June 11, 2008 1

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Managing Performance

June 11, 2008 2

Managing Performance

Organizations seek to continuously improve upon their corporate performance (headquarters and subsidiary units) against clearly defined, preset objectives, goals and targets

The performance of individuals working in an organization is determined by numerous considerations, including pay, training and development measures, working environment, ability, expectations and motivation

June 11, 2008 3

Determining Expatriate Performance

ExpatriatePerformance

CompensationPackage

Task

HeadquartersSupport

WorkEnvironment

CulturalAdjustment

June 11, 2008 4

Determining Expatriate Performance:(The Compensation Package)

The compensation or remuneration package (salary, benefits, allowances etc.) offered to an expatriate is considered an important determinant of his or her performance on the international assignment

Another important consideration and motivator for expatriates is the career progression potential stemming from their acceptance of the international assignment

June 11, 2008 5

Determining Expatriate Performance:(The Task (1))

Expatriates perform different tasks on their respective international assignments, for e.g., top managers, middle managers, business establishers, project employees and R&D project personnel, or, as CEOs / Subsidiary Managers, Structure Reproducers, Troubleshooters and Operatives

Tasks are accompanied by roles, i.e., what behavioral patterns does the organization and the host environment expect from the expatriate’s position on his or her assignment?

June 11, 2008 6

Determining Expatriate Performance:(The Task (2))

A serious “role conflict” situation may arise for expatriates on their international assignments because of the different expectations prevailing at headquarters and amongst the stakeholders in the host environment

The inability to reconcile to role conflicts can result in a performance loss for expatriates

Research indicates that expatriates accord higher priority to satisfying the role expectations of the headquarters as their performance and career prospects are often determined there

June 11, 2008 7

Determining Expatriate Performance:(The Task (3))

Job Autonomy is another determining factor which has to be considered in an expatriate’s performance

For TCNs, the issue of role conflict is more complex than for HCNs because TCN expatriates may not only have to contend with the expectations of the culturally quite different host environment, but they may also have to contend with the culturally quite different headquarters of the organization

Example – A U.S manager who works for a large Dutch multination operating a subsidiary unit in Indonesia

June 11, 2008 8

Determining Expatriate Performance:(Headquarter Support)

Headquarter support is important for the expatriate and his or her accompanying family members because of their requirement for adjustment in the new host environment which may be culturally quite different from their home environment

A perception on the part of the expatriate of insufficient support being rendered by headquarters (including support to the expatriate’s family) could result in disillusionment with the organization and a drop in the expatriate’s performance levels

June 11, 2008 9

Determining Expatriate Performance:(Headquarter Support)

Transactional

Specific, short-term, monetizable

obligationslimited involvement

of parties

Relational

Broad, open-endedlong-termobligations

monetizable andsocioeconomic

elements

June 11, 2008 10

Determining Expatriate Performance:(Host Environment)

The host environment may have a major impact on the expatriate’s performance due to the different economic, political, cultural, social, legal, technical, physical etc. framework conditions prevailing there and the policy of the organization’s headquarters towards its subsidiary units

The stage of maturity of the organization’s subsidiary unit also may considerably determine the expatriate’s performance

June 11, 2008 11

Determining Expatriate Performance:(Cultural Adjustment)

Cultural adjustment is a critical factor in an expatriate’s performance (see “expatriate failure”)

All individuals react differently, some can adjust more quickly than others (personality traits: authoritarian and dogmatic versus open-minded, culturally sensitive and emphatic)

The adjustment of the expatriate’s accompanying family members must be taken intro consideration as well

June 11, 2008 12

Determining Expatriate Performance:(Cultural Adjustment – Time Curve)

Ad

just

men

t

Time

1

2 (Culture Shock& Crisis Period)

3

4

June 11, 2008 13

Expatriate Performance Appraisal Goals can be used as the basis for performance criteria:

Hard Goals – objective, quantifiable and measurable (e.g.: ROI, market share)

Soft Goals – relationship or trait-based (e.g.: leadership style, interpersonal skills)

Contextual Goals – Factors that result from the situation or environment in which an expatriate performs (e.g.: host country regulations and restrictions)

Often, organizations use only hard goals to assess their expatriates. Things like behaviour of the expatriates and ways of obtaining results (bribery?) must also be considered

June 11, 2008 14

Who Conducts Performance Appraisal? Often high-level expatriates (subsidiary managers) are

assessed by their immediate superiors at headquarters. This creates problems because the superiors are based at a distant location and may not be fully aware of the conditions and particular situations prevailing at the subsidiary unit

Relying on “hard criteria” as a means of assessing the performance of expatriates could result in these pursuing short-term quick results oriented strategies with adverse consequences for the longer-term (and which become evident after the expatriate has completed his or her assignment and departed from the host country)

June 11, 2008 15

Who Conducts Performance Appraisal? Lower-level and other expatriates may be conducted by

a host-country manager or supervisor who can take the contextual situation into account, but who may have their own cultural biases and hence cannot fully appreciate the expatriate’s performance in the broader organizational context

Where possible, several organizations use more than one assessor to evaluate an expatriate’s performance on his or her international assignment

June 11, 2008 16

How is Performance Appraisal Conducted?

Traditionally, most organizations use standardized performance appraisal forms to evaluate their employees’ performance. Such forms allow cross-employee comparisons, but

they are inappropriate for assessing expatriates on international assignments because the

performance context changes. Many organizations continue to use performance

appraisal forms meant for domestic employees in an international context

June 11, 2008 17

Appraising the performance of HCNs may be a “culturally-sensitive” issue in some countries (save face syndrome)

Local responsiveness to performance appraisal counteracts a standardized approach by the organization

HCN managers also may experience “role conflicts” because they are expected to perform roles imposed by the parent organization and, at the same time, live up to the expectations of the home environment

HCN managers who work in the parent organization and are then transferred back to their home countries may experience particular difficulties with “role conflicts”

Appraising the Performance of HCNs