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Chapter SevenChapter Seven Performance ManagementPerformance Management 11
Learning ObjectivesLearning Objectives
Understand the challenges of internationalUnderstand the challenges of international
performance management.performance management.
Analyze the areas in terms of skills and other traits andAnalyze the areas in terms of skills and other traits and
behaviours to be appraised.behaviours to be appraised.
Understand the conflicting role expectation , differenceUnderstand the conflicting role expectation , difference
between role and job expectations and expectations frombetween role and job expectations and expectations from
different organizations.different organizations.
Analyze the variety of appraisers in internationalAnalyze the variety of appraisers in international
performance appraisal and determine who shouldperformance appraisal and determine who should
appraise the performance?appraise the performance?

Learning ObjectivesLearning Objectives
Discuss the system of performance appraisal.Discuss the system of performance appraisal.
Understand the problems associated with theUnderstand the problems associated with the
international performance appraisal; andinternational performance appraisal; and
Discuss the measures to make the internationalDiscuss the measures to make the international
performance management effective.performance management effective.

StructureStructure
1)1) IntroductionIntroduction
2)2) Challenges of international performance management .Challenges of international performance management .
3)3) Areas to be appraised.Areas to be appraised.
4)4) Organizational role expectations.Organizational role expectations.
5)5) Who should appraise the performance?Who should appraise the performance?
6)6) System of performance appraisal.System of performance appraisal.
7)7) Problems of performance appraisal.Problems of performance appraisal.
8)8) How to make appraisal effective?How to make appraisal effective?
9)9) ConclusionConclusion
10)10) SummarySummary..

7.1 Introduction7.1 Introduction
Managing employee performance based on the organizationalManaging employee performance based on the organizational
needs, strategic requirements and customer preferencesneeds, strategic requirements and customer preferences
is crucial aspect of international human resourceis crucial aspect of international human resource
management. MNCs incur high cost on human resourcesmanagement. MNCs incur high cost on human resources
due to employment of different kinds of foreigners.due to employment of different kinds of foreigners.
Therefore, they expect the foreigners to performTherefore, they expect the foreigners to perform
distinctly and create , contribute and add significantdistinctly and create , contribute and add significant
value to the organizational activities.value to the organizational activities.
Foreign employees are also aware of their cost to MNC andForeign employees are also aware of their cost to MNC and
are concerned to contribute phenomenally to theare concerned to contribute phenomenally to the
organization goals and strategies.organization goals and strategies.
MNCs encounter critical challenges in the process ofMNCs encounter critical challenges in the process of
international performance management.international performance management.

7.2 Challenges of international performance management7.2 Challenges of international performance management
Total Company versus Parts of it.Total Company versus Parts of it.
Standard format versus Customized format.Standard format versus Customized format.
Uniformity of Data of Performance.Uniformity of Data of Performance.
Environmental variationsEnvironmental variations
Validity of performance criteria.Validity of performance criteria.
Time and distance variations.Time and distance variations.
Varied levels of maturity.Varied levels of maturity.
RaterRater’’s competence.s competence.
RaterRater’’s bias.s bias.
Host environment.Host environment.
Cultural adjustments.Cultural adjustments.

MNC consists of headquarters, subsidiaries and its variousMNC consists of headquarters, subsidiaries and its various
alliance companies. HR manager needs to use differentalliance companies. HR manager needs to use different
type of appraisal technique for each part, as decisiontype of appraisal technique for each part, as decision
affects various organs of the MNC differently. Even theaffects various organs of the MNC differently. Even the
implementation process of the decision results inimplementation process of the decision results in
contrasting outcomes.contrasting outcomes.
The best practice from the point of view of a subsidiary mayThe best practice from the point of view of a subsidiary may
not be the best for HQ or other subsidiaries. Hencenot be the best for HQ or other subsidiaries. Hence
decisions that benefit most of the parts and on longdecisions that benefit most of the parts and on long
rather than short term basis are to be preferred andrather than short term basis are to be preferred and
considered appropriate.considered appropriate.
MNCs face similar dichotomy situations in their pricingMNCs face similar dichotomy situations in their pricing
policies.policies.

Now the core issue is how to measure the performance ofNow the core issue is how to measure the performance of
employees working in HQ and subsidiaries , when the HQemployees working in HQ and subsidiaries , when the HQ
and subsidiaries follow different strategies andand subsidiaries follow different strategies and
implement varied actions. These aspects of dichotomy inimplement varied actions. These aspects of dichotomy in
decision making and implementation also result indecision making and implementation also result in
dichotomy in measuring performance of employees.dichotomy in measuring performance of employees.
Another difficulty of performance appraisal is the time span ofAnother difficulty of performance appraisal is the time span of
the impact of the decision or action. Employee makesthe impact of the decision or action. Employee makes
decision in a particular year, but the impact may be indecision in a particular year, but the impact may be in
other years. Should the performance affected in the yearother years. Should the performance affected in the year
of decision or in the year of result of the decision beof decision or in the year of result of the decision be
appraised?appraised?

Normally parameters like profits, return on investment, cashNormally parameters like profits, return on investment, cash
flows, productivity, sales per employee, punctuality, rateflows, productivity, sales per employee, punctuality, rate
of customer complaints etc are applied to employees in aof customer complaints etc are applied to employees in a
group for measuring their performance. Some MNCsgroup for measuring their performance. Some MNCs
additionally apply qualitative parameters like innovation,additionally apply qualitative parameters like innovation,
leadership , motivation, judgement , adaptability etc forleadership , motivation, judgement , adaptability etc for
performance appraisal.performance appraisal.
Should the HQ and subsidiaries adapt the same and standardShould the HQ and subsidiaries adapt the same and standard
criteria / performance factors or different criteria.criteria / performance factors or different criteria.
Different criteria are appropriate for their individualDifferent criteria are appropriate for their individual
environments but vitiate uniformity of performanceenvironments but vitiate uniformity of performance
rating. For a PCN working in a subsidiary should werating. For a PCN working in a subsidiary should we
apply HQ or host country criteria is another question thatapply HQ or host country criteria is another question that
has no clear answer.has no clear answer.

Organizational performance in terms of sales, profits,Organizational performance in terms of sales, profits,
repatriation of profits is influenced by the regulations ofrepatriation of profits is influenced by the regulations of
the host countrythe host country’’s Government like issuing license ors Government like issuing license or
canceling the issued license, exchange rate controls,canceling the issued license, exchange rate controls,
immigration and migration controls, tariffs, subsidies andimmigration and migration controls, tariffs, subsidies and
employment of nationals.employment of nationals.
Therefore, increase [or decrease] in profits canTherefore, increase [or decrease] in profits can’’t be alwayst be always
attributed to the performance of the employee alone.attributed to the performance of the employee alone.
In fact MNCs cannot follow a standard format of performanceIn fact MNCs cannot follow a standard format of performance
rating as the influences of environmental factors varyrating as the influences of environmental factors vary
from country to country and hence from subsidiary tofrom country to country and hence from subsidiary to
subsidiary.subsidiary.

MNCs and their subsidiaries not only work in differentMNCs and their subsidiaries not only work in different
environment but also carryenvironment but also carry--out different kinds ofout different kinds of
business including manufacturing, trading, dealing inbusiness including manufacturing, trading, dealing in
services, construction projects and the like. Thereforeservices, construction projects and the like. Therefore
providing uniform data for appraisal is not feasible. Theproviding uniform data for appraisal is not feasible. The
problem can be partially resolved by converting the dataproblem can be partially resolved by converting the data
into [parent company] monetary terms.into [parent company] monetary terms.
But this is not a solution owing to variations in living costs ,But this is not a solution owing to variations in living costs ,
purchasing power in various countries. Differences inpurchasing power in various countries. Differences in
accounting standards among countries pose anotheraccounting standards among countries pose another
challenge in measuring employee performance on achallenge in measuring employee performance on a
uniform scale.uniform scale.

Accounting standards differ due to cultural factors that decideAccounting standards differ due to cultural factors that decide
the degree of conservatism with which accounts arethe degree of conservatism with which accounts are
prepared. Germans are very conservative whileprepared. Germans are very conservative while
Americans optimistic. Accounting system is also orientedAmericans optimistic. Accounting system is also oriented
towards the information requirements of capitaltowards the information requirements of capital
providersproviders –– individual investors or bankers. Political tiesindividual investors or bankers. Political ties
also determine systems that MNCs follow for accounting.also determine systems that MNCs follow for accounting.
Historic cost versus inflation accounting provide profitsHistoric cost versus inflation accounting provide profits
numbers that are not comparable. Advanced countriesnumbers that are not comparable. Advanced countries
procure financial resources from various sources in aprocure financial resources from various sources in a
developed markets through a variety of financialdeveloped markets through a variety of financial
instruments and , therefore, follow a sophisticatedinstruments and , therefore, follow a sophisticated
system of accounting. Thus level of economicsystem of accounting. Thus level of economic
development also impacts data uniformity.development also impacts data uniformity.

Environmental variationsEnvironmental variations
In view of variations in environmental influences amongIn view of variations in environmental influences among
subsidiaries as well as different growth rates ofsubsidiaries as well as different growth rates of
environments, employeesenvironments, employees’’ performance across theperformance across the
subsidiaries cannot be measured using uniform appraisalsubsidiaries cannot be measured using uniform appraisal
criteria and scale.criteria and scale.
Environmental factors became more vibrant after recentEnvironmental factors became more vibrant after recent
phase of globalization which initiated trends towardsphase of globalization which initiated trends towards
erosion of national cultures and formation of globalerosion of national cultures and formation of global
culture, establishment of WTO, EU and its currencyculture, establishment of WTO, EU and its currency
““EuroEuro”” , increased mobility of human resource, IT, increased mobility of human resource, IT
revolution, large scale out sourcing,revolution, large scale out sourcing, ‘‘glocalglocal’’ strategy etc.strategy etc.

Validity of performance criteria.Validity of performance criteria.
MNCs use different performance criteria based on endMNCs use different performance criteria based on end
contribution to the company and some based oncontribution to the company and some based on
employee traits. Former include profits, ROI, cash flows,employee traits. Former include profits, ROI, cash flows,
productivity etc. and latter include dynamism,productivity etc. and latter include dynamism,
decisiveness, initiative, judgement etc. Each of thesedecisiveness, initiative, judgement etc. Each of these
criteria may not be valid for local settings of a subsidiary.criteria may not be valid for local settings of a subsidiary.
Cultural and social environment, economic system andCultural and social environment, economic system and
institutional set up , political ideologies and structure thatinstitutional set up , political ideologies and structure that
influence the business as well as the performance of theinfluence the business as well as the performance of the
managers vary from the parent country to the hostmanagers vary from the parent country to the host
country. Therefore , the performance criteria valid in thecountry. Therefore , the performance criteria valid in the
parent company may not be valid in the host country.parent company may not be valid in the host country.

Time and distance variations.Time and distance variations.
Performance of business activities in MNCs is complicated byPerformance of business activities in MNCs is complicated by
distance and different time zones between parentdistance and different time zones between parent
company and subsidiaries.company and subsidiaries.
Measurement of performance of employees working in MNCsMeasurement of performance of employees working in MNCs
is challenging compared to those working in domesticis challenging compared to those working in domestic
company as the employees working in the domesticcompany as the employees working in the domestic
companies can meet the colleagues face to face, whilecompanies can meet the colleagues face to face, while
the employees of the MNCs have a limited choice to dothe employees of the MNCs have a limited choice to do
so.so.
The information technology devices like video conferencing,The information technology devices like video conferencing,
emails, fax and telephone, though, have reduced theemails, fax and telephone, though, have reduced the
complexities.complexities.

►► Varied levels of maturity.Varied levels of maturity.
People of different countries are generally strong in differentPeople of different countries are generally strong in different
skills, have different levels of maturity and are strong inskills, have different levels of maturity and are strong in
different disciplines. Indians are strong in Mathematicsdifferent disciplines. Indians are strong in Mathematics
and logic, while Americans in systematic analysis.and logic, while Americans in systematic analysis.
MNCs should not , therefore, adopt the same performanceMNCs should not , therefore, adopt the same performance
appraisal format and scale to measure the performanceappraisal format and scale to measure the performance
of employees of home country nationals and differentof employees of home country nationals and different
host country nationals as well as third country nationals.host country nationals as well as third country nationals.

►► RaterRater’’s competence.s competence.
The person who appraises the performance of employees ofThe person who appraises the performance of employees of
the MNCs, i.e. those who work either in HQ orthe MNCs, i.e. those who work either in HQ or
subsidiaries is called the rater. Usually the raterssubsidiaries is called the rater. Usually the raters
executives either in the HQ or in a subsidiary. It is quiteexecutives either in the HQ or in a subsidiary. It is quite
likely that these raters have no experience of working inlikely that these raters have no experience of working in
other countries and they do not know the social,other countries and they do not know the social,
business and work challenges that the foreign employeesbusiness and work challenges that the foreign employees
face.face.
It is doubtful if that such raters possess required competenceIt is doubtful if that such raters possess required competence
to appraise the performance of expatriates.to appraise the performance of expatriates.

►► RaterRater’’s bias.s bias.
The problems with subjective measure have opportunity forThe problems with subjective measure have opportunity for
bias. The rater bias includebias. The rater bias include
Halo effectHalo effect –– the raters have a tendency tothe raters have a tendency to
excessively depend upon rating of one trait or oneexcessively depend upon rating of one trait or one
behavioural consideration rather than carry a balancedbehavioural consideration rather than carry a balanced
appraisal of all traits or behavioural aspects.appraisal of all traits or behavioural aspects.
The Error of Central TendencyThe Error of Central Tendency –– Some raters followSome raters follow
the safe policy of rating all employees at the mid point ofthe safe policy of rating all employees at the mid point of
the rating scale and avoid rating at the extreme in spitethe rating scale and avoid rating at the extreme in spite
of the employeeof the employee’’s actual performance.s actual performance. CCeenntrtraall TeTennddencencyy
–– SomeSome rraatteerrs fs foolllloow the saw the saffee ppoollicicyy ooff rraatintingg allall
ememppllooyyeeees as att tthhe mid poe mid poiintnt ooff tthhee rarattiingng sscalecale aandnd aavvooiidd
rraattiinng at theg at the exexttrreememe iinn ssppiitete oof the ef the emmppllooyyeeee’’ss aactuctuaall
performanceperformance..

►► RaterRater’’s bias.s bias.
The Leniency and StrictnessThe Leniency and Strictness –– The leniency biasThe leniency bias
crops up when some raters consistently assign highercrops up when some raters consistently assign higher
rating liberally thereby defeating the whole purpose ofrating liberally thereby defeating the whole purpose of
ratings. Equally damaging one is assigning consistentlyratings. Equally damaging one is assigning consistently
low rates.low rates.
Personal PrejudicePersonal Prejudice –– I f the rater dislikes anyI f the rater dislikes any
employee or any group , he/she may rate them at theemployee or any group , he/she may rate them at the
lower end , which may distort the rating purpose andlower end , which may distort the rating purpose and
affect the career of the employee.affect the career of the employee.
The Recency EffectThe Recency Effect –– The raters remember only theThe raters remember only the
recent actions and rate accordingly ignoring employeerecent actions and rate accordingly ignoring employee’’ss
performance over the period under appraisal.performance over the period under appraisal.

►► Host environment.Host environment.
Internal environment like structure of the host companyInternal environment like structure of the host company
organization, ownership pattern influence expatriatesorganization, ownership pattern influence expatriates’’
performance. 100% ownership by parent company,performance. 100% ownership by parent company,
against a joint venture, allows PCN to work moreagainst a joint venture, allows PCN to work more
successfully in the host company.successfully in the host company.
External environment like social and cultural issues, politicalExternal environment like social and cultural issues, political
and economic issues affect the employee performance.and economic issues affect the employee performance.
In addition, availability of school and other educationalIn addition, availability of school and other educational
facilities , medical and hospital facilities, recreationalfacilities , medical and hospital facilities, recreational
facilities, security situation & transportation facilities havefacilities, security situation & transportation facilities have
theirtheir besringbesring on foreign employee performance.on foreign employee performance.

►► Cultural adjustments.Cultural adjustments.
Adjustment of the employee to the organizational culture andAdjustment of the employee to the organizational culture and
countrycountry’’s culture and adjustment of employees culture and adjustment of employee’’s familys family
members to the countrymembers to the country’’s culture significantly influences culture significantly influence
the employeethe employee’’s performance. This fact should bes performance. This fact should be
considered in evaluation of the performance.considered in evaluation of the performance.
The analysis of challenges of performance appraisal ofThe analysis of challenges of performance appraisal of
expatriates reveals that it is rather critical to measureexpatriates reveals that it is rather critical to measure
expatriate performance. Even it would be difficult toexpatriate performance. Even it would be difficult to
measure performance of host country / parent countrymeasure performance of host country / parent country
national working in the HQ , as they also encounternational working in the HQ , as they also encounter
cultural issues while dealing with foreignerscultural issues while dealing with foreigners..

7.3 Areas to be Appraised7.3 Areas to be Appraised
Areas to be appraised depend upon the type of employee andAreas to be appraised depend upon the type of employee and
the purpose / assignment for which an expatriate is sentthe purpose / assignment for which an expatriate is sent
to the host country.to the host country.
InnovatorInnovator
SkillsSkills
TransferorTransferor
StrategistStrategist
ConsultantConsultant
OperativeOperative
TroubleTrouble
ShooterShooter
StructureStructure
ProducerProducer
ChiefChief
ExecutiveExecutive
OfficerOfficer
MNCMNC
EmployeesEmployees

7.3 Areas to be7.3 Areas to be Appraised
The Chief Executive Officer is the one who manages the
entire operations of a subsidiary.
The Structure Producer the one who reproduces the
structure. He /she is familiar with that in the parent
company or in another subsidiary . The structures
include marketing, establishing plant, introduction of a
new product , training programme or service.
The Trouble Shooter is the one who diagnoses, analyses and
solves a specific operational problem.
The Operative is the one who performs functional job in the
existing operational structure.

7.3 Areas to be7.3 Areas to be Appraised
The Strategist is the one who studies the environment under
which the subsidiary operates , identifies the
opportunities for new products / services / markets,
identifies the possible threats, strengths, weaknesses
and formulates appropriate strategy.
The Consultant is the one who is assigned with the task of
providing advice on operational or business issue.
The Innovator has a task of innovating a new product /
service based on the resources or the markets of the
host country or creating opportunities for new markets.
The Skills Transferor is the one who is assigned with the task
of developing the host country national employees of the
subsidiary . He /she stays in the host country for a short
duration and trains the locals to take up & perform the
jobs on their own.

7.4 Organizational Role Expectations7.4 Organizational Role Expectations
Parent companies predetermine the roles and expectations of
these roles from the parent country nationals before
their departure for the host country. The MNC has to
provide cross culture training along with information
about of the role expectations to expatriates.
The parent company, the parent company executive and the
host company should have the common role
expectations.
When the third country national is selected for assignment,
the clear determination of role expectations becomes
more critical as culture of organizations where the TCN
worked needs to be considered.

Parent companyParent company’’ss
Expectations fromExpectations from
the PCNthe PCN
Role perceptionRole perception
of the PCNof the PCN
SubsidiarySubsidiary’’ss
the PCNthe PCN
OrganizationalOrganizational
Culture of theCulture of the
Parent companyParent company
countrycountry
Role content ofRole content of
the PCNthe PCN
Norms of theNorms of the
SubsidiarySubsidiary
Host countryHost country

the TCNthe TCN
of the TCNof the TCN
the TCNthe TCN
Parent companyParent company
countrycountry
the TCNthe TCN
Norms of theNorms of the
Host countryHost country
Culture of OrganizationsCulture of Organizations
Where TCN workedWhere TCN worked
previouslypreviously

The critical aspect of the role is the task performance. However, the
task performance does not take place on its own. The host
country environment and parent company expectations
influence the task performance.
The performance appraisal of the foreign employees should
consider the role rather than just task . Role includes task plus
various other factors like leadership skill, inter-personal skills,
team building skills, understanding and adapting towards
organizational culture and host country culture at the work
place.
We shall have a look at role aspects of performance of foreign
employees and try defining each aspect.

Role Aspects of Performance of Foreign EmployeesRole Aspects of Performance of Foreign Employees
TeambuildingTeambuilding
LeadershipLeadership
Understanding &Understanding &
adaptingadapting
Towards organizationalTowards organizational
cultureculture
MotivationalMotivational
skillsskills
Skills ofSkills of
ManagingManaging
EnvironmentalEnvironmental
influencesinfluences
Job tasksJob tasks
Parent company &Parent company &
expectationsexpectations
integrityintegrity
Cultural issues ofCultural issues of
Various countriesVarious countries
InterpersonalInterpersonal
RelationshipsRelationships
skillsskills
MeetingMeeting
ConflictingConflicting
needsneeds

Task: Job tasks are core of employee’s assignment. They include
duties and responsibilities of the job incumbent.
Leadership: Leadership aspects of the role include leading the
subordinates, inspiring the junior employees for higher level
targets, innovations and to realize their potentialities.
Meeting Conflicting Needs: the needs of the parent company and
subsidiary vary basically. Parent company needs profits to be
transferred to the parent company while the subsidiary
emphasizes on the reinvestment of the profits for its
sustainability, growth and development. Expatriate’s
performance can be measured based on the degree at which the
conflicting needs / expectations are balanced.

Interpersonal Relationship Skills : maintenance of inter personal
relations among the employees and the stakeholders connected
to the overall job performance determines the performance of
the expatriate.
Cultural Issues: The best fit culture to the efficient performance of
the task depends upon adapting the culture of the host country
rather than the culture with which the expatriate is familiar
with.
Integrity: should be the binding factor of task performance from the
long run point of view of the stakeholders concerned.

Managing Environmental Influences : Both internal & external
environmental factors influence the job performance of foreign
employees. The skills of foreign employee in converting the
environmental factors in favour of the job enhance the
employee performance.
Motivational Skills: Cultures of certain countries make the
employees inhibitive of their skills, talents, and potentialities.
The motivational and inspirational skills of foreign employees
help them in motivating the national employees that enhances
the job performance.
Organizational Culture: Organizational culture sometimes
determines the mode of carrying the activities. The foreign
employee can use the skills only if he/she adapts to this
culture.

Team Building : Team building skills of foreign employee
invariably enhance their job performance . These skills include
work along with others, carrying with others, understanding
the culture and the way others do the work, adjust one’s own
traits and the way of doing work towards others, skills of
collaborating with others’ ideas and talents.
These role factors should be taken into account in deciding the areas
to be appraised of a foreign employee. In addition, to the
organizational role , the foreign employees’ family roles like
spouse and parent influences on job performance should also
be considered. Employee skills and initiative in helping the
spouse and children in adjustment process forms a part of of
appraisal of the foreign employee.
.

Areas to be appraised for HCN :
Compared to domestic company employee measuring
performance of host country national is relatively
difficult as host country nationals work with employees
of various cultures of parent and third countries . HCN
have to understand the cultures and predict the
behaviour of parent country and third country nationals
and accordingly adjust their interpersonal behaviour.
Therefore, HCN has to be appraised on skills of
understanding varied cultures and behaviours, cultural
adaptability and behaviour modification based on others’
cultures.

The role conception of
Host Country NationalHost Country National
the HCNthe HCN
of the HCNof the HCN
the TCNthe TCN
Parent countryParent country
the HCNthe HCN
Culture ofCulture of
The subsidiaryThe subsidiary

7.5 Who Should Appraise Performance?7.5 Who Should Appraise Performance?
In case of domestic company an employee is appraised by
the immediate supervisor. In case of a foreign employee
it is difficult to determine immediate superior as
managers from the host country as well as the parent
company supervise / oversee work of a foreign employee
working in a subsidiary.
Therefore, most of the MNCs use multiple appraisers.
Performance is appraised by superiors from both the
parent and host country. In case of PCN appraiser from
parent country is a must to oversee PCN career
progression, if not the performance directly.

7.5 Who Should Appraise Performance?7.5 Who Should Appraise Performance?
Some MNCs adopt 360 degree appraisal process under which
the foreign employee’s performance is appraised by
various stakeholders like customers, bankers,
government, suppliers, market intermediaries, trade
unions, subordinates, colleagues, human resource
professionals, superior in the parent company, superior
in the subsidiary and certifying officer of the client
company appraise the performance of the employee.
Even though several persons are party to the appraisal, home
and host country managers play the key role in
appraising.

7.6 System of Performance Appraisal.7.6 System of Performance Appraisal.
Performance appraisal of international employees is a 12-step
process.
i. Establish performance standards based on job
description, job specification, cultural requirements, and
adaptability to foreign environment, talents in enabling
family members to adjust to foreign environment.
ii. Communicate standards to employees as well as
appraisers.
iii. Decide upon the performance appraisal format.
iv. Measuring actual performance by the evaluators through
observation, interviews, records and reports.

process.
v. Frequency of appraisal. Normally once a year.
vi. Adjust actual performance due to environmental
influence.
vii. Compare the adjusted performance with that of others
and the previous performance.
viii. Compare the actual performance with standards and find
out deviations , if any.
ix. Feedback to appraisee. Mutual discussion between the
appraiser and appraisee, makes appraisal close to
perfectness in ratings.

process.
x. Suggest changes to job analysis and standards to bring
about improvements in job description, job specification
and standards of appraisal.
xi. Consider the appraisal results for contract renewal and
promotion.
xii. Plan for employee training and development. Consider
issues like demonstration of initiatives, realization of
potentiality, presentation of commitment behaviours,
exhibiting interpersonal relations, proof of intelligence
and show casing distinctive capabilities and talents.

7.7 Problems in Performance Appraisal.7.7 Problems in Performance Appraisal.
Performance appraisal of international employees is critical
and a challenge due to
Content Bias:- Most MNCs view international
performance management on the lines of domestic
performance management and focus on task factors at
the cost of culture and environment factors when the
latter play a dominant role in the perfromance of
international employees.
Ineffective raters:- MNCs use multiple raters for
appraisal of foreign employees, but the ratings of the
rater from the parent company only are considered for
decisions relating to promotion, revision of compensation
package or renewal of contract. The rater from parent
company, sadly, is unaware of the culture of the host
country or that of the foreign national.

The Recency Effect:- The raters generally remember the
recent actions of the employee and do not weigh
employees performance for the period under review.
Distant Work Place:- Foreign employees working on the
projects can’t be directly observed even by the host
country supervisor. Similarly , the performance of other
employees workers working in the field in different
places cannot be directly observed by the raters. Added
to this the parent company superior who never observes
the employee at work rates the performance.

Appraisal Forms:- MNCs use standard appraisal form for
the domestic and foreign nationals. Such forms do not
suit the requirements of PCN, HCN or TCN employees.
Failure of Superiors in conducting appraisal Interviews:-
Due to distance factors many raters do not conduct any
interview with the employee to be appraised.
Use of Performance Data:- For major decisions like
promotion, revision to pay package or renewal of
contract personal opinions or network is used by MNCs
instead of the data emanating fro performance
appraisals.

7.8 How to Make Performance Appraisal Effective?7.8 How to Make Performance Appraisal Effective?
The problems discussed could be overcome by adapting
Reliability and Validity:- the appraisal system should provide
reliable and valid data and information. Techniques of
appraisal should be designed to assure this.
Appraisal should be relevant:- The technique should be
designed with the purpose of the appraisal in mind.
Customization of appraisal forms:- Different factors influence
performance of PCN, HCN and TCN employees. Similarly
requirements of the parent company and various
subsidiaries vary significantly. The customized forms
should cover these and standard forms be discontinued.

Consensus of Appraiser & appraisee:- The appraiser or the
designer of the appraisal form is not aware of all issues
affecting job performance, but appraisee knows them .
Hence the inputs from the appraisee be used in design
of the form, content of appraisal, technique to be used
etc.
Open & Continuous Communication:- Foreign employees
want to know continuously how well they are performing
on the job. An effective appraisal system should arrange
for the continuous feedback to the foreign employee.
Expectations of the appraiser should be clearly indicated
to employee in advance.

Sensitive to ground realities:- Performance appraisal forms,
appraisal procedure and evaluators should be sensitive
to the changing and varying ground realities related to
culture factors, language, semantics, foreign political
factors, trade unions. Government policies and
functioning.
Appraisee’s access to the results:- The employee to be
appraised must know the rules of the game. He/she
should receive information and adequate feedback
about the performance results.

Easy to operate:- Performance appraisal process as well as
procedure should be easy to operate for the appraiser
and the employee being appraised.
Rater’s knowledge about the Appraisee:- Rater should be
provided with information about appraisee’s work,
behaviour, culture, organizational culture, environmental
factors affecting appraisee’s work .

7.9 Conclusion7.9 Conclusion
International performance appraisal to be effective should be
close to the ground realities of the country where the
employee concerned is working. Global performance
appraisal should not be like local performance appraisal
for a domestic company.
Therefore, it should be customized for the country, company
and the employee. Performance management should
aim at improving the skills rather than making
employees redundant.

7.10 Summary7.10 Summary
International human resource managers as well as
managements of MNCs face a variety of challenges and
difficulties in managing the performance of different
types of employees.
These challenges include: Total Company versus Parts
of it, Standard format versus customized format,
Uniformity of data of performance, Environmental
variations, Validity of performance criteria, Time and
distance variations, Varied levels of maturity, Rater’s
competence, Rater bias, Host environment and cultural
adjustments.

Areas to be appraised vary from one type of the
employee to other type of employee like parent country
national, host country national and third country
national. In addition, it also varies based on the purpose
/ assignment for which expatriate is sent to the host
country.
Parent companies predetermine the roles and
expectations of these roles from the parent country
nationals before departure for the subsidiary.

Performance of the employee is normally appraised by
the immediate supervisor in case of a domestic
company.
International performance management is not that
effective as it should be , owing to the challenges as well
as the problems of performance appraisal.

Well students
this brings us to the end of our
session 07!
Next we move to session 08Next we move to session 08
OnOn ““Training & DevelopmentTraining & Development”
Chapter eight.
Good Luck!

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