MGTM15: Week 8

International Performance Management

 Issue for consideration…

• Managing performance-it’s the same

the world over, isn’t it!
 Objectives
• To appreciate changing perspectives on the importance
and role of performance management (PM) in
contemporary IEs

• To understand the nature and purpose of performance

management and performance appraisal in IEs, including
the impact of cultural values on PM design,
implementation and evaluation, and the characteristics of
a successful PM system

• To outline the stages involved in designing a performance

management system in IEs
 What is International PM?
Briscoe et al (2012: 344)

‘A designed, 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 organisational level) contributes to the
attainment of strategic global objectives and results in
overall MNE desired performance’.
 What is International PM?
• PM traditionally been seen in terms of performance
appraisal

• PM evolved away from this ‘appraisal’ model

• A comprehensive system of PM may incorporate other

initiatives: coaching, counselling, and performance-related
pay

• IE will need to evaluate how employees are doing on

assignment, and how to maintain and improve
performance
 Phases of PM
• Performance Agreement: defining objectives, identifying
development needs

• Performance Monitoring: reviewing performance

• Performance Reinforcement: recognising and rewarding

performance

• Performance Enhancement: coaching, counselling,

training and development
A Performance Management
Model
 PM in IHRM
• Integrated set of techniques which have an independent
existence under their own names, eg performance
appraisal/PA (Lewis 1998)

• Bundle is at core- eg link to strategy, goals, feedback,

development, reward

• Theories: expectancy theory, goal-setting theory;

psychological contract theory

• In IEs, PM more complex as multiple boundaries-national,

cultural, functional, organisational
 Importance of PM
• Fombrun et al (1984): goal of HRM to drive ‘performance’, as
defined by corporate strategy

• Appraisal plays a crucial role in rewarding and incentivising

higher performance/informing the IE of employee training and
development needs

• Sophisticated PM systems can generate useful information

on performance for informed placement, promotion, career
development, training and development, reward and other
decisions
 Importance of PM – 2

• PA also informs wider IE corporate strategy process, helping

organisations address:

• What should be our strategic focus/core competences?

• Should we diversify?

• Should we make acquisitions/mergers?

 Importance of PM – 3

• Appraisal information helps specify/define what needs to be

done to what level to implement a strategy successfully
• Helps identify necessary changes in skill- mix to implement
long- term strategic plans
• Helps address:
• What do managers/staff need to do differently to make
necessary strategic changes?
• How can we align HR capabilities with strategic business
goals?
• What training and development is necessary to help an
IE realise strategic goals?
 Importance of PM – 4
Helps organisations facilitate cultural change if staff
appraised against set of organisational core
competencies, framed in behavioural terms
Helps define what meant by ‘strategy implementation’ at
level of individual objectives and behaviour, making
explicit what constitutes effective behaviour, and helping
communicate shared vision of organisational purpose,
values and expectations
Helps sustain and enhance effective performance by
clarifying what constitutes high performance/how
employees need to achieve it, enhancing motivation
Helps make accurate HRM decisions
 Common Purposes of PM
Managerial Control: eg set/review objectives

Performance Improvement: what and how

Identify Training and Development Needs

Identify potential for promotion, secondment, talent

management…exit?

Basis for reward

Improves communication-dialogue with managers, stakeholders

Does PM Rhetoric Match the Promise?
‘Arguably the most contentious and least popular among
those who are involved. Managers do not appear to like
doing it, employees see no point in it, and personnel and
human resource managers as guardians of the
organisation’s appraisal policy and procedures have to
stand by and watch their work fall into disrepute’ (Bratton
and Gold, 1999:214)
Grint (1993: 64): 'Rarely in the history of business can such
a system have promised so much and delivered so little'
PA remains contentious and unpopular; muddle and
confusion still surrounds theory and practice
 Does PM Rhetoric Match the
Promise? – 2
Does PM offer ‘the potential to reverse past trends, so
that it is viewed less of a threat and a waste of time and
more as the source of continuous dialogue between
organisational members’ (Bratton and Gold 2017, 244)

PA seems inherently linked to management control

Barlow (1989, p500) ‘Institutionally elaborated systems of

management appraisal and development are significant
rhetoric's in the apparatus of bureaucratic control‘
 Performance management
process in context

Brewster et al, 2022:250

 Issues in International PM
• Cultural differences – some collectivistic cultures may
prefer team rather than individual appraisal: uncomfortable
with direct face-to-face feedback or criticism

• Some high power – distance cultures may be

uncomfortable with feedback from direct reports

• Cultural differences in terms of attitudes to extrinsic

rewards, group performance, specific formal appraisal
methods, employee involvement, the role of off-job
behaviours, and attitudes to respect
 Issues in International PM – 2
Observability: in IEs, much behaviour is unobservable by
headquarters; how much involvement should local
subsidiary managers have?

Conflicts of loyalty between the HQ and subsidiary may

exist; should IEs foster dual allegiance?

Is it motivating to link performance and reward?

How easy is this in complex/multiple legal/employment

contexts, such as joint venture/different cultures?
 Issues in International PM – 3
What mix of organisational and individual performance
criteria should be used?

Assignments may involve multiple goals: eg filling a

position/delivering results/developing individual for bigger
role/transferring technology/mentoring and developing locals

Eg, volatile environments, separation of IE from employees

by time/distance, variable maturity/goals of different markets,
difference between multi-domestic and global industries, mix
of short/long-term measures
 Issues in International PM – 4
Additional dimensions: eg need for employees to act as
envoys/diplomats; family circumstances; importance of
interpersonal skills; cultural/language differences

Need to balance global consistency and local conditions

Requires local variations: single, standardised practice,

or divergent systems to reflect local conditions?

Who conducts PA, and how?

 Issues in International PM – 5
The corporate HQ/local affiliate/regional HQ? conflicts?

What performance data should be used?

‘Objective/Subjective/goals and targets/Competence profiles?

Who counts as ‘international’?

All employees in IEs ‘international’, ‘thinking global’?

 Examples of Cultural Influence:
China
• Power-distance and collectivism in particular seem to affect
PM

• Chinese organisations increasingly adopting PM, but often

informal, with significant consideration given to issues of
moral behaviour, ‘face’ and ‘guanxi’, especially in public
sector.

• Lack of strategic HRM: appraisal as formality, subjectivity in

appraisal all remain challenges
 PM in Mexico
• Appraisal rarely used as incentive for individual performance;
managers tend to overrate performance.

• During economic downturns/downsizing of the 1980s/1990s,

firms linking rewards to performance evaluation suppressed
level of rewards; used PA to downsize, leading employees to
develop negative perceptions of PA

• Benevolent paternalism: employee dependency/suppressed

conflict
 PM in Mexico – 2
• Social relationships: intense communication and face to face
interaction valued, so PA used for employee expression (eg
to express career aspirations) rather than compensation

• Costs of employee dismissals encourage inaccurate

performance evaluations

• Some firms implemented modern PA practices, yet ‘the

effectiveness of these practices is determined by the
country’s economy, work culture and organisational
structures, all of which affect the purpose and acceptance of
PA systems’ (Davila and Elvira 2008: 123)
 PM in Mexico – 3
• Individual merit-based PA often threatens culture of
collectivism and group loyalty; employees ‘associate
assessment with a threat to personal or private interests…
rather than as a potential source for individual or collective
development…some supervisors treat the process as a
superficial artefact or an informal task to complete at the last
minute, quickly and carelessly’ (Davila and Elvira 2008: 126)
 PM in India
• Also shows influence of culture on PM: recent years have
seen change

• Use of PM systems, once under-emphasised, increasing

• PM faces several challenges: transparency, linkages with

rewards, influence of plethora of labour laws

• Shifts from closed/confidential performance evaluations

towards open dialogue/discussion
 PM in India – 2
More qualitative, development-oriented PM incorporating
peer evaluation (often web-based) now more common,
especially in IT and private sector more generally

More emphasis on performance-based/merit pay linked

to performance evaluations: strongly data-driven, with
little rated involvement, perhaps reflecting high power-
distance

PM in local firms/public sector more affected by

hierarchical, power-oriented, top-down culture
 PM in UK
• Less emphasis on precise overall rating, perhaps because of
perceived ‘demotivating’ effects (Bach 2005)
• Often use PA to identify training needs, but only minority use
for reward decisions
• Covers increasing proportion of workforce, not just managers,
sales staff and professionals
• Extended to many public services: universities 1980s, schools
1990s.
• Company directors often excluded, despite concerns with
corporate governance
 PM in UK – 2
Shifts from top-down ‘objectives’ in 1980s to more competence-
based, development agenda in 1990s

Issues of values, person-organisation fit, mutuality and

engagement (Sparrow 2008)

Recent concern with strategy and coherence with other

agendas, eg Talent Management

Low uncertainty avoidance/low power distance facilitate joint

problem-solving/psychological contracting

Key challenges: work-life balance, employee diversity, and age

discrimination legislation
 PM in France
• More hierarchical and conflict-intensive governance than
Germany
• Social factors, class, broad general education, technical
knowledge and educational selection for the prestigious
‘’Grande Ecole’ system play greater role in career systems
• French labour laws allow some flexibility in assessing
performance, within merit-based, non-discriminatory
framework
• France: ‘moderately-regulated’ country,
 PM in Germany
• ‘Highly regulated’ system: complex labour laws, contractual
agreements with unions/co-determination

• Participation, consultation/information rights for workers:

works councils need to approve PMs changes

• Larger range of explicit legal/institutional factors affecting

PM: traditions of collective bargaining,
co-determination/vocational training
 PM in Germany – 2
Greater employee input/consensus-building, long-term
career focus/emphasis on specialised technical
knowledge and expertise/‘technik’
Day-to day-informality with explicitly formalised roles,
standards, criteria, regulated by co-determination
Performance-based pay slower to gain acceptance, given
emphasis on long-term goals and development
Lower power-distance associated with employee input
into objectives, openness, and informal dialogue between
superior and subordinate
Higher uncertainty-avoidance associated with highly-
regulated work environment/formalised rules on PM
 PM in Germany – 3
Feedback: open confrontation/long-term orientation
associated with long-term employment relations,
seniority/relative lack of career mobility outside firm
More northern ‘egalitarian’ tradition of Germany; legal
expertise important
German PM a strong ‘developmental’ role, but more
modest role in performance-related pay, except in MNCs
Greater internationalisation: adoption of more ‘Anglo-
Saxon’ PM practices, often transferred from German
foreign subsidiaries in process of ‘reverse diffusion’
 Perlmutter (1969):
International Orientations and PM
• Ethnocentric: parent-country PMS designed/implemented by
corporate HQ: standardisation, integration/economy of scale
goals, but not cultural responsiveness goals.
• Polycentric: locally-responsive PM systems taking cultural,
institutional, market conditions into account: difficult to compare
performance across different countries for TM, leadership
development/succession planning
• Regio-centric: regionally-standardised processes allow
comparisons across region, facilitating intra-regional
mobility;little standardisation or comparison between regions,
creating ‘regional silos’
 Performance Criteria:
Organisation-Level

• Whole vs. part decisions

• Incomparable data
• Volatility of environment: adapt
• Separation by time/distance
• Variable market maturity and goals
• Eg multi-domestic vs. global industries
• Simultaneous, different unit strategies?
• ST focus on accounting measures
 Individual Level Criteria

• Additional Dimensions: eg envoys, diplomats,

families, interpersonal skills

• Recognise cultural/language differences

• Balanced Scorecard?
 Performance Appraisal

• Observation and judgment: evaluation and development

• Balance global consistency and local conditions: eg

local variations in PA

• Cultural differences: extrinsic rewards, group

performance, specific formal appraisal methods,
employee involvement, off-job behaviours
 Other Issues in IPA

• Who conducts?

• How?

• What data?

• 360 degree and competency frameworks

• Distrust, insult?