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Human Resource (HR) Practices and Cultural Dimensions

• Employee Resourcing – People planning, recruitment & selection, induction

• Employee Performance Management – Motivation, feedback, rewards, development

Performance Management System (PMS) Business Performance Measurement (BPM)

Scope of Human Resource Management

Performance Management Systems (PMS)

• Involve setting goals, measuring outcomes and providing feedback to improve performance or;

• ‘a framework in which performance by individuals can be directed, (agreed?), motivated and refined’

(Mabey and Salamon 1995)

A Performance Management Cycle (Torrington & Hall 1998)

Define the role• Job descriptions• Business Objectives

Set or agree a Personal Development Plan (PDP) supporting target achievement

Set or agree individual objectives, targets or goals

Assessment• Ongoing or annual• Link to pay

Features of a Business Performance Management System• Performance measures

– e.g. Balanced Scorecard (Kaplan & Norton)• Supporting infrastructure

– data acquisition, analysis, interpretation

Francos-Santos et al (2007)

Roles of Business Performance Management Systems

• Measure performance (monitor progress, evaluate performance)

• Strategy management (implementation, focus, alignment)

• Communication (internal/external, benchmarking, compliance)

• Influence behaviour (rewards, relationships)• Learning & improvement (feedback, double-loop

learning, performance improvement)Francos-Santos et al (2007)

• Selection & Design of Measures• Collection and manipulation of data• Information management• Performance evaluation & rewards• System review

Francos-Santos et al (2007)

Processes in Business Performance Management

Systems

Issues with Implementation• What are the intended outcomes – control,

assessment or development?• Often a strategic decision, but is it accepted

organisation wide?• Does the method of measuring performance

‘fit’ the current culture or strategy?• Is it resourced?• Does the method of rewarding performance

‘fit’ the current culture or strategy?

PMS- Issues of outcome

Outcomes-• Pay - linked to performance?• Promotion?• Development?• Additional Resourcing?• Sanctions for underperformance ?

The cultural background for performance management

• Essentially a western development, originating in the US, much of the research into use and operation conducted in a domestic context (Armstrong and Baron, 1998).

• (Pucik, 1985; Vance et al, 1992) suggest that it is the cultural differences that make it difficult to standardise aspects of performance management.

• Cultural dimensions (e.g. Hofstede, GLOBE) are often used as a common starting point.

GLOBE project (2004) – cultural dimensions

• Power Distance• Uncertainty

Avoidance• Humane Orientation• Collectivism –

Institutional• Collectivism – In

Group

• Performance Orientation

• Assertiveness• Gender

Egalitarianism• Future Orientation

Cultural Dimensions allow comparisons between cultural characteristics…..

Power Distance• authority, hierarchy, power differences, status privileges

LOW HIGH

Denmark Hungary

GLOBE – society cultural dimensions

Uncertainty Avoidance• orderliness, consistency, procedures, laws

LOW HIGH

Russia Germany

GLOBE – society cultural dimensions

Performance Orientation– Innovation, high standards, task oriented, achievements, results

LOW HIGH

Italy Singapore

GLOBE – society cultural dimensions

Future Orientation• planning, strategies, flexibility, delayed rewards

LOW HIGH

Brazil Netherlands

GLOBE – society cultural dimensions

Collectivism – In Group• family and team members’

pride, loyalty & cohesion

Collectivism – Institutional• team based rewards,

resource allocation

LOW HIGH

Sweden ChinaSwedenUSA

GLOBE – society cultural dimensions

Humane Orientation• fairness, generosity, kindness, compassion

LOW HIGH

Poland Malaysia

GLOBE – society cultural dimensions

Assertiveness• tough, dominant, aggressive, competitive

LOW HIGH

Norway USA

GLOBE – society cultural dimensions

Gender Egalitarianism• professional development, management

LOW HIGH

South Korea

Denmark

Other Cultural Dimensions• Monochronic vs Polychronic time orientation

• Low vs High Context Communicators

• 12/09/201220 •

MONO POLY

UK France

LOW HIGH

USA Italy

PMS in an International Context

Complexities occur in this environment• Comparisons of data• Giving and receiving feedback• Context• Time and Space• PMS procedures can become out of date -

even more rapidly in international settings

Weird or just different?

• http://www.ted.com/talks/derek_sivers_weird_or_just_different.html

PMS in an International Context

• Environmental factors- societal, legal, technical and physical demands and variables associated with work tasks and the personality of the individual make it difficult to isolate job related factors, set performance standards and devise procedures

• There are (i) significant differences between HQ and their Strategic Business Units (SBU) and (ii) between international managers and local employees

(Shen, J 2005)

PMS and Cultural Dimensions

Overall:• MNCs need to consider if their Performance

Management System is exportable?• Performance measurement and feedback are

viewed differently by different cultures (e.g. employee assertiveness, initiative, focus on achieving results etc.)

Some questions to consider• Is their a marked difference between the evaluation

of performance abroad from home country policy?• Is their a danger of alienating or de-motivating the

local team by imposing home rules?• Does the local operation have novel ways of

delivering or depersonalising positive/negative feedback without de-motivating?

• Who appraises the global manager?…’ out of site, out of mind…they do not understand what we encounter…’

Contextual model of expatriate performance managementDowling and Welch, 2004

Basic components of performance management

Dowling and Welch (2004)

Dowling and Welch, 2004

Variables affecting expatriate performance

“Motivation” is about what we can give to a person now so that he or she will work better in the future.

(Trompenaars, 1998)

What are PMS intended to achieve?

Maslow – hierarchy of needs:

• Physiological needs• Safety• Social• Esteem• Self-actualisation

Concepts of motivation

McClelland (managers in organisations) – basic and non-conscious needs:

• Achievement• Affiliation

• Power

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Clustering by values and practices

Sub-Saharan Africa

GreeceHungaryAlbaniaSloveniaPolandRussia

GeorgiaKazakhstan

TurkeyKuwaitEgypt

MoroccoQatar

ZimbabweNamibiaZambiaNigeria

South Africa (black sample)

PhilippinesIndonesiaMalaysia

IndiaThailand

Iran

SingaporeHong Kong

TaiwanChina

South KoreaJapan

DenmarkFinlandSweden(Baltics)

AustriaNetherlandsSwitzerland

Germany

IsraelItaly

Switzerland(French speaking)

SpainPortugalFrance

EcuadorEl SalvadorColumbia

BoliviaBrazil

GuatemalaArgentinaCosta RicaVenezuela

Mexico

CanadaUSA

AustraliaIreland

UKSouth Africa

(White sample)New Zealand

Anglo

Motivation

• Self-actualisation/self-concept – one’s sense of one’s own competence, power achievement and abilities.

• Performance –oriented leaders elevate their subordinate’s self-concept by acting as role models, convincing them that the standards are very high but achievable, showing confidence in them, supporting and rewarding their accomplishments, giving them autonomy, and intellectually challenging them

(Javidan, 2004)

According to GLOBE cultures differ in their emphasis on performance

High performance orientation• Results over people• Expect demanding targets• ‘can-do’ attitude• Value what you do not who you

are• Value bonuses and rewards• Have a sense of urgency

Low performance orientation• Values societal and family friendships• High respect for quality of life• Have performance appraisal systems

that emphasise loyalty, integrity and cooperation

• Value who you are not what you do• View merit pay as potentially

destructive to harmony• Associate competition with defeat

and punishment.

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Dimension – Performance Orientation

Sub-Saha-ran Africa

Anglo

High

Med

Low

Motivation• Nature of motivation varies in individualistic

and collectivist cultures• Individualist – individuals’ interests and need

for understanding goal-directed behaviour, emphasis on personal task choice and control

• Collectivist – need to fulfil duties and contribute to the group, emphasis on task chosen by in-group members

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian AsiaNordic

Europe

Cultural Dimension – In-group Col-lectivism

Sub-Saha-ran Africa

Anglo

High Med Low

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian AsiaNordic

Europe

Sub-Saha-ran

Africa

Anglo

Cultural Dimension – Institutional Collectivism

Cultural Diversity & Performance

• Managers may foster pro-diversity beliefs by communicating their belief in the value of diversity and explaining how task performance can benefit from diversity of information and perspectives.

Homan et al (2006)

Building a culture where diversity is valued

• Schein (1992) defines the culture of an organisation as shared assumptions and beliefs

• Organisational cultures reflect the societies in which they are embedded (Javidan, House & Dorfman, 2004)

• Performance management in organisations is shaped by their culture

Corporate Values and PMS

• Contemporary PMS evaluate employees’ behaviour against Corporate (or Organisational) Values

• Organisational Culture shapes Values • Organisational Culture is shaped by the

national cultural roots of the Organisation• So Corporate Values are shaped by the

national cultural roots of the Organisation

Egalitarian

People Task

Hierarchical

Fulfilment-oriented culture

Project-oriented culture

Role-oriented culture

Cultural characteristics of organisations

(Adapted from Trompenaars)

People-oriented culture

Leaders can influence organisational culture

• Attention- leaders communicate their priorities, values and concerns by their choice of things to ask about, measure, comment on, praise and criticise.

• Reactions to crises –because of the emotionality surrounding crises, a leader’s response to them sends a strong message about values and assumptions.

• Role Modelling – leaders communicate values and expectations by their own actions.

• Allocation of rewards – the criteria used as the basis for allocating rewards signal what is valued by the organisation.

• Criteria for Selection and Dismissal – choices for recruiting, selecting, promoting and dismissing people.

(Yukl, 2010)

• Western MNCs- interested in- personal ability, skill, cultural empathy, adaptability and flexibility , diplomatic skill and creativity

• Chinese MNCs- industriousness, diligence, positive attitude and compliance to company rules and policies are main concern

• (Shen, J 2005)

Cultural differences in Corporate emphasis

Local freedom to prioritise corporate values in PMS

Netherlands France Germany Britain

Reality Imagination Leadership Overview

Analysis Analysis Analysis Imagination

Overview Leadership Reality Reality

Leadership Overview Imagination Analysis

Imagination Reality Overview Leadership

Global Corporate Values:

Leadership; Reality; Analysis; Imagination; Overview

Performance criteria or goals –‘Hard’ goals: objective, quantifiable

and can be directly measured (e.g. ROCE)• Soft goals: relationship or trait-based (e.g.

adherence to Corporate Values)–Contextual goals: factors that result

from the situation in which performance occurs

Performance Criteria

• Objective, ‘hard’ measures can be affected by ‘delayed outcome’ or ‘negative correlations’

• Delayed outcome – interference from external events which distorts an employee’s influence on the goal

• Negative correlations – where success in one goal may have a negative effect on another (maybe someone else’s goal!)

Performance Criteria

• ‘Soft’ goals are measured subjectively based on perceptions

• Often difficult to justify• Often difficult to measure without direct

observation e.g. Manager in London, employee in Hong Kong

• Often measured through ‘others’ perceptions e.g. Employee’s peers

PMS and Cultural DimensionsObjective -setting

Setting objectives within time frames (Future Orientation) and operating on (spurious ?) criteria:

• Is acceptable to German organisations (accepted MBO) as it reduces uncertainty, clarifies targets roles and responsibilities

• Isn’t acceptable to French managers- mutually agreed annual objectives may not prove comfortable especially in writing! MBO not successful here as many saw it as entrapment not empowerment

(Schneider, 2003)

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Dimension – Future Orientation

Sub-Saha-ran Africa

Anglo

High

Med

Low

Measuring Performance

• Formal systems – ‘Appraisal’ vs ‘Development Discussion’

• Once or twice per year • Discussion formally recorded and linked to

rewards and personal development plans

Problems with Appraisal (1)• Employee suspicion - criticism, control and use of

results• Managers unable to do the job - need for

effective training (assessment and interviewing)• Systems are bureaucratic - paperwork based,

collation of data• Any supposed outcomes not acted upon –

reduced effectiveness, loss of motivation and commitment to participation

Problems with Appraisal (2)• Accuracy of evidence and assessment• Subjectivity and fairness• Heavy reliance on managers

– Are they skilled?– Are they committed to the approach?– Are they agreed about the purpose?– Do they take the “easy approach” and follow a

“central tendency”?• Organisational interpretation of results

Appraisal systems and culture

• Individualism – favour formal appraisal systems

• Collectivist – favour informal appraisal systems• Career development, financial objectives

might be of little/no importance in cultures in which the future is viewed as unpredictable – future orientation

(Groeschl, 2003)

Feedback• Individualist cultures employ positive feedback

to motivate employees• Collectivist cultures positive feedback could

embarrass employees – criticisms and compliments are usually not conveyed openly – directed at a group rather than an individual

• Indirect feedback – written notes or asking a peer of the subordinate to deliver the feedback.

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian AsiaNordic

Europe

Cultural Dimension – In-group Col-lectivism

Sub-Saha-ran Africa

Anglo

High Med Low

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian AsiaNordic

Europe

Sub-Saha-ran

Africa

Anglo

Cultural Dimension – Institutional Collectivism

Feedback• Employees should receive continuous

feedback about their performance from their managers

• The formal appraisal system should be a formal record reflecting feedback already given

• Managers should receive feedback from their employees about their management style – low power distance

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Dimension – Power Distance

Sub-Saha-ran Africa

Anglo

High

Med

Low

Feedback and Uncertainty Avoidance

‘Feedback seeking’- in order to manage uncertainty, individuals will engage in strategies for seeking feedback from a variety of sources (superiors, peers, subordinates), either through asking questions (inquiry) or observing (monitoring).

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Dimension – Uncertainty Avoidance

Sub-Saha-ran Africa

Anglo

High

Med

Low

360 degree feedback process• The utility of the 360 degree process depends largely

on the cultural values held by the participants• In collective cultures critical information may cause

loss of face.• Feedback on performance assumes that one has

considerable control over one’s own behaviours or outcomes (i.e. Low power distance)

• Organisations that strongly internalise the values of low power distance and individualism could benefit greatly from applying the 360 degree process

(Shipper, Hoffman & Rotondo, 2007)

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Dimension – Power Distance

Sub-Saha-ran Africa

Anglo

High

Med

Low

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian AsiaNordic

Europe

Cultural Dimension – In-group Col-lectivism

Sub-Saha-ran Africa

Anglo

High Med Low

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian AsiaNordic

Europe

Sub-Saha-ran

Africa

Anglo

Cultural Dimension – Institutional Collectivism

Feedback and Cultural Dimensions

• A 2-way conversation with the boss seemed untenable with the French (high Power Distance according to Hofstede)

• Russians also found to be uncomfortable- goal setting suffers from ‘ been there, done that’ -imbibed strongly under communism

(Schneider ‘03)

• China- .. All feedback was positive to avoid upsetting personal relationships in one Chinese-Western Joint venture

• China- misuse through cultural interpretation-One Chinese company publicly displayed

performance rankings and required poor performers to publicly confess and state how to improve

Feedback and Cultural Dimensions

• Japan- PMS often emphasise individuality- often difficult in organisations where society traditionally reflects collective responsibility

Feedback and Cultural Dimensions

The effect of individual/collectivism and power distance on the performance appraisal process.Cultural Dimensions

WHO HOW CONTENT PURPOSE

Low Power Distance

Multi-source (e.g. peer, subordinate)

Participatory two-way communication. Employee initiated. Appeals process.

Unspecified Unspecified

High Power Distance

Supervisor (someone with relatively more power)

Directive.Supervisor initiated.No appeals process

Unspecified Unspecified

Collectivist SupervisorThird Party

Subtle/indirect Group level.More positive tone.Relationship focussed. Criteria include loyalty, seniority.

DevelopmentIncrease loyalty

Individualist Unspecified Direct/open Individual level.Job focussed.

Administrative.Make personal decisions.

Feedback, Communication Competence and Performance

A study of Russian and US managers with experience of multicultural teams demonstrated that cross cultural communication competence accounts for 20% of the performance variation in multicultural teams

(Matveev & Nelson, 2004).

Cross-Cultural Communication and cultural dimensions

• Understanding attitudes to time• Language

– Dominance of a particular language – Use of jargon, idioms, humour etc.

• Media– High context communicators/low context

Attitudes to Time/1Monochronic cultures

• One thing at a time• Tight schedules• Detailed planning strictly

adhered to

• E.g. Anglo, Germanic, Nordic

Synchronic or polychronic • A number of activities run in

parallel• Relationships come before

schedules• Substance before process• e.g. Latin cultures

Attitudes to Time/2

Turn Taking in Verbal Communication

Anglo-Saxon: A __ __ __ __ __ B __ __ __ __ __

Latin: A ___ ___ ___ ___ ___ B ___ ___ ___ ___ ___

High or Low ContextLow Context Communicators

(e.g. UK)

• Focus on the content of the message; the words

• Focus on the task to be done• Are clear and direct (except UK!)• Provide only as much background

information as they need

High Context Communicators

(e.g. French, Italian)• Integrate non-verbal signals into the

message (facial expressions, gestures etc.)

• Focus on building relationships• How things are done (process) is

just as important as getting them done

• Saving face and maintaining harmony important

Pay for performance

Pay and performance may mean different things to different cultures:

• Pay – cash or other rewards (shares, holiday etc.)

• Pay – total cash or a % of base salary• Pay – individual or group?

Pay for performance

• Paying for performance over and above ‘normal’ salary may be subject to local laws

• The % payable may be restricted• The method of payment may be controlled

e.g. Payment in shares rather than cash

Bonuses

• Egalitarian cultures may focus on total reward being an equal amount per person rather than a % of salary (e.g. Denmark)

• The overall proportion of fixed vs performance –related reward my depend on the amount of perceived control over performance (power distance, performance orientation)

Germanic Europe

Latin Europe

Latin America

Eastern Europe

Middle East

Southern Asia

Confusian Asia

Nordic Europe

Cultural Dimension – Gender Egalitarianism

Sub-Saha-ran Africa

Anglo

High

Med

Low