Posted at 12.17.2018
In global terms, performance management serves as a a process which allows a global company or multinational venture (MNE) to evaluate and constantly improve individual and corporate and business performance in relation to pre-set goals and targets. Furthermore, performance appraisals are considered to be always a key human resource management (HRM) activity of performance management and can affect the execution of business strategy in a company. According to Milliman et al. (2002, p. 106) the goal of performance appraisals is to 'identify specific advantages and weaknesses, evaluate training needs, plan future development, and provide motivation through providing as a basis for prize and career responses'. It has been further simplified by Harzing and Ruysseveldt (2004) who claim that performance appraisals involve the two processes of observation and judgement through the analysis and development of performance. Furthermore, international performance appraisal (IPA) can be seen as a tactical process that helps the MNE to continuously improve global operations through their workers by corresponding up to certain pre-set targets. However, we will see that while performance appraisals are essential in conditions of performance management, they can also often be looked at as problematic.
A 'global director' can generally be looked at as anyone who has the capability and connection with doing work for a MNE in additional countries throughout the world. Therefore, in this framework it could be said that expatriates are a good example of global professionals. An expatriate is undoubtedly an employee who is moved out of their home country as a manager and into another section of the company's international procedures in order to execute an international task (Dowling et al. 2008, p. 4). In this article, I am discussing the main element issues faced with a MNE regarding international performance management and appraisal. In addition, I am going to also be considering the different ways of IPA, while supplying particular target to the appraisal of expatriates.
A MNE is not homogeneous across all of its subsidiaries and therefore, a number of environmental contingencies must be considered with regards to the many subsidiaries. These contingencies are the mental distance between the parent and host country, entry methods and the role of the subsidiaries (Colakoglu et al. , 2009). There are several staffing models that are considered while filling up positions in the subsidiaries. Inside the geocentric staffing model, companies use the most capable person regardless of the country the worker actually belongs to. On the other hand, regiocentric is a geographic strategy and a subset of the geocentric procedure whereby employees continue to be within a particular geographic region, allowing professionals to enjoy regional autonomy (Schuler et al. , 2002). In the ethnocentric staffing model, parent-country nationals (PCNs) are used to fill up the higher level positions, whereas in the polycentric staffing model, host-country nationals (HCNs) are used with the belief that the business will benefit from their local knowledge (Varma et al. , 2005). Furthermore, the ethnocentric and geocentric staffing models also require integration and transfer of knowledge inside the web host country unit in order to allow better performance from the subsidiary. In addition, this means that the particular staffing strategy used will impact on the subsidiaries performance (Colakoglu et al. , 2009).
The diverse business strategies of an company along with the vibrant global environment create the need for proper HRM. It is becoming necessary to strategically take care of the human resources of an company with desire to that they can fit into the global environment and succeed. The operation of MNEs involves two proportions, these being multiculturalism and geographic dispersion. Both of these aspects are balanced by adopting a variety of a centralised and decentralised procedure given that they both have their own benefits. Strategically, it is essential that the HRM matches with the business strategy of the organisation. Furthermore, you can find complete control from the head office and this centralised approach helps it be imperative to develop standard performance evaluation standards all throughout the subsidiaries of the MNE (Caliguiri, 2006). In this plan local responsiveness is vital, whereas global integration is not required. The decentralised approach makes them develop performance analysis criteria with respect to the number country, with the performance analysis being aligned with the subsidiary's strategy. Additionally, these organisations experience tremendous pressure for local responsiveness along with global integration and therefore, performance evaluation will also consider the global as well as the local perspectives (Caliguiri, 2006). This means that the success of MNEs can very much depend on the performance of expatriates.
Performance appraisal of expatriate is an essential task, with the opportunity of conflict between your subsidiary supervisor and the head office. Nonetheless it is up to the subsidiary managers to set specific targets and set up clear standards for performance dimension in order to avoid such issue. Furthermore, the mental distance between the parent and number country can make handling the subsidiary a difficult task because of the cultural differences, vocabulary barriers, as well as the social and political conditions. It is for this reason that companies have a tendency to retain more PCNs within subsidiaries, as they are more in a position to create an informal communication network in the company and build public capital in the corporation, even while creating a dual determination to both the subsidiary and the organisation all together (Colakoglu et al. , 2009). Because of this, the PCN will further allow the subsidiary to acquire greater knowledge of what is occurring in the MNE. Therefore, subsidiaries will no longer can be found in isolation with strong control from headquarters, given that they will experience higher integration and autonomy. However, there reaches times a discord of interest between your head office and the subsidiaries which will make managing international procedures a huge task (Boussebaa, 2009).
Performance management of expatriates is without a doubt more challenging than in the case of domestic professionals. The performance of your expatriate will depend on a variety of issues such as the compensation, cultural modifications, responsibilities and job jobs, as well as support from head office and the variety environment. The expatriate will face lots of problems when they take up employment within a international country. For example, the jobs and job jobs are often defined in the framework of the expatriate's home country and therefore they may well not be able to understand their unique job role in the foreign environment (Newlands and Hooper, 2009). Furthermore, the expatriate may face difficulty in changing to the international culture, and it will be up to the MNE to ensure that they acclimatise, as this is essential to the expatriate having the ability to perform at their finest in terms of the job in hand. The host environment will also create challenges due to a mixture of other factors such as, sociable, economic, legal, scientific and physical difficulties. Therefore, taking everything into consideration it is completely vital as well as a crucial performance varying that a sufficient degree of support is provided to the individual and their family by both the head office and hosts (Dowling et al. , 2008).
The performance appraisal of expatriates can entail a number of complicated issues. Therefore, the data readily available for carrying out the appraisal may be unreliable, the international environment can be sophisticated and energetic, it is difficult to carry out an appraisal in a volatile environment, and the geographical distance along with different time areas often make the appraisal difficult to execute. Furthermore, as stated earlier, the local culture can also have a significant effect on appraisals.
A MNE may perform an appraisal using the home-based approach or the host-based approach. Used, these appraisals would be completed one per year in order to ensure better performance management of the expatriate (Dowling et al. , 2008). On the other hand, expatriate appraisals may be completed using the home-based procedure, while the number system is utilized for appraising third-country nationals (TCN) and HCN. An integrative strategy can be used by incorporating both the home and host performance appraisal plans in order to generate an effective balance. Furthermore, in terms of who'll perform the appraisal, HCNs may be made to perform appraisals as they can assist in devising a suitable appraisal system while aiding the acculturation process. An ex-expatriate may also be an option, while self-evaluation may also be used, allowing the expatriate to judge themselves (Armstrong, 1998). Moreover, the 360-degree feedback could also be employed. This can assist in the issue of biasness as it includes multiple sources for opinions, including peer's who work within close closeness of the expatriate.
Nevertheless, an IPA will generally be completed by different nationals, including HCNs and PCNs. However, there may be conflicting thoughts and perspectives, and several biases may take place whenever a PCN conducts the appraisal. The geographical distance can also make it problematic for the PCN to carry out the appraisal in a highly effective manner and for that reason, not allowing an appropriate evaluation criteria to be established. Furthermore, it is difficult for the PCN to understand the global business circumstance and examine performance in framework to the international scenario as they may fail to understand the business challenges which exist in the global environment (Shen, 2005). The PCN is obligated to count only on succeeding data while making the analysis, and therefore they are only able to judge the performance based on quantitative data rather than qualitative data. Alternatively, despite overcoming the dilemma of cultural version, a HCN may also have certain biases while performing a performance appraisal, as they might not feel trusting towards the expatriate, while doubting their motives.
Performance appraisal in MNEs can also often require assessment by the immediate supervisor, where a narrative report is prepared by the manager each year regarding the expatriates work quality and output. Measurement techniques like simple search positions, behavioural checklist, and comparison with objectives are being used. This is apt to be based on the appraisal tactics within the coordinator country, which can entail certain cultural issues. We know that language obstacles can pose an issue, however, a MNE may also face difficulties in expanding countries where performance appraisal constraints is present in the form of 'face cutting down', as well as in the authoritarian societies where worker participation in appraisals is very limited (Brewster and Harris, 1999).
However, the primary challenge is maintaining global steadiness and local fit. A MNE realises that performance appraisals require local version, and consequently professionals from different civilizations will understand different appraisal methods as appropriate. The performance evaluation criteria should therefore be easy to comprehend and should inspire managers regardless of their culture and nationality (Paauwe and Dewe, 1995 cited in Shen, 2005). Furthermore in conditions of establishing performance goals, MNEs may either set hard goals or gentle goals. Hard goals are quantifiable goals and can be assessed through come back on investments, profits and market show, whereas, soft goals are qualitative and predicated on relationships or features, including customer relationships, effort, cooperation, effort communication skills and authority skills. MNEs will hold the three options of host requirements, home benchmarks or integrative specifications when deciding the standards for expatriates. The performance expectation should therefore be effectively communicated to expatriates, while appraisal varieties should also be customised in line with the knowledge of the HCN and PCN, and it should be guaranteed that the appraisal is conducted in a non-biased manner (Shen, 2005). Additionally, MNEs will most likely exempt the expatriate from management obligations and appraisal to be able to enable those to adjust in to the new environment. Subsequently, it might also be argued that performance appraisal can be increased in the subsidiaries of the MNEs by arranging clear evaluation standards.
An effective IPA would ensure a subsidiary is proficiently applying the organization strategy, and provided that the look of the IPA is suitable, this will cause a positive influence on the company's performance (Janssens, 1994). The performance appraisal of your expatriate can of course be a very difficult process. However, this will generally be completed with a joint effort from both HCNs and PCNs, which therefore takes out the likelihood of biasness and allows the expatriate to be assessed in an honest way. Furthermore, corresponding to Milliman et al. (2002), performance appraisal remains an enigma in the management process. On one hand, it is known as to be a critical management tool which improves communication, development and execution of the business's strategy, while on the other side, critics contend that it generates more problems than it resolves and can lead to employees being de-motivated. Nevertheless, performance assessments clearly have the potential to favorably influence global professionals, but an important concern to consider with performance appraisals is whether they are carried out in a highly effective manner and in alignment with their supposed purposes.