Anisa Febrilla

1710522061
Management

SUMMARY CHAPTER 6

PERFORMANCE MANAGEMENT

Performance management is a process that enables the MNE to evaluate and continuously
improve individual, subsidiary unit and corporate performance, against clearly defined, pre-set
goals and targets.

Five constraints in evaluating subsidiary performance

1. Whole versus part
the consequences of such global decisions for subsidiary management must be taken into
consideration when considering the issue of performance appraisal of the senior
managers of this joint venture
2. Non-comparable data
 frequently the data obtained from subsidiaries may be neither easily interpretable nor
reliable. These factors can make an objective appraisal of subsidiary performance
problematic, which in turn complicates the task of appraising the performance of
individual subsidiary managers.
3. Volatility in the global business environment
This volatility may require that long-term goals be flexible in order to respond to
potential market contingencies. According to Pucik,7 an inflexible approach may mean
that subsidiaries could be pursuing strategies that no longer fit the new environment
4. Separation by time and distance
Judgments concerning the congruence between the MNE and local subsidiary activities
are further complicated by the physical distances involved, time-zone differences, the
frequency of contact between the corporate head-office staff and subsidiary management
and the cost of the reporting system. For this reason, many MNE corporate managers
spend a considerable amount of time traveling in order to meet expatriate and local
managers in foreign locations.
5. Variable levels of maturity across markets: the need for relevant comparative data
According to Pucik,10 without the supporting infrastructure of the parent, market
development in foreign subsidiaries is generally slower and more difficult to achieve than
at home, where established brands can support new products and new business areas can
be cross subsidized by other divisions.

CONTROL AND PERFORMANCE MANAGEMENT

Although it is not often described as such, performance management is a part of a multinational’s
control system because performance targets are a part of formal control. Through formal control
mechanisms and communication through the feedback and appraisal aspects, performance
management also contributes to shaping corporate culture, both formally and informally12
thereby acting as an informal control mechanism as well as part of the bureaucratic control
system.

PERFORMANCE MANAGEMENT OF INTERNATIONAL EMPLOYEES

Expatriate Performance Management
When attempting to determine expatriate performance, it is important to consider the impact of
the following variables and their interrelationship:
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 progression potential
associated with an overseas assignment, are often important motives for accepting the
posting. If these expectations are not realized during the assignment, the level of
motivation and commitment is likely to decrease, thus affecting performance.
2. The task – the assignment task variables and role of the expatriate.
 3. Headquarters’ support.
the process of adjustment to the foreign location typically produces, to varying degrees, a
range of emotional and psychological reactions to unfamiliar situations encountered over
the period of the stay in the host country. The level of headquarters’ support provided to
the individual and the family is an important performance variable.
4. The environment in which performance occurs – the subsidiary or foreign facility.
An expatriate overseeing the establishment of a new facility in a foreign country,
especially in a developing or emerging market, will face different challenges and
constraints to an expatriate manager who is posted into an established operation.
5. Cultural adjustment – of the individual and the accompanying family members.
The process of cultural adjustment may be a critical determinant of expatriate job
performance. Indeed, much of the literature reviewed in our discussion of the cause of
expatriate ‘failure’ covers the process of adjustment. It is likely that expatriates and their
families will have some difficulty adjusting to a new environment, and this will impact
on the manager’s work performance.

A Cross-Cultural Context For Performance Management

corporate and local strategies and role expectations create much of the potential for complexity
and conflict in the definitions underlying criteria, processes and standards that make up
performance management. Regional and national institutional, regulatory and historical contexts
can impact the character of the criteria selected, task definitions, the timing and even the
purposes of performance management.
Performance management of non-expatriates
it is possible to suggest some performance management challenges:
How to determine performance criteria and goals related to the effective conduct of non-standard
1. assignments, especially virtual assignees.
2. An understanding of the criteria for performance is generally advocated as a highly
participative process between supervisor and employee
3. Isolating the international dimensions of job performance might not be as straightforward
as in traditional expatriate assignments
4. Outstanding performance, under-performance or failure in non-expatriate and non-
standard assignments will challenge the performance appraisal process.
5. regular feedback on progress towards those performance goals is most usually provided
through the performance appraisal activity.
6. One key function of performance appraisal feedback is that it provides opportunities to
improve performance by identifying performance gaps that might be eliminated with
training and development.
7. Employee expectations about rewards for performance and as elements of their working
conditions, together with motivation are important aspects of individual performance.
8. considered – particularly in terms of the impact on these staff of international business
travelers and commuters who ‘drop in, drop out’.

PERFORMANCE APPRAISAL OF INTERNATIONAL EMPLOYEES

Performance criteria
Goals tend to be translated into performance appraisal criteria so specificity and measurability
issues are important aspects, and we need to recognize that hard, soft and contextual goals are
often used as the basis for performance criteria.
Who conducts the performance appraisal?
Appraisal of other employees is likely to be conducted by the subsidiary’s CEO, or the
immediate host country supervisor, depending upon the nature and level of the position
concerned. With regard to expatriate performance appraisal, host-country managers may have a
clearer picture of expatriate performance and can take into consideration contextual criteria.
Standardized or customized performance appraisal form
Employees who relocate within the multinational and non-expatriate assignees who also cross
cultural boundaries in their performance context do not always feel headquarters-based appraisal
forms allow for consideration of the critical success factors of their performance like cross-
cultural competence

Frequency of appraisal
In practice, formal appraisal is commonly on a yearly basis, and this appears to extend to
international
performance systems, even though the domestic-oriented literature on this topic recommends an
ongoing combination of formal and informal performance appraisal and feedback

Performance feedback
feedback of the appraisal process. One of the problems with annual appraisal is that employees
do not receive the consistent frequent feedback considered critical in order to maintain or
improve their performance. The performance literature also suggests that regular feedback is an
important aspect in terms of meeting targets and revising goals, as well as assisting in motivation
of work effort. The difficulty for the expatriate who is being evaluated by a geographically
distant manager is that timely, appropriate feedback is only viable against hard criteria.
Appraisal of HCN employees