Performance management methods might be different in a foreign country, depending on

  • Summary

  • Contents

  • Subject index

With increasing globalization comes the need to understand human resource management (HRM) more broadly across countries, cultures, institutions, and organizational types. Designed to help readers explore and understand the key concepts and latest research behind the strategic management of people in organizations that operate in a global context, this accessible book provides concise coverage of HRM concepts, balancing comparative approaches and US and non-US schools of thought. Not limited to the multinational firm, the book reflects the most current knowledge in the field and considers all types of organizations embedded in the global context. Chapter-opening vignettes (short cases) exemplify the chapter's core topics and show readers how chapter content can be applied. Extensive references make it easy for readers to explore concepts in more depth.

Global Performance Management and Compensation

Global Performance Management and Compensation

Global performance management and compensation

Learning Objectives

After reading this chapter you should be able to:

  • describe the objectives of a global performance management system,
  • explain how and why performance management systems are different in different countries,
  • identify the issues in performance appraisal of expatriates,
  • explain the influence of national differences on compensation systems, and
  • outline best practices in compensation programs for expatriates.

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Are you an international HRM designing an expat performance system? Find some useful tips and considerations to get the most out of your employees working abroad.

Next to expatriate failure, one of the greatest difficulties multinational companies encounter is that of underperformance. dummy Research by Harvard Business Review over a 10 year period showed that almost one third of US managers who stayed for the duration of an expat assignment failed to meet performance expectations. As a global human resource manager, developing an international performance management system that highlights potential issues early, and provides a framework for remediation, is essential for your company to achieve a return on investment.

International performance management is the evaluation of an individual who works in a foreign subsidiary on a temporary basis to transfer knowledge or develop global leadership skills. At its best, international performance management should feed into the global goals of the business.

Challenges of international performance management

There are many challenges associated with expatriate performance management. Although we have listed some below, they are likely to vary by business. Ideally work to identify the challenges your company is likely to encounter and attempt to mitigate them in the expatriate performance management plan.

Environmental variations

Performance management systems rarely work in the same way domestically and internationally. Environmental variations including; different growth rates, the immediate environment and differences in performance, usually mean international performance appraisals need to be unique to each expatriate manager.

Time and distance

Improvements in technology make this less of an issue than it once was, but time differences and local infrastructure will impact on performance and appraisals. This is particularly true of expats working in underdeveloped countries.

Cultural adjustment

The employee’s ability to adjust to the organisational culture within the subsidiary, as well as the wider culture within their new country, is likely to impact performance. An understanding of the local organisational culture by the HR team, the management team and the employee will facilitate the creation of a measurable international performance management system.

Inconsistency of implementation

Like all performance development, it will only be successful if implemented consistently in company subsidiaries. Oversight of this may be a challenge if most Human Resource functions are centralised to headquarters, meaning some employees thrive while others are left directionless.

Tips for creating an international performance management system

Developing a system that will work successfully across markets is a significant challenge for a global human resources manager. To further compound the situation, there is very little best practice research as existing studies do not focus on the same variables or countries.

Define, facilitate and encourage performance

Ultimately the goal of an expatriate performance management system is to define, facilitate and encourage performance in the individual and the teams they work with.

Your company’s international performance management system should enable managers of expat employees to set specific, realistic, measurable goals that feed into the overall objectives of the business. However, setting goals is not sufficient for success, the programme should also contain a method of assessing performance on several occasions over a year.

To achieve the goals that have been set, employees need to be able to facilitate performance through removal of barriers like outdated equipment or software, poor procedures and micro-management. However, international employees may encounter further difficulty with government requirements or personal safety depending on where they are based. Flexibility needs to be included in this regard when developing an expat performance management system.

Finally, encouraging performance has been shown to be another marker of  a successful international assignment. The methods for encouraging performance may vary from country to country. While additional remuneration may work successfully at headquarters, time off or other special privileges may be more valued in other countries. The easiest way to find out what may work best is to survey international employees. Once agreed it is essential that the appraisal process is transparent and fair.

Training

Essential to successful international performance management is a clear and effective training plan for all stakeholders. Once complete, managers need to be held accountable for implementing the process across their own employees, ideally in the form of their own performance appraisal by senior management and/or human resources.

As a Global HR Manager, you should also provide new expatriates with the tools they need to succeed and help to prevent costly expat failure. See our tips on how to dummy prepare expats for foreign assignment.

Cross-cultural differences

When creating a performance development plan that is going to work cross-culturally the differences in how performance feedback should be provided needs to be accounted for. For example, in some European cultures feedback should be direct and actionable where as in some Asian cultures the same feedback could cause unacceptable loss of face for the employee. Therefore, it is important to understand the culture on the ground when creating guidelines on how feedback should be provided.

In addition to skill sets, another element of effective expat performance is personal health and wellbeing. Ensure your employees have the international health insurance protection they need to excel.

What is the most likely benefit of operating a company facility in a foreign country?

Lower Labor Costs A benefit of operating overseas is that many foreign countries offer lower operating costs, particularly reduced labor costs.

Which factor has been found to have the greatest influence on whether an employee completes foreign assignment?

In research conducted a number of years ago, the factor most strongly influencing whether an employee completed a foreign assignment was the comfort of the employee's spouse and family.

What challenges are placed on human resources when an organization operates globally?

10 challenges HR faces in a global company.
Compliance with labor laws. ... .
Talent acquisition. ... .
Developing agile leaders. ... .
Balancing local and home issues. ... .
Building capability. ... .
Efficient coordination and collaboration. ... .
Retaining critical talent. ... .
Sharing knowledge across borders..

Which of the following best defines an international organization?

international organization, institution drawing membership from at least three states, having activities in several states, and whose members are held together by a formal agreement.