Performance management systems and multinational enterprises

 

   The practice of international HRM is concerned with the HR activities conducted by a multinational company (MNC) in managing people throughout the organization. These include headquarters staff, home country nationals (HCNs – employees who are nationals of the country in which the subsidiary is based), third country nationals (TCNs – employees in a subsidiary who are nationals of a country other than the parent company’s country), and expatriates (employees assigned to a foreign subsidiary who are nationals of the parent company’s country) (Armstrong, (2017) .

Managing employees is the most difficult task for any organization. Even the employees within the country with same origin and with the same culture people attitudes desires ambitions and expectations   are different. Performance management systems in subsidiaries covering home and third country nationals are the area of HRM, where there is likely to be the most convergence, This means that a system based on the one used in the parent company is applied completely or partly worldwide, As Briscoe et  al (2012: 347) observed: ‘There are some valid reasons which suggest that... a standardized approach may be warranted for the sake of global integration, culture cohesiveness, fairness, mobility of global employees, and as a control mechanism(Armstrong, (2017). According to Armstrong there are four main approaches to international performance management.

1.       Total convergence (standardization) – using the parent company’s scheme throughout the international organization.

2.       Total divergence (localization) – foreign subsidiaries use their own systems.

3.       Partial convergence – foreign subsidiaries use a version of the parent company’s system, modified to take account of local factors such as culture and work systems. Alternatively, they ensure that their own systems conform to policy guidelines issued by headquarters, possibly including certain requirements such as the design of the forms or methods of rating.

4.       Dual system – using the headquarters scheme for expatriates (parent company nationals), and local, possibly partly converged schemes, for home country and third country nationals (the special considerations affecting

 (Armstrong, (2017).

As long as employees performing work at organizations there must be some kind of a performance management to evaluate, compensate and reward those employees.  Armstrong states three main elements which contain in international performance management systems.

·         Performance agreement – the manager and the individual jointly decide on the goals that the latter is expected to achieve.

·         Performance management throughout the year – this involves regular dialogues between the manager and the individual about the latter’s performance, coaching, and taking action to improve performance.

·         Performance review – a formal review of performance in achieving agreed goals and in meeting competency requirements.

(Armstrong, (2017).

 

MNE should be able to evaluate and constantly enhance the individual personnel, subsidiary firm and employee performance against the organizational goals.

 

Armstrong have mentioned that the effectiveness of international performance management is affected overall by the sheer complexity of international business and the distance separating headquarters and subsidiaries (Armstrong, (2017).

 

 Briscoe and Claus (2008) noted that a challenge is provided by ‘the major differences that arise between host national perceptions and those of the home office regarding what was being accomplished and the circumstances under which it was being achieved’. Briscoe and Schuler (2004: 354) mentioned the following difficulties:

 

 * Problems with the choice of evaluator (eg in the local or parent company) and that person’s amount of contact with the rate;

 ● the host country’s perceptions of performance, which may differ from those in the parent company;

● problems with long-distance communication;

● inadequate contact between parent company rater and subsidiary company rater;

● unclear or contradictory performance objectives for foreign operations;

● lack of understanding by the parent company of the foreign environment and culture;

● indifference to the foreign experience of the expatriate

 

(Armstrong, (2017).

References : 

Armstrong, M. (2017) Armstrong‟s Handbook of Human Resource Management Practice, 14th edition. London, Kogan Page.