CHAPTER#06
distance: A fourth factor that
MULTINATIONAL
PERFORMANCE
MANAGEMENT
When evaluating subsidiary
performance against
expectations, however, it is
important to recognize various
constraints that may affect goal
attainment. These include the
following five constraints
outlined below:
Whole versus part: First, it is
important to appreciate that by
its very nature, the MNE is a
single entity that faces a global
environment, which means that
it simultaneously confronts
differing national environments.
Integration and control
imperatives often place the
multinational in the position
where it decides that the good of
the whole is more important
than one subsidiary’s short-term
profitability.
Non-comparable data: A
second key constraint it that
frequently the data obtained
from subsidiaries may be neither
easily interpretable nor reliable.
These factors can make an
objective appraisal of subsidiary
performance problematic, which
in turn complicates the task of
appraising the performance of
individual subsidiary managers.
Volatility in the global
business environment: A third
factor that can impact on the
performance of a subsidiary is
the occurrence of volatility and
turbulence in the global business
environment. This volatility may
require that long-term goals be
flexible in order to respond to
potential market contingencies.
Separation by time and
supervisory positions.
can impact on the performance
of a subsidiary is the effect of
separation by time and distance.
Judgments concerning the
congruence between the MNE
and local subsidiary activities
are further complicated by the
physical distances involved,
time-zone differences, the
frequency of contact between
the corporate head-office staff
and subsidiary management and
the cost of the reporting system.
Variable levels of maturity
across markets: the need for
relevant comparative data: A
final factor influencing the
performance of a subsidiary is
the variable level of maturity
across markets. without the
supporting infrastructure of the
parent, market development in
foreign subsidiaries is generally
slower and more difficult to
achieve than at home.
Expatriates Task: expatriates
are assigned to foreign
operations to fulfil specific
tasks:
The chief executive officer, or
subsidiary manager, who
oversees and directs the entire
foreign operation.
The structure reproducer
carries the assignment of
building or reproducing in a
foreign subsidiary a structure
similar to that which he or she
knows from another part of the
company.
The troubleshooter is the
individual who is sent to a
foreign subsidiary to analyze
and solve a particular
operational problem.
The operative is the individual
whose assignment is to perform
functional job tasks in an
existing operational structure, in
generally lower level,
Types of Expatriates
Assignments
‘technical assignments’ –
short-term knowledge
transference activities, said to
make up 5 to 10 per cent of
expatriate assignments.
developmental assignments’ –
focusing on in-country
performance and the acquisition
of local or regional
understanding by the assignee,
said to make up 5 to 10 per cent
of assignments.
strategic assignments’ – high-
profile activities that focus on
developing a balanced global
perspective, said to make up 10
to 15 per cent of assignments.
functional assignments’ –
described as more enduring
assignments with local
employees that involve the two-
way transfer of existing
processes and practices, said to
make up between 55 and 80 per
cent of assignments.
Non-expatriate performance
management challenges
performance criteria and goals
for non-standard work. Criteria
for performance is subject to
cultural differences. Isolating
international dimensions of job
performance is not as straight
forward as for traditional
expatriate jobs. Outstanding and
failures will challenge
performance appraisal process.
Performance appraisals are
complicated by international
context, outside appraisers.
Ways to improve and rewards
are unclear. Impact of non-
standard work on HCN co-
workers
PERFORMANCE
APPRAISAL OF
INTERNATIONAL
EMPLOYEES
Performance criteria: Goals
tend to be translated into
performance appraisal criteria so
specificity and measurability
issues are important aspects, and
we need to recognize that hard,
soft and contextual goals are
often used as the basis for
performance criteria. Hard
goals are objective, quantifiable
and can be directly measured.
Soft goals tend to be
relationship or trait-based, such
as leadership style or
interpersonal skills. Contextual
goals attempt to take into
consideration factors that result
from the situation in which
performance occurs.
Who conducts the
performance appraisal? :
Another issue is who conducts
the performance appraisal.
Typically, employees are
appraised by their immediate
superiors, and this can pose
problems for subsidiary chief
executive officers.
Consequently, subsidiary
managers tend to be assessed
according to subsidiary
performance, with a reliance on
hard criteria similar to that
applied to heads of domestic
units or divisions.
Standardized or customized
performance: Domestic firms
commonly design performance
appraisal forms for each job
category, particularly those
using a traditional performance
appraisal approach rather than
performance management. Such
standardization assists in the
collection of accurate
performance data on which HR
decisions can be made, and
allows for cross-employee
comparisons.
Frequency of appraisal: In
practice, formal appraisal is
commonly on a yearly basis, and
this appears to extend to
international performance
systems, even though the
domestic-oriented literature on
this topic recommends an
ongoing combination of formal
and informal performance
appraisal and feedback.
Performance feedback: An
important aspect of an effective
performance management
system is the provision of timely
feedback of the appraisal
process. One of the problems
with annual appraisal is that
employees do not receive the
consistent frequent feedback
considered critical in order to
maintain or improve their
performance.
Appraisal of HCN employees:
The discussion so far has
omitted the issue of appraising
the performance of HCN
employees. It is important to
mention here is that the practice
of performance appraisal itself
confronts the issue of cultural
applicability. Performance
appraisal in different nations can
be interpreted as a signal of
distrust or even an insult.