3. Performance Management
• Performance Management is a means of getting better results
from the organizations, teams and individuals within an agreed
framework of planned goals, objectives and standards.
-ARMSTRONG AND MURLIS
• The essence of performance management is the development of
individuals with competence and commitment, working towards
the achievement of shared meaningful objectives within an
organisation which supports and encourages their achievement
- LOCKETT
4. • A communication tool to measure each
individual's contribution
– To evaluate talent and achievement with sensible
consistency and accuracy
– To help distinguish barriers to top performance
5. Why Appraise Performance?
• Periodic evaluation helps mangers to have a better
understanding of each employee's skills with the goal to
facilitate, train and develop abilities and power to their
employees
– A chase to assess job development, encourage
interest and enhance job performance by pointing
out the development and recognizing productive
work
– A feedback system that might otherwise be
overlooked
6. Aims of Performance management….
• When we know what is expected of us, and have played
a role in forming these expectations, we will do our
best to meet the expectations.
• We can meet expectations only through our capability
and if we get support from the ‘management’ through
processes, systems and resources.
8. • Adaption to the approach in doing business.
• Complexities' increases when operations go
internationally
9. IHRM and PM
• Used as a differentiation strategy
• Competency of Human Resource is vital
• Home, Host and Third Country
• Globalisation is increasing in demand
• Affects expansion plans
• Subsidiary Performance as added plans
10. Subsidiary Constriants
• Variance in mechanism regarding reporting of
performance data
• Volatile international environment
• Complications to the parent organization
• Life cycle stage
12. Influencing Factors for Expatriates
• An expatriate is sent to foreign subsidiary for
performing varied tasks
• The guidance and support to the expatriate
from the home country office acts as catalyst
to improved performance
• Environmental situation at the host country is
also an important factor that affects the
performance of an expatriate
• The family of the expatriate also needs
adjustment
13. Tri –faceted goals
• Clearly quantifiable measures
• Relationship oriented performance
• Situations in which the performance is carried
14. Suggestive Performance Appraisal
Process
• Always consider the difficulty level of the
assignment of expatriate before appraising
• Make importance should be given to the
appraisal by subsidiary manager
• Consult the host country manager
• Incorporate local market considerations
15. • Due credit is given to the expatriate for
accepting the challenging assignment
• Qualitative Criteria
16. Design process for expatriate performance
• Goal setting for expatriates
• Performance appraisal
18. Individual Performance and Appraisal
• Factors to be considered in the Individual Performance and
Appraisal process :
• Expatriate Performance Management System
• Compensation Package
• Task
• Headquarters’ Support
• Host Environment
• Cultural Adjustment
19. International Compensation
• Key components of an International Compensation Program -
– Base Salary
– Foreign Service Inducement/Hardship Premium
– Allowances
– Benefits
– Tax differentials
20. Components:
BASE SALARY
• An expatriate’s base salary is normally in the same range as the
base salary for a similar position in the home country.
FOREIGN SERVICE PREMIUM
• A foreign service premium is extra pay the expatriate receives
for working outside his or her country of origin
• It is offered as an inducement to accept foreign postings
21. ALLOWANCES
• Hardship allowances
– Payments to compensate expatriates for exceptionally hard living and working
conditions at certain foreign locations.
• Housing allowances
• Cost-of-living allowances
• Education allowances
• Relocation allowances
• Parent country wages everywhere
• Wean expatriates from allowances
• Pay based on local or regional markets
• Cafeteria selection of allowances
• Global pay systems
22. TAXATION
• Unless a host country has a reciprocal tax treaty with the
expatriate’s home country, the expatriate may have to pay
income tax to both the home country and the host-country
governments
• When a reciprocal tax treaty is not in force, the firm typically
pays the expatriate’s income tax in the host country
BENEFITS
• Many firms also ensure that their expatriates receive the same
level of medical and pension benefits abroad that they received
at home
23. Expatriate Manager Compensation:
Other Approaches
• Headquarters-based compensation: paying
home country wages regardless of location
• Host-based compensation system: adjusting
wages to local lifestyles and costs of living
• Global pay systems: worldwide job
evaluations, performance appraisal methods,
and salary scales are used
25. Expatriate Performance Appraisal:
Challenges
• Fit of international operation in multinational strategy
• Unreliable date
• Complex and volatile environments
• Time difference and distance separation
• Local cultural situation
• In most cases, two groups evaluate the performance of expatriate managers
- host nation managers and home office managers - and both are subject to
unintentional bias
• Home country managers tend to rely on hard data when evaluating
expatriates
• Host country managers can be biased towards their own frame of reference
26. Steps to Improve the Expatriate
Performance Appraisal
1. Fit the evaluation criteria to strategy
2. Fine-tune the evaluation criteria
3. Use multiple sources of evaluation with varying periods of evaluation
To reduce bias in performance appraisal:
• Most expatriates believe more weight should be given to an on-site
manager's appraisal than to an off-site manager's appraisal
• A former expatriate who has served in the same location could be
involved in the appraisal process to help reduce bias.
• When the policy is for foreign on-site mangers to write performance
evaluations, home office managers should probably be consulted before
an on-site manager completes a formal termination evaluation
27.
28. The Expatriate Manager:
Compensation
• The balance-sheet approach
– Provides a compensation package that equates
purchasing power
– Allowances for cost of living, housing, food,
recreation, personal care, clothing, education,
home furnishing, transportation, and medical care
• This approach equalizes purchasing power
across countries so employees can enjoy the
30. One of the greatest challenges
– Balance sheet approach: adjusts manager’s
compensation so that manager receives same
standard of living as in the home country + extra
pay for locating overseas
– packages are complex b/c of determining adequate
base salary because of difference in currencies,
variance in tax rates, & determining what benefits
can be utilized & are of value in foreign countries.
31.
32. Appraising Expatriate Managers
• Challenges in appraising overseas managers
– Determining who should appraise the manager.
– Deciding on which factors to base the appraisal.
• Improving the expatriate appraisal process
– Stipulate the assignment’s difficulty level, and adapt the performance
criteria to the situation.
– Weigh the evaluation more toward the on-site manager’s appraisal than
toward the home-site manager’s.
– If the home-office manager does the actual written appraisal, use a
former expatriate from the same overseas location for advice.
33. WHO SHOULD RATE?
More weight given to onsite
manager’s evaluation.
Expat who worked in same
location should assist home-office
manager with evaluation.
If foreign on-site manager preparing
evaluation, home-office manager should
be consulted before finalization.
34. Performance Appraisal at
Pepsi-Cola International
• Common performance appraisal system:
focuses on motivating managers to achieve and maintain high
standards of motivation.
Factors associated with high performance in diverse markets were
identified:
Handling business complexity
Results orientation
Organizational savvy
Leadership
Executive excellence
Composure under pressure
Maturity
35. Contd…
Technical knowledge
Positive people skills
Effective communication and impact
• Five feed-back based mechanism:
instant feedback
coaching
accountability-based performance appraisal
development feedback
human resource plan
36. • Guidelines for appraisal, modification to suit cultural
differences.
• PCI tried to balance the cultural and administrative
imperatives of successfully managing the performance of a
diverse workforce.
38. Key Components of Performance Management
System (PMS) Culture:
Clear Goals and Objectives
Continuous Feedback and Communication
Performance Measurement and Evaluation
Employee Development and Training
Performance Recognition and Rewards
Fairness and Transparency
39. Performance Management System in International
Human Resource Management (IHRM):
:
key considerations for implementing PMS in IHRM:
Cultural Sensitivity:
Localized Goal Setting
Language and Communication
Cross-Cultural Training
Legal and Regulatory Compliance
Technology and Systems Integration
Performance Reviews and Calibration
40. International performance management
systems vary across different countries
India: In India, performance management systems are
typically based on a combination of objective setting,
periodic performance reviews, and feedback
discussions.
Many organizations in India use key performance
indicators (KPIs) and balanced scorecards to measure
individual and organizational performance.
Performance appraisals are often conducted annually
or semi-annually.
41. China: Performance management in China is
often characterized by a strong emphasis on
collectivism and teamwork.
Performance evaluations are typically conducted
through a combination of self-assessment, peer
assessment, and supervisor assessment.
Chinese companies may also use a "9-box grid"
system to assess and rank employees based on
performance and potential.
42. South Korea: Performance management in
South Korea is often driven by a hierarchical and
goal-oriented culture.
Companies in South Korea often use a
combination of performance appraisals, self-
assessments, and 360-degree feedback.
The focus is on goal alignment and continuous
improvement. Performance evaluations are
usually conducted annually or biannually.
43. United Kingdom: Performance management practices
in the UK vary across organizations, but they generally
focus on setting clear objectives, regular performance
reviews, and feedback discussions.
Performance evaluations may be conducted annually
or more frequently, depending on the organization.
Some companies in the UK also incorporate employee
development plans and performance-related pay.
44. United States: In the USA, performance
management systems can vary across industries
and organizations.
Many American companies use performance
appraisals to assess individual performance and
determine compensation and promotion
decisions.
There is often an emphasis on individual
achievement, goal setting, and performance-
based rewards. Performance evaluations may be
conducted annually or more frequently.
45. Japan: In Japan, performance management systems
often emphasize teamwork, group harmony, and long-
term employment.
Performance evaluations in Japanese companies
typically involve a combination of self-assessment,
peer assessment, and supervisor assessment.
Feedback discussions focus on identifying areas for
improvement and career development. Performance
appraisals are often conducted annually.
