International Performance Management

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Performance Management
System
 A performance management system is a
formal, structured process used to measure,
evaluate, and influence employees’ job-
related attitudes, behaviors, and performance
results.
 It helps to direct and motivate employees to
maximize the effort they exert on behalf of
the organization.
 It is a process employers used to make sure
employees are working toward organizational
goal.
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Performance Management
System
 Performance management systems are
designed to help organizations draw the best
out of their employees, by enabling them to
perform at optimal levels.
 If the system is not used properly,
evaluations can lead to frustration, anger,
and reduced motivation levels, rather than
motivating employees to perform better!

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Performance Management
Activities
 Effective performance management
comprises 3 major activities:
 1. setting goals or objectives
 2. providing feedback
 3. motivating employees

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Performance Management vs.
Performance Appraisal
 Performance Management—A process that
consolidates goal setting, performance
appraisal, and employee development into a
single, common system, the aim of which is
to ensure that employee’s performance is
supporting the company’s goals.
 Performance Appraisal—Evaluating
employees’ current and/or past performance
relative to their performance standards.
Performance Appraisals
 Performance appraisals form a major part of
performance management system.
 It involves evaluating employees’ current and
or past performance relative to their
performance standards, typically perform
annually by a supervisor for a subordinate.
 Evaluation of performance may also be based
on the judgments and opinions of
subordinates, peers, supervisors, other
managers, and even employees themselves.
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Performance Appraisals
 Individual’s performance is appraised, or
evaluated, according to expectations of
appropriate outcomes and behaviors that
contribute to organizational goal attainment.
 It is a process designed to help employees
understand their roles, objectives,
expectations, and performance success.

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Reasons for Performance
Appraisal
 1. It provides an opportunity for supervisors
and subordinates to review their work-related
behavior.
 2. It provides an opportunity to review
employees’ career plans based on their
strengths and weaknesses.
 3. It provides information for making
decisions on promotion and salary.
 4. It helps the organization to better manage
employees and improve overall performance.
Reasons for Performance
Appraisal
 5. Motivating employees.
 The purpose of performance appraisal is to
motivate employees to achieve a higher level
of performance by correcting any deficiency
or weakness in the performance.
 Motivation can be achieved by promotion and
substantial merit/pay increase.
 Reward system is a motivational tool.

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Steps in Performance
Appraisal
 1. Goal-setting—define the job and its standards.
 It involves defining the job so that both employee
and supervisor agree on the duties and job
standards.
 It is crucial that the supervisor set individual
employees’ goals for the coming year, through
discussions with subordinates, keeping in mind the
business unit’s objectives and the firm’s business
strategy.
 Goals help employees to understand what is
expected of them, and assist them in planning and
prioritizing their work accordingly.

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Steps in Performance
Appraisal
 It is well-documented that individuals who
have goals work better and are more
productive than those who do not have goals.
 In order for goals to be effective, they must
have the following characteristics:
 Goals must be specific, measurable,
attainable, relevant and realistic, and timely.

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Steps in Performance
Appraisal
 2. Evaluating employee’s job
performance against the standards.
 It involves measure employees’
performance against the job standards.
 It means comparing employee’s actual
performance to the target performance,
or the goals and standards set
previously.
Steps in Performance
Appraisal
 3. Providing feedback to employees so that
they can improve their performance.
 In order for an employee to know how he is
doing on the job, it is important that
supervisors provide regular feedback to
employees.
 Timely feedback can help employees correct
performance deficiencies and prevent errors
from increasing.
 Feedback must be provided on a regular basis
and delivered in a constructive way.
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Performance Evaluation
Process Guidelines
 For annual evaluations to proceed smoothly
and to serve their critical purpose, it is
essential for organizations to establish
standard evaluation processes.
 All employees should be made familiar with
the performance evaluation system so that
they know what to expect, when to expect it,
and how to go about to achieve a fair and
timely performance evaluation.
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Performance Evaluation
Process Guidelines
 The evaluation guidelines should clearly spell
out the key features of the process:
 1. How the evaluation be conducted? There
should be information on manager and
employee responsibilities, dates and venues,
types of forms to be used, and specific steps
in conducting the evaluation.
 2. Who will conduct the evaluation?
Immediate supervisor, divisional head,
corporate office, multiple raters?
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Who Should Appraise
Performance?
 1. Manager/Supervisor Appraisal—A
performance appraisal done by an employee’s
manager or supervisor and often reviewed by
a manager one level higher.
 2. Self-Appraisal—done by the employee
being evaluated, generally on an appraisal
form completed by the employee prior to the
performance interview.

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Who Should Appraise
Performance?
 3. Subordinate Appraisal--A performance
appraisal of a superior by an employee, which
is more appropriate for developmental than
for administrative purpose.
 4. Peer Appraisal—done by one’s fellow
employees, generally on forms that are
compiled into a single profile for use in the
performance interview conducted by the
employee’s manager.
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Who Should Appraise
Performance?
 5. Customer Appraisal-- A performance
appraisal, based on TQM concepts,
seeks evaluation from both external and
internal customers.
 6. Team Appraisal-- A performance
appraisal, also based on TQM concepts,
that recognizes team accomplishment
rather than individual performance.
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Who Should Appraise
Performance?
 7. 360 Degree Appraisal (multiple raters)
 This is based on the assumption that jobs are
multifaceted, and different people see
different things.
 As the name implies, 360-degree appraisal
and feedback system is intended to provide
employees with as accurate a view of their
performance as possible by getting input from
all angles—supervisors, peers, subordinates,
customers, HQ managers, local managers,
and the like.
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Performance Evaluation
Process Guidelines
 3. When will the evaluation be
conducted? Annually, bi-annually?
 4. What will be evaluated? –skills, traits,
behaviors, and outcomes
 5. What are the potential consequences
of evaluation? —merit raises, bonuses,
promotions, transfer, demotions,
terminations.

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Performance Criteria
 Criteria for appraisal of employees can
be classified into 4 categories:
 1. Traits
 2. Competency
 3. Behavior
 4. Outcomes

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Performance Criteria
 1. Traits. For examples:
 Loyalty
 Honesty
 Reliable and dependable
 Confident
 Hardworking
 Creative and innovative
 Assertive and decisive
 Open and global minded
 Flexible
 Friendly and courteous
Performance Criteria
 2. Competency (SKAs)
 --education and professional qualifications
 --business and cultural knowledge
 --types of training received
 --work experience
 --ability to adapt to changing environment
 --ability to work in teams
 --technical skills
 --social, language, and communication skills
 --problem-solving and decision-making skills

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Performance Criteria
 3. Behaviors. Examples:
 --average number of customer contacts per day
 --average number of customer served per day
 --number of customer complaints or problems solved
 --application of newly gained expertise or international
experience
 --sick days used per year
 --absenteeism, attendance of meetings
 --punctuality
 --promptness in service
 --adhere to deadlines
 --following instructions
 --greeting of customers

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Performance Criteria
 4. Result areas or outcomes. Examples:
 --actual work performance
 --achievement of targets
 --quantity produced
 --overall sales volume
 --dollar increase in sales
 --number of new accounts established
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Performance Criteria
 Result areas or outcomes:
 --completion of assigned tasks or projects
 --development of local teams (by PCN expats)
 --personal growth and development
 --market expansion (increased target market)
 --number of stores opened
 --number of mergers and acquisitions
 --number of inventions (new products and
services introduced)

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Why Performance Appraisal
Fails or Ineffective
 1. Unclear performance standards.
 2. Performance standards not communicated to
employees at the beginning of the performance
period.
 3. Inadequate preparation on the part of the
manager.
 4. Manager may not be able to observe performance
or have all the necessary information to evaluate.
 5. Managers may not be trained to evaluate and
giving feedback.
Why Performance Appraisal
Fails or Ineffective
 6. No thorough discussion of causes of
performance problems.
 7. No follow-up or coaching after the
evaluation.
 8. Rater bias due to personal prejudice or
discrimination.
 9. Too many forms to complete (too much
paper work).
 10. Inappropriate time span in evaluation
(either too short or too long).
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Roles of Performance
Management
 Firms develop performance management
systems for three major reasons--for
evaluation, for development, and
administrative purpose.
 These purposes are much the same for
domestic and international operations.
 The major difference is that implementation
of these goals is much more difficult in the
global arena.
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Roles of Performance
Management
 Evaluation purposes for performance management in
the international environment include:
 1. to recognize individual performance
 2. to compare actual results with target performance
 3. to identify performance gap.
 4. to identify employees’ strengths and weaknesses.
 5. to provide feedback to employees so they will
know where they stand.
 6. to provide a means of warning employees about
unsatisfactory performance.

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Roles of Performance
Management
 Developmental purposes include:
 1. to help employees improve their performance to
develop future potential for managerial position.
 2. to develop commitment to the firm through discussion
of career opportunities and career planning with the
employee.
 3. to assist in goal identification and achievement.
 4. to improve communication by allowing employees to
discuss their concerns.
 5. to motivate employee via recognition of their efforts.
 6. to diagnose individual training and development needs.
 7. to identify individual and organizational problems.

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Roles of Performance
Management
 Administrative purposes include:
 1. to provide input that can be used for the entire range of HRM
activities. Performance Appraisal is used as a basis for
compensation, promotion, job assignment, transfers,
termination, and layoff decisions.
 2. to generate data for HR planning, job analysis and design,
recruitment and selection needs.
 3. to validate the effectiveness of recruitment and selection
criteria.
 4. to provide a ‘paper trail’ for documenting HRM actions that
can result in legal action. Accurate and objective performance
data must be kept and retained.

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International Performance
Management
 In the broader international context,
performance management is a process
that enables the MNC to evaluate and
continuously improve subsidiary unit
and corporate performance, in addition
to individual performance, against
clearly defined, pre-set goals and
targets.
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Performance Management for
Expatriates
 Performance management for expatriates can provide
critical measures of the success of an organization’s
strategic objectives, as well as be an important means
of evaluating the expatriate’s actual on-the-job
performance.
 Performance issues for expatriates could be context-
driven incorporating the unique environmental factors
related to the host country, such as technology
(online performance appraisal), local business norms
(methods and emphasis on performance areas), and
cultural norms (perceptions of performance
evaluation); for example…

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Performance Management for
Expatriates
 Performance appraisal in different countries
can be interpreted as a signal of distrust or
even an insult.
 In Japan, for instance, it is important to avoid
direct confrontation to ‘save face’, and this
custom affects the way in which performance
appraisal is conducted.
 A Japanese manager cannot directly point out
a work-related problem or error committed by
a subordinate.
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Variables Affecting Expatriate
Performance
 When attempting to determine expat
performance, it is important to consider the
impact of the following variables:
 1. the compensation package
 2. the task and the role of the expat
 3. HQ’s support
 4. the environment in which performance
occurs
 5. cultural adjustment

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Variables Affecting Expatriate
Performance
 1. The compensation package
 It is essential that we recognize the
importance of remuneration and reward in
the performance equation.
 Perceived financial benefits, along with the
career progression potential associated with
an overseas assignment, are often important
motives for accepting the posting.
 If these expectations are not met, the level of
motivation and commitment will decrease,
and this will affect performance.
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Variables Affecting Expatriate
Performance
 2. The task and the role of the expat
 Along with the specifics of the task, the firm will
determine the role that accompanies each task
position.
 A role is the organized set of behaviors that are
assigned to a particular position.
 Performance appraisal is determined by how task and
role behaviors conform to parent firm’s expectations.
 Individuals vary according to their abilities to fulfill
the task and role behaviors required from the
assignments.

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Variables Affecting Expatriate
Performance
 3. HQ’s support
 The transfer of the individual and
accompanying family members into a foreign
environment produces a range of emotional
and psychological reactions to unfamiliar
environment.
 The level of HQ’s support provided to the
individual and family is an important factor
affecting performance.
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Variables Affecting Expatriate
Performance
 4. The environment in which performance occurs:
 (a) the host environment with its differing societal, legal,
economic, technical, and physical demands can be a major
determinant of expat performance.
 (b) the type of operation to which the expat is assigned also
plays a role. For example, it may be relatively easier to perform
in a wholly owned subsidiary than in a joint venture with a
state-owned enterprise in China.
 (c) Similarly, the stage of the international business will
influence the success of the expatriate. The expat posted in a
new operation will face more challenges and constraints than
the one who is posted in a mature operation.

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Variables Affecting Expatriate
Performance
 5. Cultural adjustment
 The process of cultural adjustment may
be a critical determinant of expat job
performance.
 Whether expat and family have
difficulties in adjusting to a new
environment will impact on the expat’s
work performance.

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Variables Affecting Expatriate
Performance
 These five variables affecting expatriate
performance are not mutually exclusive.
 They interact in a way that has significant
implications for international employees’
performance.
 Designers and users of performance
management systems need to be aware of,
and responsive to, the impact of these
variables.
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Characteristics of Effective
International Performance
Management Systems: Guidelines
 A number of things can be done to improve
the effectiveness of an international
performance management system.
 1. Relevance
 HR needs to ensure that the criteria and
process for evaluation are relevant to the
content and requirements of the job.
 This involves IHR and evaluators having a
clear understanding of the unique situation of
the foreign job requirements.

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Characteristics of Effective
International Performance
Management Systems: Guidelines
 2. Acceptability
 the criteria and process used need to be
acceptable to those using it, both
evaluators and ratees.
 To be acceptable to ratees, the
appraisal must be seen to be objective,
fair, accurate, and reasonable.

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Characteristics of Effective
International Performance
Management Systems: Guidelines
 3. Sensitivity
 An effective performance management system takes
into consideration cultural and international business
differences.
 It will include input from people with experience in
the particular foreign setting, such as former expats.
 It will recognize the cultural and physical distance
between the foreign location and the parent firm.
 The performance system may be designed in such a
way that it frees the home evaluator from having
directly assess the expats.

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Characteristics of Effective
International Performance
Management Systems: Guidelines
 4. Practicability
 The last characteristic is that the performance
evaluation system needs to be easy to use.
 If it is too complex or too difficult to
administer, managers will not use it or will
only give it surface attention.
 This will discount any potential value from the
assessment process, and make it impossible
to achieve the objectives set out for the
performance system.

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Characteristics of Effective
International Performance
Management Systems: Guidelines
 In conclusion, performance management
success largely depends on the manager and
expat in question:
 How well they both understand, internalize,
and accept the system, and how skillful they
are in its implementation.
 Appropriate performance management
training should be given to all evaluators to
assess employee performance effectively.
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Global Differences and Similarities in
Performance Appraisal
 A study showed that:
 There was more variation in performance appraisal.
 For example, appraisal was important in determining
pay in Taiwan, the US, and Canada.
 Employers in Australia used appraisal to “document
the employee’s performance.”
 Appraisal was used to give recognition to employees
in Japan and Mexico.
 END

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