that its culture has on
performance appraisal can then be extrapolated.
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Fig 2 Hofstede’s Dimension of Culture Applied to Australia

Source: https://www.hofstede-insights.com/country-comparison/australia/

Power Distance: Australia has a low score on the power distance scale. This means
that uneven distribution of power within society is rarely accepted. (Hofstede’s insight
2022). Organisations within this culture have a hierarchy of convenience, direct,
informal communication and a free flow of information. This impacts performance
appraisal as high performance and job satisfaction are hinged on employee participation
in management decisions (Sale 2004). Promotions do not carry as much weight, as
authority within the organisation is mainly decentralised.

Uncertainty Avoidance: Albeit not as much as Austria, Australia is also an Uncertainty

avoiding country. With an intermediate score just above the middle mark, Australians
are averse to the unknown but can also adapt should the need arise (Hofstede’s
Insights 2022).

Individualism vs Collectivism: Australia has an extremely individualist culture.

Independence is immensely valued, and this has translated into a society that is loosely
knit, and the only expectation placed on individuals is to look out for themselves and
their immediate family (Sale 2004). This also spills over into the business world, as
employees are expected to be self-sufficient and proactive. As regards performance
appraisal, Individualism calls for a modification of training approaches as individual
training would be more effective than a collective one.
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Masculinity vs Femininity: Australia, with a score of 61 on the masculinity dimension,

is a moderately masculine society with values based on striving to be the best of oneself
and a ‘winner takes all’ framework (Hofstede’s Insight 2022). Australians take pride in
their work and achievements, and this affects performance appraisal by being the
baseline for hiring, firing, bonus allocation and promotion decisions within the
organisation.

Long Term Orientation: With a low score of 21 on this scale, Australia has a more
normative culture, choosing to focus on the present, placing value on family and
traditions. As a short term oriented culture, Aussies have a relatively minute tendency to
save toward the future and a fixation on achieving instantaneous results (Hofstede’s
Insights 2022). An impact this has on performance appraisal is a prolific lack of vision
and proactivity that can be exhibited by employees. It could also affect the willingness of
employees to learn new skills for future needs.

Indulgence: Australians are a very indulgent people. Australia scores high (71) on the
Indulgence dimension scale. They are very willing to actively pursue impulses and base
desires on the scope of enjoying the good things of life and “living a little”. Due to this,
Australians place a more significant degree of importance on leisure activities, and this
might impact performance appraisals as employees might be hesitant to implement
appraisal reforms that might include extended work hours and sometimes foster laxity in
carrying out responsibilities.

Comparative Analysis of Austrian and Australian Performance

Appraisal Systems

AUSTRALIA AUSTRIA
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Fig 3 Comparative Analysis of Australian and Austrian dimensions of Culture.

Source: https://www.hofstede-insights.com/country-comparison/australia,austria/

Austria and Australia are pretty similar in culture, thus would have performance
appraisal systems very similar to one another with a couple of concessions for varying
degrees of deviation. For instance, where Austrians are generally long term oriented,
Australians live in the now. This means that performance appraisals in Australia have to
be conducted in a way that effectively captures the short term orientation that is typical
of the Australian culture.

Integrating Murphy And Denisi’s (2008) Model Of Performance

Appraisal Into Real-World Application In Performance Management
Murphy and Denisi (2008) proposed a new model of performance appraisal that
integrated the several factors that influence appraisal decisions and performance
management into a working template that can be applied to the analysis of performance
management systems across cultures, organisations and differing cultures (Varma et
al). To effectively apply this model of performance appraisal to the analysis of proposed
management systems for market entry into Austria and Australia, we would first have to
explore the distal factors like the indulgent nature of the Australian people, low power
distance among Austrians and the masculinity of Australians and how they influence the
performance appraisal. We would then put this into the context of the company’s
strategies and inherent performance quotas, the legal systems of Austria and Australia
and the level of technological advancement available to create new systems that
mitigate these impacts. However, the purpose of appraisal has to be clearly defined—
this would influence the frequency and timing of reviews, the personnel conducting the
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assessment and the relationship between the rater and the rate. The organisational
norms are also considered and aligned with intervening, judgement and distortion
factors. Each factor is carefully analysed to create an effective performance approach
that comprehensively captures employees’ skills, achievements, lapses and growth to
inform managerial decisions.

Recommendations for Performance Appraisal Systems in Austria.

Austrians possess an individualist, masculine-centric and low power distance culture.
For any performance appraisal to be effective, it has to be a perfect balance of
Employee-self assessments, general performance, and manager appraisals (Thakur
2019). These complement the low power distance prevalent in the culture and its
individualist nature. The evaluation would best be delivered using a free form technique
or graphic scale technique to complement the Masculinity quota of the society.

Recommendations for Performance Appraisal Systems in Australia.

Australians have a higher level of power distance than Austria. However, it is still low
enough not to significantly impact employee performance appraisal. However, because
Australians are short term-oriented, effective performance appraisal approaches or
systems would have to integrate a project evaluation appraisal that reviews individual
employee performance after every project as opposed to yearly (Thakur 2019). The
high levels of individualism would also be advantageous to a 360-degree approach to
performance appraisal. A Ranking appraisal technique would also be complementary to
mitigating the extremely masculine-centric nature of the Australian Culture.

Conclusion
Culture plays an integral part in every nation’s way of life and organisational processes
and a proper understanding of culture and its varying dimensions can help
organisations project and foresee future bottlenecks to effective performance
management and appraisal and efficiently navigate these bends to ensure smooth
business processes and maximise profitability.
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References
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