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Week4Lecturenotes.docx
International Human Resource Management:
BUSMGT 761
Week 4:
12
th
July 2021
Performance
Management
To recap, recruitment and selection decisions in IHRM have serious implications in terms of an expatriate’s performance and hence, should be dealt with caution and care.
Task/in
-
role
performance
•
When employees use technical
skills and knowledge to produce
goods or services through the
organization's core technical
processes, or
•
When they accomplish specialized
tasks that support these core
functions, they are engaging in task
performance.
•
Directly related to the job
•
Usually presented in job description
Week 3
recap
Examined various approaches to international
staffing
Outline pivotal role of international
assignments
Discuss the key drivers behind expatriate
failure
Focused on recruitment and selection as major
factors in the success of global assignments
The aim of this week is to draw together the relevant literature on performance management in the international context as it relates to IHRM. The focus is on the subsidiary context, reflecting historical bias towards subsidiary management in the international business and performance management literature, although the focus is broadening. The approach is to identify those aspects that require a substantial modification of traditional performance management practices (especially appraisal criteria, the roles of various actors in the processes, and the processes themselves) that are imposed by international operations.
Objectives
Define Performance
Define
Understand Performance Management as a process
Understand
Multinational Performance Management at the
global and the local level
Discuss
Performance Management as part of the MNE’s
control system
Outline
Factors associated with expatriate performance
Examine
Before we look at performance management, let us understand what ‘performance’ means.
Performance
Task/in
-
role
performance
Contextual/extra
-
role
performance
Although many academics choose the word ‘job performance’, however, performance can be seen as either task or in-role performance and contextual or extra-role performance.
As the name suggests task performance is the core of an employee’s job and this is what the employee is expected to deliver. Examples of task performance can be, achieving sales targets, finishing projects within a timeframe or increased productivity.
But employees do not only come to the job and focus on their tasks or roles. They also depict extra role performance, such as participating in company programmes, volunteering for an extra-curricular activity, or helping out a colleague with extra work.
Although employees are not expected to go out of their job boundaries, however, you will increasingly find that the boundaries between task and contextual performance are blurred. Organisations expect employees to perform extra-role activities. Research also shows that employees who are more involved with organisational activities are more satisfied with their jobs and have an enhanced sense of commitment.
Contextual/extra
-
role Performance
•
Persisting with enthusiasm and extra
effort as necessary to complete own
task activities successfully
•
Volunteering to carry out task
activities that are not formally part of
own job.
•
Helping and cooperating with others.
•
Following organizational rules and
procedures.
•
Endorsing, supporting, and
defending organizational objectives
We can understand individual performance through the AMO model, where A is ability, M is motivation and O is opportunity. Boxall and Purcell (2016) state that how much an individual will perform depends upon their ability to do the job (experience, education, skills, knowledge), how motivated they are to perform (intrinsically and/or extrinsically), and the opportunities that they perceive in the environment (e.g., degree of autonomy, freedom to be part of cross-functional teams) in order to enable them to give performance. How much ability, motivation and opportunity an individual enjoys depends upon both a) individual (e.g., experience, health) and b) situational (e.g., organisational policies and practices, type of organisation) factors. Hence, depending on their own individual and situational factors, individuals display varying levels of ability and motivation and enjoy different opportunities, and this then ultimately has an impact on their performance levels.
Organisational Goal Setting…
Balanced Scorecard (BSC)
Triple Bottom Line
Goals are set at the organisational level and then distributed at the individual/team level. It is important to remember that performance may also occur outside the goals set by the organisation. For example, favourable tax incentives may enhance the bottom line of an organisation.
At the organisational level, a balanced way of looking at performance would be to achieve on outcomes related to financials, customers, internal business processes and learning and growth.
However, organisations are also increasingly focusing on the triple bottom line with focus on people, planet and profitability.
Click on the link provided on the slide to read more on this example.
Performance management is a process for strategy implementation, a vehicle for culture change, and it provides input to other HR systems such as development and remuneration.
|
1. Job analysis and design 2. Performance goal setting Performance (mutual)communicate mutual expectations management 3. Performance appraisal process 4. Feedback 5. Feeding into a) rewards, b) training and development, c) work redesign
|
The performance management process can be broken down into four key activities that, in practice, tend to overlap. These are illustrated in Figure 10.1 (textbook page 317). The key categories are:
· Performance planning
· Performance coaching and mentoring
· Performance appraisal
· Performance feedback.
Figure 6.1 from your textbook illustrates the major issues, actions and decision processes related to performance management in the international context. This model allows us to investigate the complex interaction between local and global contexts for performance and the tasks of the actors, performance criteria, purposes for and timing of performance management as these elements relate to individual and firm outcomes. It provides a convenient starting point for our exploration of the link between the MNEs internationalisation strategies, its goals for individual units in terms of contribution to global profitability, and the performance management of individual employees, whether PCN, TCN, or HCN. The aspects of these relationships are critical as an individual’s performance is appraised (or evaluated) according to expectations of appropriate outcomes and behaviour that contribute to organisational goal attainment.
A Model of
MNE
Performance
Management
Goal:
contribution
to
global
profitability
&
wellbeing
Outcomes
and
behaviors
(
Figure
6.1)
There are five constraints to evaluating subsidiary performance against an MNE’s expectations for it:
Whole vs. part – the performance of a subsidiary may look poor taken alone, but good in the context of what it is expected of it for the MNE; for example, if it’s purpose is to undercut a competitor’s prices.
Non-comparable data – is a key constraint that affects goal attainment for an MNE subsidiary. Non-comparable data is not easily interpretable or reliable. For example, a subsidiary may register skyrocketing sales, but accounting rules in the host country may be over-counting sales compared to how they would be measured in the MNE parent country. In terms of the performance appraisal, non-comparable data can’t just be plugged into a general rewards system algorithm to determine rewards or punishment.
MNE
performance
management
constraints
•
Whole vs. part
•
Non
-
comparable data
•
Volatility in the global business
environment
•
Separation by time and distance
•
Variable levels of maturity
across markets:
the need for relevant
comparative data
Volatility in the global business environment – the approach must be flexible so that subsidiary is always pursuing strategies that fit the current environment.
Separation by time and distance – video conferencing, chats, and emails are not full
1
1
1
replacement for regular and frequent face to face contact between subsidiary managers and corporate staff.
The variable levels of maturity across markets – without the supporting infrastructure of the parent, market development may take longer at the subsidiary.
See pp. 151-153.
Control and performance m
ana
g
e
m
en
t
14
(
Figure
6.2)
Monitoring performance allows an MNE to ensure conformity to agreed-upon standards.
Performance management enables the MNE to evaluate and continuously improve individual, subsidiary, and corporate performance against pre-defined pre-set goals and targets which take the MNE in the direction it wants to go.
See p. 156.
https://www.payscale.com/compensation
-
today/2018/08/performance
-
management
-
techniques
Click on the link provided on the slide to read more on this example.
Variables affecting
IA
performance
See more
in
chapter
8
(
Figure
6.3)
Technical competence is a necessary but insufficient condition for successful international performance. Cross-cultural interpersonal skills, sensitivity to foreign norms and values, and ease of adaptation to unfamiliar environments are just a few of the managerial characteristics most multinationals seek when selecting international managers.
Figure 6.3 (p. 155) lists five factors related to expatriate performance:
Compensation package: important for motivation and commitment.
Task performance: various tasks include chief executive officer, structure reproducer, troubleshooter, and operative. These different tasks can be linked to four types of assignment (technical, developmental, strategic, and functional). Furthermore, role clarity, and job similarity (abroad vs. domestically) may have an impact on the performance of an expatriate.
Level of HQ support that is provided to the individual and the family.
Host environment: the type of operation is important (wholly owned subsidiary vs.
13
13
13
IJV) as well as the stage of international business.
Cultural adjustment—self and family: difficulties in adjustment impact on performance and are often the cause of expatriate ‘failure’.
In summary, expatriate performance management is much more complex than performance management on a national level, as more influence factors need to be considered in an international environment.
16
16
16
Types of assignments
Direct Control
· Position filling of managerial and/or technical roles
· Trouble-shooters
Strategic Knowledge Transfer
•Reasons for Communicate and adopt strategic mission (and policies & procedures)
•International Facilitators and consultants Organisational Development Assignments
· Socialization of locals into corporate values via informal co-ordination and informal communication networks
PCN role conception
Figure 6.4
Source: Adapted
from
Torbiörn,
I.
The
structure
of managerial
roles
in
cross
-
cultural settings.
International
Studies
of
Management
and Organization 15
(1)
,
p.
60
· Network building and boundary spanning
Management Development
· Developing global mindset in high-potential future leaders
Performance
Management process should reflect the goals of the assignment
16
16
16
Expatriates are assigned to foreign operations to fulfil specific tasks and performance objectives for each individual should reflect these tasks.
Communication of role conception from the multinational to the expatriate is indicated by the straight arrows. Role conception is also communicated to the role recipient by host-country stakeholders (e.g., subsidiary employees, host government officials, customer, suppliers, etc.) as shown in the dashed arrows. This, however, crosses a cultural boundary. Role behaviour provides the feedback loop, again at two levels: the MNE and the host-country stakeholders. Trying to perform to differing expectations may cause role conflict.
If PCN managers adapt their role behaviour according to the role conception communicated in the host environment, it may conflict with that predetermined at headquarters. From the perspective of headquarters, commitment to the parent is perceived as important, given the part that the PCN plays in transferring know-how and the ‘preferred way of doing things’ into the subsidiary. This helps to explain the preference for using headquarters’ standards in expatriate performance appraisal as a control mechanism.
Communication of role conception from the multinational to the expatriate is indicated by the straight arrows. Role conception is also communicated to the role recipient by host-country stakeholders (e.g., subsidiary employees, host government officials, customer, suppliers, etc.) as shown in the dashed arrows.
Role expectations are likely to be more complex for the TCN than the PCN, as the role is defined by and performed in two different countries. That is, role conception crosses two cultural boundaries, as shown in Figure 6.5. Parent and host country role senders may have differing expectations of role behaviour, that, in turn, are different to the accepted managerial behaviour defined by the prevailing norms in the TCN’s own country. For example, a US manager working for a Dutch multinational posted as a TCN in Indonesia may face added difficulties. The American’s role behaviour may be deemed inappropriate by both the parent (Dutch multinational) and the host nationals (Indonesians).
H
CN role conception
Figure 6.6
In terms of task performance and potential role conflict, as can be seen from Figure 6.6, HCN managers face particular role concerns that are different from those of PCN and TCN managers. The HCN manager is expected to perform a role that is conceptualised by a psychologically and physically distant parent company but enacted in an environment with other role senders who are both psychologically and physically close. Parent company role conception is communicated to the HCN, but it crosses the cultural boundary, as does feedback expressed, as the HCN’s role behaviour (the straight arrows in Figure 6.6). Input from host country role senders, though, does not cross a cultural boundary. The HCN receives role expectations and encacts role behaviours in his or her own cultural environment.
The performance management process of international assignees typically follows three steps: goal setting, performance appraisal, and feedback.
Performance
management
of
IA’s…
P
er
f
or
m
an
c
e
appraisal
22
Feedback
–
pay
&
promotion
–
training
and
development
Goal
setting
(
tasks
)
–
negotiated
or
assigned
Goal setting includes details of the goals, and this depends on the type of assignment that the IA is on.
Performance
management
of
IA’s…
23
Which performance
criteria?
•
Hard
goals (Task)
–
objective, quantifiable
results
•
Soft
goals
–
interpersonal
skills; how results
are achieved, incl.
ethics
•
Contextual
goals
–
activities that
contribute
to
the
social
and
psychological
core
of the
organization
•
Head Office or subsidiary specific goals?
Goal
setting
)
tasks
(
–
negotiated
or
assigned
Appraising performance is a complex task as there are lot of variables to be considered. For example, who will conduct the appraisal, what would the setting be, how frequently does it need to happen.
Performance
management
of
IA’s…
24
Standard or customized??
•
Standard form allows for cross
-
employee
comparisons
•
Performance
context
requires customisation
Who
conducts
the
appraisal?
•
Immediate
supervisor
(
near
or
far)
•
Multiple
raters
•
360
0
Frequency of
appraisal?
•
Annual? Bi
-
Annual?
•
Formal v informal setting?
P
er
f
or
m
an
c
e
appraisal
The performance appraisal needs to feed into other areas such as reward, training, job design etc.
Performance
management
of
IA’s…
25
Timeliness?
•
Difficult to provide to expatriates
if conducted from head office
Medium / Channel?
•
Zoom (now we’re all experts)
Feedback
–
pay
&
promotion
–
training
and
development
|
· Performance criteria and goals for nonstandard work · Criteria for performance is subject to cultural differences Non-• Isolating international dimensions of job performance is not as straightforward as for expatriate traditional expatriate jobs performance • Outstanding/under-performance and failures will challenge performance management appraisal process · Performance appraisals are complicated challenges by international context, outside appraisers · Ways to improve and what to reward is unclear · Impact of non-standard work on HCN coworkers |
Non-expatriates, such as, international business travellers or frequent flyers also face performance management issues and there is lot of complexity inherent in the system.
Performance Appraisal: Current challenges |
Performance appraisal is fraught with challenges. Aligning individual and company goals may not always be easy. Linking rewards to performance may be tricky, especially if the performance criteria are not objective. It may be difficult to identify poor performance of individuals as the subsidiary performance may be positively impacted by factors beyond the individual control of the expatriates, even though such expatriates may be poor performers. Managing performance is another slippery area; if not done correctly could land the company into lawsuits and legal problems.
Post Covid-19, more and more companies are using ‘digital’ rather than ‘physical’ workplaces. We use technology to interact with business processes, collect and analyse data, and draft reports; to communicate, collaborate, and knit teams together across spatial and organisational boundaries. Work is now digital and mobile.
Working in digital spaces creates a challenge for organisations. Practices and norms that derive productivity in the physical workplace don’t necessarily work as well in the digital one, and may even be counterproductive. You can’t encourage remote workers to connect with each other by putting board games in the office lounge or providing a catered lunch.
https://www.top
-
employers.com/en/insights/performance
-
management/webinar
-
takeaways
-
your
-
people
-
are
-
greater
-
than
-
number/
Deloitte Insights, 2021
Their study identifies three attributes common to productive digital teams: psychological safety, digital competence, and management support for experimentation and flexibility.
Organisations all over the world are redesigning their performance management systems to keep up with the times. The traditional methods alone may not be as effective.
Current Trend: Redesigning PM
•
Continuous feedback utilising
online tools focused on
improving current
performance
•
Expectations of continuous
learning and developing skills
required for the future
•
Big data driven decisions
–
limiting bias
•
Team based PM reflecting
team based working
https://www2.deloitte.com/insights/us/en/focus/human
-
capital
-
trends/2017/redesigning
-
performance
-
management.html
Click on the link provided on the slide to read more on this example.
https://qz.com/428813/ge
-
performance
-
review
-
strategy
-
shift/
https://www.clearreview.com/top
-
5
-
performance
-
management
-
case
-
studies/
In
2015
, under
CEO
Jeff Immelt,
GE
announced it was replac
ing this approach
with
fre
quent feed
back
and reg
u
lar con
ver
sa
tions called”
touch
points
” to
review progress against agreed near
-
term goals. This new approach was sup
-
port
ed by an online and mobile app, which enables employ
ees to cap
ture
progress against their goals, give their peers feed
back
and also
request
feedback. The new app is called “PD@GE” for “performance development at
GE”.
Click on the link provided on the slide to read more on this example.
Adobe replaced annu
al appraisals with reg
u
lar one
-
on
-
one
check
-
ins
, sup
port
ed by
fre
quent feed
-
back
—
both pos
i
tive and con
struc
tive. There are
no per
for
mance rat
ings
or rank
ings and they
allow dif
fer
ent parts of the organ
i
sa
tion to deter
mine how fre
quent
ly they should hold check
-
in
con
ver
sa
tions, based on their work cycles. Now that forced rank
ing has been abol
ished, employ
ees
at Adobe are assessed based on
how well they meet their goals
. Man
agers are also trained on the
nuances of giv
ing and receiv
ing feedback.
The result has been a
marked increase in employ
ee engage
ment, with
vol
un
tary turnover decreas
-
ing by
30
%
since check
-
ins were intro
duced.
https://www.forbes.com/sites/davidburkus/2016/06/01/how
-
adobe
-
scrapped
-
its
-
performance
-
review
-
system
-
and
-
why
-
it
-
worked/#fe0fe585
5
e8f
https://www.clearreview.com/top
-
5
-
performance
-
management
-
case
-
studies/
Click on the link provided on the slide to read more on this example.
Broadening out the discussion to the multinational level and addressing performance management and appraisal concerns related to non-expatriates and those on nonstandard assignments, has been useful in reminding us that there are many dimensions to international business operations that need to be considered when designing an effective performance management system in the multinational context.
Summary
Definition
and types of performance of individual
employees
The
basic components
of performance
management system for international employees
Factors associated with
International Assignee
performance
Trends
in performance appraisal
