Chap 9 Intern PM

8/10/2019 Chap 9 Intern PM

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We address:

Multinational performance management at the global and local level:

o considering aspects such as non-comparable data,

o the volatility of the global environment,

o the effect of distance, and

o level of subsidiary maturity Performance management as part of a MNEs control system

Factors associated with expatriate performance, including compensation

package, task and role, headquarters support, host environment factors

and cultural adjustment

Performance management of expatriates and non-expatriates, and for

those on non-standard tasks and assignments such commuter and virtual

issues related to the performance appraisal of international employees

Chapter Objectives
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Performance Management (PM)

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Performance Management (PM) is a process that enables

the multinational to evaluate & continuously improve

individual, subsidiary unit & corporate performanceagainst clearly defined , preset goals & targets.

Below model (Figure 11-1) allow to investigate the

complex interaction between local & global contexts for

performance & the tasks of the actors, performancecriteria, purpose for & timing of PM as these elements

relate to individual & firm outcome.

It provides convenient starting point for our exploration

of the links between multinationals internationalizationstrategies, its goals for individual units in of individual

employees whether PCN, TCN or HCN.


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Perspectives, issues, actions and consequences in

MNE performance managementFigure

11-1


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Multinational Performance Management (MPM)

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MNE has specific expectations for each of its foreign

subsidiaries, cooperative ventures & other forms of

operation modes in term of mkt. performance &contribution to total profits & competitiveness.

When evaluating subsidiary performance against these

expectations however its is important to recognizevarious constraints that may effect goal attainment as

below:-


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MNE subsidiary performance constraints

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1. Whole versus part

2. Non-comparable data

3. Volatility of the global environment

4. Separation by time and distance

5. Variable levels of maturity

6. Control and performance management


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1. Whole versus part

Multinational is a single entity that faces a global

environment which means that it simultaneouslyconfronts differing national environment.

Integration & control imperatives often place the

multinational in the position where it decides that the

good of the whole is more important than onesubsidiary's short-term profitability.

E.g. Multinational establishes a JV in a particular mkt. in

order to have a presence there, even though it has low

expectations in the short-term & may provide minimumresources to the venture.

Therefore the consequences of such global decision for

subsidiary mgt. must be taken into consideration for PA.



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2. Non- comparable data

Frequently, the data obtained from subsidiaries may be

neither interpretable nor reliable.

E.g. notions of what constitutes adequate quality

control checks can vary widely from one country to

another, import tariffs can distort pricing schedule or adock strike in one country can unexpectedly delay

supply of necessary components to a manufacturing

plants in another country.

These factors can make an objective of appraisal of

subsidiary performance problematic & may complicate

the appraisal of individual subsidiary managers.



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3. Volatility of the global environment (local condition)

The turbulence of the global environment requires long

term goals flexible in order to respond to potential mkt.contingencies.

E.g. SAR, Bird Flu & adoption of international accounting

standards (IAS), each of these events has had profound

implications for the global & local strategies

multinationals.

Because subsidiaries operate under such volatility &

fluctuation they must tailor long term goals to the specific

situation in a given mkt.

Problem arise when subsidiary managers perceive that

goals and deadline set by a distance HQ strategy team are

unrealistic & inflexible due to a failure to take into

account local conditions that change as a result of a

volatile environment.



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4. Separation by time & distance

Judgments concerning the congruence between

multinational & local subsidiaries activities are furthercomplicated by the physical distance involved, time-zone

differences, frequency of contact between the corporate

head office staff & subsidiary mgt. & the cost of the

reporting system.

5. Variable levels of maturity

Without the supporting infrastructure of the parent,

mkt. development in foreign subsidiaries is generally

slower & more difficult to achieve that at home, where

established brands can support new products & new

business areas can be cross-subsidized by other

division.



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As a result, more time may be needed to achieve result

than is customary in a domestic mkt. & this fact ought

to be recognized in the PM process.

6. Control & performance management.

PM is a part of a multinationalscontrol system.

Through formal control mechanism & communication

through the feedback & appraisal aspects, PM also

contributes to shaping corporate culture both formally

& informally, thereby acting as an informal control

mechanism as well as part of the bureaucratic control

system.



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MNE control and performanceFigure11-2


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Traditional expatriate assignments when expatriates usually

their family members relocate to virtual assignment., where

no physical relocation by employees or their families is

required.

When attempting to manage the performance of staff

working across the multinational it is essential to consider all

these variables in relation to the nature of the internationalassignment.

Performance Management of International Employees


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To determine expatriate performance it is important to

consider the impact of the following variables & their

interrelationship:-

1. The compensation package.

2. The task & role the assignment task variables &

role of the expatriate .3. Headquarterssupport .

4.The environment in which performance occurs- the

subsidiary or foreign facility.

5.Cultural adjustment of individual and

accompanying family members.

Expatriate Performance Management


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1. The compensation package

Perceived financial benefits, along with the career

progression potential associated with an overseasassignment are often important motives for

accepting the posting.

2. The task & role. Expatriates are assigned to foreign operations to

fulfill specific tasks. There are 4 tasks:

1. CEO or subsidiary manager- oversees & directs the

entire foreign operation.2. Structure reproducer carries the assignment of

building or reproducing in a foreign subsidiary a

structure similar to that which he knows from

another part of the company.



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3. Troubleshooter the individual who is sent to a

foreign subsidiary to analyze & solve a particular

operation problem.4. Operatives- perform functional job such as lower

level or supervisory level.

3. HQ support Process of adjustment to the foreign location typically

produce to verifying degree, a range of emotional &

physiological reactions to unfamiliar situation

encountered over the period of the stay in the hostcountry.

The level of the HQ support provided to the individual

& the family is an important performance variable.



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4. Host environment

The environment has an impact on any job but it

becomes of primary important with regards toexpatriate mgt.

The international context with difference societal,

legal, economic, technical & physical demands can be

major determinant of expatriate performance.5. Cultural adjustment

The process of cultural adjustment may be critical

determinant of expatriate job performance.

Cause of expatriate failure cover the purpose ofadjustment.

Expatriate & their family will have some difficulty

adjustment to a new environment this will effect the

managerswork performance.



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Regional & national institutional, regulatory &

historical contexts can impact the character of the

criteria selected, task definitions, the timing & even thepurpose of PM.

E.g. PM (Danish & Swedish) described as decentralized,

based on broad range of hard & soft criteria (the

balanced scorecard) & strategically linked to identify &support changes in operational level activities.

In France, legal & cultural factors combine to create

PM system characterized by administrators with a high

level of expertise even though Franceslabor laws allowsome flexibility in assessing performance within a

merit-based and non-discriminatory framework.

A cross -cultural context for PM

f i


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Non-expatriates(i.e. the international business traveler

or frequent flyer) were describes as employees whose

work involved international travel but who are notconsidered international assignees because they do not

relocate to another country.

PM challenges for non-expatriates are:-

1. How to determine performance criteria & goals

related to the effective conduct of non-standard

assignments, especially virtual assignees.2. An understanding of the criteria for performance is

generally advocated as a highly participative process

between supervisor & employee.

PM of non-expatriates

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3. Isolating the international dimensions of job

performance might not be as straightforward as intraditional expatriate assignments.

4. Outstanding performance, under-performance or

failure in no expatriates & non-standard assignments will

challenge the PA process.5. Who conducts PA, how & based on what performance

data may be intensified when it involves increasing

numbers of others outside head office with whom the

assignee is working.6. A detailed analysis of other pre-departure & ongoing

training that might be required for non-expatriate

assignment is yet to be conducted.

PM of non-expatriates


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PM f i i l l


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Individual PM involves a set of decision on the

dimensions and level of performance criteria, task &

role definition & timing of the formal & informalaspects of the appraisal.

It comprises a formal process of goal setting, PA &

feedback.

Data from this process is often used to determine pay

& promotion, T&D requirement.

PM of international employees.

P f C it i


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The global firms ability to measure an employees

individual contribution to performance & to assess the

aggregate contribution of human capital to strategicprogress is a complex & timely.

Goals tend to be translated into performance appraisal

criteria so specifically & measurability issues areimportant aspects & need to reorganized the hard, soft

& contextual goals are often used as the basis for

performance criteria.

Performance Criteria.


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Wh d t th PA


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Employees are appraised by their immediate superiors &

can pose problem for subsidiary CEO (or manager).

They work in countries geographically distance, yet areevaluated by superiors back at HQ who are not in a

position to see on a day-to-day basis how the expatriates

performs in a particular situation.

Subsidiary managers tend to be assessed according tosubsidiary performance with a reliance on hard criteria

similar to that applied to heads of domestic units &

divisions.

Appraisal of other employees is likely to be conducted bythe subsidiarys CEO or the immediate host-country

supervisor, depending upon the nature & level of position

concerned.

Who conducts the PA

Wh d t th PA


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Regards to expatriate PA, host-country manager may

have clearer picture of expatriate performance & can

take into consideration contextual criteria.

Who conducts the PA

St d di d t i d PA f


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Domestic companies commonly designed PA forms for

each job category, particularly those using a traditional

PA approach rather than PM.

The standardization assist in the collection of accurate

performance data on which personnel decision can be

made & allows for cross- employee comparisons.

Employees who relocate within the multinational & non-

expatriate assignees who also cross cultural boundaries

in their performance context do not always feel HQappraisal forms allow for consideration of the critical

success factors of their performance like cross- cultural

competence.

Standardized or customized PA forms.

Frequency of appraisal


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Formal PA is commonly on a yearly basis and extend to

international performance system.

E.g. US companies using annual appraisal system weremore likely to used standard appraisal forms & hard

criteria.

An important aspect of an effective PM system is the

provision of timely feedback of the appraisal process. One of the problem with annual appraisal is the

employees do not receive the consistent frequent

feedback considered critical in order to maintain or

improve their performance. For virtual assignees, is complicated when geographical

dispersion dictates reliance on email communication.

Frequency of appraisal.

Appraisal of HCN employees


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PM in different nations can be interpreted as a signal of

distrust or even an insult.

E.g. In Japan it is important to avoid direct confrontation

to savefaceand this affect the way PA is conducted.

One way to overcome the dilemma adoption is to usehost-country nationals to assist in diversifying a suitable

system for appraising subsidiary employees & to advise

on the conduct of the appraisal.

Appraisal of HCN employees.

Chap 9 Intern PM

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