Module 3

Global performance management Introduction, key components of PMSs factors

affecting PMSs culture and PMSs, PMSs in six leading economies: China, India, Japan,
South Korea, UK and USA,PMS for expatriates. total rewards in international context
Recap: differentiating between PCN,TCN,&HCN. Introduction: the current state of
total rewards complexities faced by the IHR managers, international total reward
programs, approaches to international compensation repatriation issues, international
trends in global total reward

Global performance management

The global performance management. Global PM is a critical strategic international human

resource management activity that refers to a large range of activities engaged in by
organizations to enhance organizational effectiveness Performance Management Helps to
Boost Employee Engagement and Productivity. Engaged employees stay longer, actively
involve themselves in the workplace and produce better results. Improving levels of
employee engagement is key to boosting productivity and maximizing ROI

Performance Management – Introduction

Performance management includes activities to ensure that goals are consistently being met
in an effective and efficient manner. Performance management can focus on performance of
the organization, a department, processes to build a product or service, employees, etc.
Performance management can be defined as the development of individuals with competence
and commitment, working towards the achievement of shared meaningful objectives within
an organization which supports and encourages their achievement.

Michael Armstrong have defined performance management is a strategic and

integrated approach to delivering sustained success to organizations by improving the
performance of the people who work in them and by developing the capabilities of
teams and individual contributors.

Performance assessment has a long history based on comparative judgments of human worth.
In the early part of the 19th century, for example, Robert Owen used colored wooden cubes,
hung above work stations, to indicate the performance of individual employees at his New
Lanark cotton mills in Scotland. Various merit ratings were represented by different colored
cubes which were changed to indicate imp

rovement or decline in employee performance

A performance management system includes the following actions:

1. Developing clear job descriptions

2. Determining competency sets and selecting people through an appropriate selection

process

3. Negotiating requirements and accomplishment-based performance standards, outcomes,

and measures

4. Providing effective orientation, education, and training

5. Imparting on-going coaching and feedback

6. Conducting quarterly performance development discussions

7. Designing effective compensation management and recognition systems that reward

people for their significant contributions

8. Providing promotional/career development opportunities for staff.

The major objectives of performance management system are enlisted below:

1. To emphasize on career planning and future growth opportunities for employees;

2. It is ensure to raise the efficiency and productivity of employees;

3. To encourage belongingness, team spirit and devotions among employees with the job

4. To provide feedback about HR planning and potentialities to implement the planning facts;

5. To identify systematically the need and requirements of some learning and training
aspects;

6. To promote better and high work culture in the organization.

7. To focus more on systems approach to perform appraisals rather than to make any
formalities;

8. To foster a positive relationship between managers and employees through a two way
communication process

9. To appreciate, recognise and to give reward and compensate employees for achievement of
performance objectives successfully in a more objective, transparent and justified way.
Components of Performance Management System

1. Performance Planning: Performance planning is the first crucial component of any

performance management process which forms the basis of performance appraisals.
Performance planning is jointly done by the appraisee and also the reviewee in the beginning
of a performance session. During this period, the employees decide upon the targets and the
key performance areas which can be performed over a year within the performance budget.,
which is finalized after a mutual agreement between the reporting officer and the employee.

2. Performance Appraisal and Reviewing: The appraisals are normally performed twice in
a year in an organization in the form of mid reviews and annual reviews which is held in the
end of the financial year. In this process, the appraisee first offers the self filled up ratings in
the self appraisal form and also describes his/her achievements over a period of time in
quantifiable terms. After the self appraisal, the final ratings are provided by the appraiser for
the quantifiable and measurable achievements of the employee being appraised. The entire
process of review seeks an active participation of both the employee and the appraiser for
analyzing the causes of loopholes in the performance and how it can be overcome. This has
been discussed in the performance feedback section.

3. Feedback on the Performance followed by personal counseling and performance

facilitation: Feedback and counseling is given a lot of importance in the performance
management process. This is the stage in which the employee acquires awareness from the
appraiser about the areas of improvements and also information on whether the employee is
contributing the expected levels of performance or not. The employee receives an open and a
very transparent feedback and along with this the training and development needs of the
employee is also identified. The appraiser adopts all the possible steps to ensure that the
employee meets the expected outcomes for an organization through effective personal
counseling and guidance, mentoring and representing the employee in training programmes
which develop the competencies and improve the overall productivity.

4. Rewarding good performance: This is a very vital component as it will determine the
work motivation of an employee. During this stage, an employee is publicly recognized for
good performance and is rewarded. This stage is very sensitive for an employee as this may
have a direct influence on the self-esteem and achievement orientation. Any contributions
duly recognized by an organization helps an employee in coping up with the failures
successfully and satisfies the need for affection.

5. Performance Improvement Plans: In this stage, fresh set of goals are established for an
employee and new deadline is provided for accomplishing those objectives. The employee is
clearly communicated about the areas in which the employee is expected to improve and a
stipulated deadline is also assigned within which the employee must show this improvement.
This plan is jointly developed by the appraisee and the appraiser and is mutually approved.
6. Potential Appraisal: Potential appraisal forms a basis for both lateral and vertical
movement of employees. By implementing competency mapping and various assessment
techniques, potential appraisal is performed. Potential appraisal provides crucial inputs for
succession planning and job rotation.

FACTORS AFFECTING PERFORMANCE MANAGEMENT SYSTEMS: For a

performance management system to be implemented, there are a number of conditions that
must exist prior to its execution.

These factors include:

1. Ability of manager to mobilize the organization.

2. Effectively communicating the roles, duties and responsibilities of all such individuals
who are the participants in the process of bringing about change.

● Transparency and Simplicity

● Practicality and Participation

● Equality and Objectivity

Most managers know that the basics of effective performance management should include
goal setting, coaching, development planning, and recognition. While these are the actual
pillars of performance management, there are also certain factors that can dictate its success.

As a thought leader in performance management, Josh Bersin of the Deloitte Bersin research
firm has identified the top 10 factors in a performance management process, which are
outlined below. Take a look at the list to determine if you’ve gotten the following factors
right in your performance management approach:

● Philosophy, purpose, and culture

● Identify your company’s philosophy and purpose, and build them into your corporate
culture.

● Make goal-setting agile, local, and meaningful

Make sure that goals are aligned, clear, and have a specific purpose employees can
understand. Have managers collaborate with their peers to help them set goals that support
company objectives at the individual level.

● Use check-ins instead of the annual review

Annual reviews are antiquated, ineffective, time-consuming, and costly. Use weekly check-
ins instead.

● Reduce (or eliminate) impact of ratings

If you still want to use a rating scale to gauge performance, make sure that you’re having
discussions with employees about their performance regularly (via check-ins). Consider
getting rid of numeric scales to assess performance altogether.

● Coach and develop your employees

The best managers are coaches who give ample feedback to help their employees perform at
the highest possible level. You must also present them with the resources they need to pursue
the development opportunities they seek.

● Redesign compensation processes

Not all companies link pay to goal achievement, but it is possible to do. Find out which
compensation processes will work best for motivating high performance in your organization,
and make any changes as needed.

● Recognize employee contributions

Even top performers who regularly excel want to be noticed for their efforts. Praise both
small accomplishments and major wins using the specific methods for recognition that each
individual prefers (e.g., a private email vs. recognizing their achievements publicly).

● Simplify your processes

Eliminate redundancies by ensuring that all goals and efforts are aligned and everyone is
making unique contributions towards achieving team, department, and company-level goals.

● Use metrics to measure success

Identify the performance metrics that will determine success both in terms of goal
achievement and ongoing performance. Make sure that employees have a thorough
understanding of how their performance will be measured in advance, well before
performance-related discussions take place.

● Train managers on these practice

Train management to ensure that they’re managing their teams according to companywide
performance management strategies. These Performance Management Tactics are simple, but
by incorporating them into your overall strategy, you can lead your teams in the right
direction and increase goal achievement across your entire organization.
Performance Management Culture

Every organization has a company culture. No matter the business size, industry or location,
every business has an identity that reflects the goals and expectations of the organization.
However, not all company cultures are created equal or reflect what its top leadership
believes is their culture.

Amidst the myriad tools that organizations have at their fingertips, including data mining,
social media engagement, instant analytics and vast databases, it is the culture of a company
that often makes the difference between a highly successful organization and an average
organization. The reason that a performance management culture is so important amidst the
technological advantages that organizations have today is because it prioritizes people over
results.

A performance management culture is a direct result of the strategies implemented by the

organization’s leadership, however without employee inspiration, strategic leadership means
nothing. For this reason building a performance management culture is dependent on the
development of employee talent and motivating an organization through a shared goal.

Studies have shown that employees that feel valued within their organization are more likely
to report better physical and mental health, higher levels of engagement, motivation and
career satisfaction. Even when organizations express high-level expectations on their
employees, if an employee feels valued, they are more likely to not only meet high-level
expectations, but also surpass them. This is why organizations like Google, Apple and
Facebook have flourished as organizations that demand the most out of their employees, yet
provide a creative, collaborative culture that stimulates innovation.

Many performance management systems struggle to keep up with the culture of Google,
Apple and Facebook due to an emphasis placed on systematic performance reviews
conducted during particular times throughout the year. To properly implement a culture of
performance, an ongoing strategy must take place all year long. To enact a performance
management culture, organizations must:

● Motivate Change – Assess the current culture of the organization and the roadblocks to
cultural performance. Organizational leaders must be consistent when seeking to clearly act
out the organization’s mission and brand strategy. Often time’s organizations discover that
employee evaluations based on regularly scheduled performance reviews not only do not
work to motivate a staff, but also create wasted time. To motivate change, leaders must do
without outdated perceptions of reviewing employee talent.

● Create the Groundwork – Introduce new concepts and expectations for both employees and
managers. A performance management culture is established through open, honest and clear
communication. By communicating the big picture, employees will not only feel included
and valued, but also internalize and take ownership of the goals of the organization.
● Sustain Behavior – Provide resources for employee motivation that drive individual
performance and sustainability. Employees must be given on-going feedback in both
expectations and accomplishments. This feedback is critical for both the employee and
manager to commit to share both positive and disappointing results. Through the
development of sustainable expectations, managers are able to delegate quicker and more
efficiently to employees who grow with increased expectations and organizational goals.
Studies show that routine check-ins in employee performance gives employees a constant
feed of information that stimulates professional growth and performance.

● Provide New Resources – Enable employee motivation through an evaluation of current

skills and provide resources to improve upon and gain new expertise. Employees that grow in
various expertise and skills are able to adapt more quickly to organizational demands as well
as contribute to wiser and more engaging solutions to industry problems.

By building a performance management culture, organizations better adapt to changing

technologies, create environments of creativity and collaboration, as well as develop
sustainable results. As technologies continue to change and organizations utilize the vast
resources for industry advancement, the constant of human capital must remain the same.

Creating a performance management culture impacts a large amount of business success,

which is why it is important to utilize the best individuals to enact organizational change. At
MK Strategic Resources, analyzing employee talent and understanding the core
organizational needs allows us to seamlessly improve upon existing strategies.

PMSs in six leading economies CHINA

1. Confucius says… Not a God as such, but the philosophies and teachings of
Confucius are as embedded in Chinese values and behaviors as any religion. Order.
Obedience. Self-Discipline. An unequivocal respect for hierarchy. Morality. Loyalty.
Compassion. Subversion of individual wants and needs to those of the group. In the
west, individualist cultures are increasingly challenging respect for hierarchy. The
west values merit. Idolizes high achievers. Chinese values are changing with a new
generation of more liberalized Communists, but the 2,500-year-old Confucian
fundamentals continue to run deep in their veins. In performance management this
means that employees expect their leaders to tell them what to do and often how to do
it. They may be suspicious of, or uncomfortable with the prospect of autonomy

2. The Doctrine of the Mean This particular subset of Confucius’ writings can really
challenge western leaders. Essentially the doctrine calls for moderation in all things
by avoiding extremes or standing out in any way. This ‘equality’ value is deeply
entrenched in communism – by eliminating the extremes of excessive poverty or
wealth, everyone is in the communal middle ground. In the workplace, striving for
high performance, especially at an individual level, is seen as a contravention of this
doctrine. Further, the collectivist approach demands that rewards are shared: one team
member that is recognized for high performance and praised or rewarded individually
could be considered a traitor to the group. In such cases, Chinese high performers
have been ostracized by their peers, or purposely dropped their subsequent
performance levels to ‘right this wrong.’

3. Mianzi (saving face) You’re managing a Chinese team and have just observed an
action or behavior by one individual that you believe is highly ineffective and requires
immediate correction. Natural reaction: provide feedback. Stop. Before you do that,
remember the importance of saving face to the Chinese. No matter how valid, well-
intentioned and constructive your feedback is, it may produce a totally different effect
to that which you want. Negative feedback, particularly given in view or earshot of
others, can have a totally demoralizing effect and your Chinese employee has lost
face.Successful expats in China point to much more than their functional expertise
and even leadership experience to explain their success. They are attuned to the
cultural intelligence required to adapt their thinking and approaches in a foreign
world.Importantly, they are continuous learners, open minded, curious and patient.

INDIA

While change may be inevitable, it is interesting to reflect on how organizations can

leverage these changes to address immediate challenges and create long-term
sustainability. Some key learnings that the study revealed are:

1. Importance of managerial capability in driving change in approach: For

organizations to benefit from structural changes that they are making, they must
ensure that their approach to performance management is in sync with their
managerial capability and maturity. Most organizations that are disbanding forced
ranking, pushing down ratings, decisions and decentralizing authority must ask
themselves if they are simultaneously enabling managers to drive the performance
process effectively. This means evaluating the capability of their managerial cadre,
assessing their ability to demonstrate maturity in exercising judgment and establishing
a governance framework that can control the possible misuse of this power. India has
witnessed considerable job inflation in the last decade and this has resulted in the rise
of a pool of young and enthusiastic but often inexperienced managers. These
individuals have technical acumen but may not be equipped to deal with softer aspects
of the job such hard coding ratings using a combination of role expectations, business
goals and market realities. While this has improved process transparency and
employee satisfaction with the system, how it impacts the credibility of the manager is
still to be evaluated. Success of this model could mean a paradigm shift for
performance management in the future.

2. Balancing the achievement of business objectives while making employees an

equal stakeholder in the process: The primary focus of performance management in
India continues to be delivery of business goals. 93 percent organizations expect their
PMS to drive business objectives while less than 10 percent look at the performance
process to drive creativity or recognize team contribution. This unidimensional
approach to performance management often leads to one of the major stakeholders,
the employee, being overlooked. They are the focal point of the entire system and yet
often have little say in the overall process outcomes. It is increasingly being
appreciated that a system which only focuses on business outcomes and acts as a
vehicle of distribution of rewards ends up disengaging employees. What employees
are looking for today is to be part of an ongoing performance experience rather than
just a mechanistic annual exercise. Similarly, recent research in neuro-leadership
alludes to the fact that rating systems that reduce a year’s worth of employee effort
into a single number or rating can often be dehumanizing and can negatively impact
morale. While all this has led to organizations making development agendas central to
the performance management process, one needs to be careful that the fine balance
between business prerogatives and people outcomes is not compromised.

3. Innovative models of rewarding performance: Our research indicates that

outcomes of performance evaluation have a closer linkage to immediate term
decisions like annual bonus payout rather than longer term decisions like career
progression and long-term incentives. While monetary incentivizing of performance
continues to be the norm, there is a growing appreciation of the negative impact of
heavily linking performance management to rewards. Interestingly, it is perceived that
this linkage distorts decision-making on ratings (20 percent), undermines morale (8
percent) and creates interpersonal issues within the teams (12 percent). Success of
new performance management models will hinge on the establishment of more
innovative modes of rewarding performance. The time has come for organizations to
seriously evaluate if financial reward is in fact the best available motivational lever
and whether hard-coding performance outcomes with financial rewards allow
organizations to consistently overachieve.

There is definitely no uniform approach to managing performance and each

organization’s approach must draw on its context. Organizations should explore the
objectives they want to achieve and evaluate managerial maturity, employee agenda,
HR capability and relevance of people's capability to succeed before investing in any
changes to current systems. This exploration, more than anything, will decide the
ease, appeal and success of any new performance management system implemented.

JAPAN

This paper investigates the changes in performance appraisal in Japanese companies,

with a focus on the purpose of appraisals. It begins by critically reviewing existing
literature on the purposes of performance appraisal, and then analyses secondary data
on the purposes of appraisal in Japanese companies, emphasizing that the purposes of
appraisal should be congruent with Japanese style management. It then reviews the
concepts of performance management (PM) and shows how PM offers a useful
framework for analyzing the expansion of the purpose of appraisal in Japanese
companies

Finally, it concludes that the purposes of appraisal in Japanese companies have

expanded in a manner that is consistent with changes in Japanese-style management.
South korea performance management reform initiatives introduced by the Korean
government at four different managerial dimensions, including organizational
management, human resource management, financial management, and evaluation
management. It discusses resistance faced by traditional values in the course of
pursuing performance management reform as well as various challenges to successful
implementation of the reforms. Performance improvement in the Korean government
is adopted in four different areas: organization, human resources, finance, and
evaluation. The chapter describes two initiatives that the government has introduced:
teambased structure and “agencification.” In the late 1990s, the Korean government
started to transform internal structures within the government to achieve better
performance rather than to reduce costs. Rule-based bureaucratic controls and
regulations discourage better performance. The Korean government has attempted not
only to diversify staffing for more talented candidates but also to diffuse performance-
related pay as well as a performance agreement system.

USA

1. Performance: it refers to the actions taken by the state to help Government

Agencies manage themselves better, such as:
● The GPRA Modernization Act of 2010 which states that agencies must develop
strategic plans and annual reports on their performance;
● An emphasis on transparency and openness by creating the Data.gov website, where
relevant information on government spending data, for example, are posted;
● Data gathering and decision-making processes based on relevant data.

2. Risk: recognizing and accepting risk as part of the development process. By

acknowledging the potential risks (natural, economical, cyber-attacks), Government
Agencies can create budgets and action plans specifically designed to manage them
and to reduce their impact on the overall performance and growth. Such actions
slowly turn risk avoidance into risk management.

3. Innovation: old and outdated systems must be replaced. By creating up to date

programs and by using modern technology, the government agencies can improve
their performance. Also, by adopting innovative initiatives they can better assess
performance, growth and gather valuable and relevant information. Creating a culture
based on innovation is also very important.

4. Efficiency: Government Agencies are expected to perform at minimum cost, thus

performance budgeting and cost saving strategies are governed by this trend. By
creating a realistic cost baseline and applying cost strategies, government agencies
can assure that funding is directly linked to achieving high-priority results.

5. Leadership: training efficient leaders has become a priority. Planning is nothing

without a person that can set it in motion, coordinate it, making sure that every step is
achieved and every employee does what he is supposed to do. Performance is
achieved through well prepared staff, strategies and strong leadership.

UK

1. Peer Feedback: Compensate for Cultural Challenges towards Self-evaluation One

of the latest performance management trends is incorporating feedback from more
than one source.

By incorporating peer feedback, employers not only maximize their source of

information as regards employee performance but also open the door to unlocking
hidden talent. Given the previously discussed cultural uniqueness of the UK, valuable
skills may remain in the dark without employees providing useful and honest
evaluations with respect to what it was like to work with a colleague in a given project
or how they contributed to achieving a goal.

While there are various ways to lead and implement this socially based performance
management best practice, all of them hold the same truth: it works. Remote work has
decreased the amount of manager-employee interactions, and solely relying on
managerial feedback is not viable. The digital era has increased the need for
teamwork, and employers nowadays relate more often with co-workers than superiors.

2. A Holistic Approach to Performance Management Siloed talent management

processes limit agility. In fact, they may even impact employee experience negatively,
turning talent retention into a bigger challenge. The current shift in performance
management models calls for coordination among various talent management
initiatives, where you can get valuable information from one and implement it into
another.

Let’s take, for example, the talent loss difficulties UK employers are facing due to
Brexit. Organizations need to cover open roles and responsibilities that require
specific skill sets. In a holistic framework, where talent management initiatives are
connected to each other, managers can find, propose and follow up on development
plans during a performance review, discovering hidden interests and developing new
skills. This approach works toward improving the employee experience and
productivity, unlocking hidden talent and maximizing the effectiveness of all
initiatives by finding relevant relations between one another.
Moreover, unified talent management initiatives help avoid confusion or
misinformation as regards one crucial element in this increasing digital work
environment – data, which plays a major role when implementing a holistic approach.

The best way for organizations to leverage data is to activate all of their talent
management initiatives under the same platform. In this way, it becomes the stone
that kills both birds. On the one hand, HR professionals and managers get a better
insight into the information they collect from the different touch points of the
employee journey and can implement it to increase retention (one of the most
important current goals). On the other, they maximize the effectiveness of their
performance management processes not only by enhancing productivity but also by
empowering their workforce to develop professionally within the organization.

3. Continuous Performance Management One of the most crucial best practices in

modern performance management initiatives is implementing continuous reviews.
Once again, with the inevitable evolution of quarterly and yearly goals, annual
appraisals lose ground, impact and effectiveness. By implementing ongoing feedback,
employers give place to a shift in employee appraisal philosophy.

Continuous performance management doesn’t change the performance review basics.

However, small adjustments occur when regular check-ups take place. Managers are
still in charge of reviewing past objectives while also decreasing the risk of them
becoming obsolete by applying necessary changes in the shape of follow-ups. This
approach broadens the scope of an employee performance review by implementing a
forward-looking evaluation.

By adapting to a continuous performance management approach, managers improve

the awareness of the skill sets among their workforce. Through 1-on-1 talks, leaders
can better understand the desires and interests employees have, review past and future
goal-setting and implement feedback in a more consistent way, meeting both
organizational and personal objectives at the same time.