Global Performance Management of IHRM - Essay Example

GLOBAL PERFORMANCE MANAGEMENT OF IHRM By Table of content Executive summary 3 Introduction 3 2. Critical literature review 4 2.1 International Performance Management 5 2.2 Importance of International Performance Management 6 2.3 Performance appraisal of an international assignee 7 2.4 Standardised versus customised 8 3. Determinants of IHRM activities 9 3.1 Factors affecting expatriate performance 10 4. Cultural adjustment 11 5. Task/ position and role performance 12 5.1 Expatriate performance and failure 13 5.2 Expatriate failure cost 14 6. Poaching of employees in the multinational context 15 7. Managing performance of international assignees 16 7.1 Different types of international assignments 16 7.2 Main reasons for using each assignment (CREME SURVEY)17 8. Conclusion 17 9. Abbreviation List 18 10. Reference 19 Executive summary Performance management (PM) is an important process of management of human resource. PM entails an assessment of the previous and current results, as well as performance of a team, employee or the organisation as a whole. PM is the base for HRM related practices in many businesses (Adler, 34). Performance Management comprises of rewarding, career development, staff training as well as new recruitment. PM process is complicated especially when in research scope is the global market (Baker and Mendenhall, 1990). This paper is looking to examine the performance management from the International Human Resource Management (IHRM) perspective. The paper’s primary objective is to explore performance management and all its challenges (Adler, 56, Aswathappa & Dash, 178). The present study primary aim is to increase understanding on the performance management practices of the existing expatriates. The study looks at the understanding of related contextual factors and the efficiency (Black, Mendenhall, and Oddou, 197). Descriptive findings earlier studies pictures and also expound on several new ideas For example; team goals. The fundamental practices of performance management influencing the effectiveness of the system were perceived (Cohen, 157). The key outcome is set performance goals of expatriate performance management. The formal performance evaluation leads to an increased process efficiency (Devellis, 187, Beck, 58). The results further show the international level of a company, hierarchical position of the expatriate as well as the business’s size. The expatriate task type and the organisational structure influence practices of performance management (Kraemer, and Thiemann, 197). 1. Introduction Human Resource Management (HRM) is a business practice and academic theory that addresses the practical and theoretical techniques of workforce management. HRM is universal as per its processes, policies and strategies. HRM has replaced personnel management gradually (Kyi, 328, Stolt, 197). Developing and managing human resource in a global setting is increasingly referred to as a central challenge. The prevailing company tendency towards internationalisation, inter-company merging and global operation has gradually increased the necessity of expatriation. Expatriation is aimed to fill the skills gap, technology transfer and new endeavour launching. Expatriation has been increasing steadily worldwide, and the trend continuation is very likely (Windham International and NFTC, 187. Krausert, 379). Efficient and good management should be applied on expatriate as they play a critical role in globalisation and internationalisation of the company (Mendenhall & Oddou, 179). In return, specifics in relation to performance management as per an international setting should be well understood. There exists an extensive literature resulting from the study of performance management in a national setting over the past three decades (Armstrong and Baron, 397, Collings, Wood & Caligiuri, 243). 2. Literature review Sending expatriates abroad for global competencies development is consistent with the overall human resource strategies by many organisations. Expatriates find a position for experience development and report gained value-added tangible skills for the group. Louis (265) discussed the contrasts, surprises and changes within a society. According to Louis, newcomers to the experience of a company attempt to make sense (Louis M. 354). Expatriates require making sense for the foreign country and the facility of the new organisation. Many foreign countries entail different economic, monetary and political systems, different norms, languages and standards of behaviour. The differences create a distinction of the foreign country with the expatriates’ home country. Thus, expatriates have to overcome the experienced culture shock (Oberg, 265). Expatriates assignments job requires multiple environmental adaptations. Existing members of an organisation play an essential role in sense-making process, aiding for the newcomers (Reichers 376, Louis 256). As a result of language barriers and cultural differences, it may turn out to difficult for expatriates to make sense relying on native citizens and the existing members of the organisation. 2.1 International Performance Management International Performance Management (IPM) is a systematic grouping of processes combined with the creation of an efficient workforce within a given enterprise to reach its goals (Reichers, 398, Jackson, Schuler & Werner, 475). IPM methods facilitate evaluation and continuous improvement corporate performance, subsidiary unit and individual against pre-set, clearly defined targets and objectives. International employee performance management Power-Point notes slide 2 (lecturer’s notes). IPM can be broken down into few simple aspects. The elements include; planning, monitoring and rewarding. (I) Planning: the first step and also most important in any performance management. Thus, proper planning is essential during performance management. The process applies to both performance management and the inner business working. Good planning starts with proper analysis of the target goals and development of realistic methods for their achievement thereafter. The set target goals need to be realistic; otherwise the performance management plan will undoubtedly fail (Schollhammer, 423, Newlands & Hooper, 265). Ample time should be taken in the creation of a real plan that can achieve the organisation’s goals. (II) Monitoring: for the success of any performance management, a rigorous monitoring process needs to be involved. The process should carefully survey each department, individuals, as well as the overall company for the attainment of the set goals. Monitoring of performance management entails not only monitoring, but also providing the relevant feedback to the employees and departments. The feedback may be in the form of rewards and praise or constructive criticism (Tung, 298). For the success of the performance, each step towards the goal needs to be carefully monitored. If the lack of some areas is experienced, steps, to improve them such as trainings, need to be taken (Sengupta & Bhattacharya, 277). (III) Rewarding: employees within any given organisation deserve rewards. Rewarding factors not only performance management success but also the success of the whole company. Rewards can be in the form of actual monetary rewards or public recognition. Rewards improve employee’s satisfaction and morale, boost productivity, as well as helping in the movement towards the set goals. 2.2 Importance of International Performance Management International Performance Management (IPM) is essential to the business. Global Performance Management embedding within the company and applying it as a business strategic tool will result in compliance, engagement, as well as productivity (Tung, 198, Stahl, Björkman & Morris, 177). IPM makes it easy for the management to decide on how to distribute its resources. Time factor management and decision-making is more efficient, and enhanced. IPM saves time as the staff members become motivated and more focused. Consistent and regular performance management drives to sustainable high performance within the business (Baker, and Mendenhall, 199, Festing, 208). Importance of performance management can be summarised as; Profitability: performance management enables recognition without aligned pay high performance. IPM support retention and attrition reduction in Human Resource Management. Training results and spend is as well optimised. IPM requires no extra capital expenditure. Engagement: Empowerment and accountability are increased through involvement of employees. Participation encourages and embeds the best management of the people. Engagement as well helps recognition and feedback using social media approaches. Compliance: IPM makes audits accessible by improving data protection. IPM helps in recording all meetings of employees, evidencing application of the process (Windham International and NFTC, 179). Productivity: IPM removes the high burden of administration and paper-based processes for Human Resource. 2.3 Performance appraisal of an international assignee The performance of an individual is appraised as per the expected behaviour and outcomes that contribute to the attainment of the organisational objective. Role accompanying each task position designated for a particular international assignee has to be considered. Apart is a set of organised behaviours that are assigned to a particular area. A function itself is defined in the description of the job, usually predetermined as the manner in which a task is performed and interpreted maybe affected by an individual. The person conducting performance appraisal depends on the job level. Use of local staffs may be necessary. Distance and time separation may be considered. Sophisticated communication systems are not full face-to-face contacts substitute. The factor as well needs consideration. Standardised form of performance appraisal is used to control going native. However, use of a customised form may be necessary. In deciding on when and how to appraise performance, frequency of appraisal needs to be considered. The feedback per employee on the respective performance has to be considered as well (Sims, 247, Jackson, 242). 2.4 Standardised versus customised: global versus local debate Issues relating to Human Recourse Management practices with respect to the host-countries of focused. Factors within the host-country that constrain or facilitate business processes and global management transfer needs to be considered. 3. Determinants of IHRM activities Inter-organizational interdependence: A subsidiary depends on the multinational parent for resources. The parent as well influences then subsidiary’s HRM practices and policies. However, subsidiaries and parents relationships are far from being static. As branches increase their growth and maturity, management capability, market proficiency and adequate technology is gained acquired (Daft, 208, Gertsen, et al 212). Dependence on the parent resource: Multinational Company’s parent relies on the management of a critically scarce resource. The control is meant for the subsidiary strategies influencing. As per the model of resource dependence, reliance on an out-of-country organisation resource support affects the human resource practices of the subsidiary. Dependence on local resources: As a subsidiary grows and matures, a better base of manufacturing, management capabilities, financial support and oversees relationships may be built. The movement will improve product sale and market within and outside the subsidiary’s host state boundaries. At the subsidiary’s stage in life cycle, its performance and success will depend more on the local market base than on the support from the domestic parent. As a result, subsidiary become more localised concerning matters in relation to human resource (Mendenhall, 191, Sitkin, 209, Durai, 201). Dependence on host institution: organisations compete for customer, recourses, social acceptance, institutional legitimacy, as well as for political power. A given subsidiary within a particular host country interacting with advocacy groups, competitors, customers and regulators will highly depend on the institutions. Ownership: Multinational companies together with the local partners obtain a stake of ownership through joint ventures formation. Ownership is also gained by adaptation of any of the alliances. The relationships sometimes create problems for the subsidiary and parent without the consideration of the structure (Tung, R.L 198). For example; Assignment of a joint venture to employees results in loyalty division. Due to the challenges, the parent, to foster coordination, may impose standard integrated Human Recourse policies (Yamane, 197, Bhattacharyya, 207). International employee performance management Power-Point notes slide 10 (lecturer’s notes). 3.1 Factors affecting expatriate performance Performance criteria can be ambiguous in a foreign culture and thus causing problems for an expatriate. Expatriates in most cases are not told in the manner in which their performance evaluation will be carried out. As a result, the individuals are not aware on where to invest more of their energy. The decision on the criteria, to be used so as to appraise the performance of an expatriate, is critical to this process. The criteria employed in expatriate appraisal maybe worldwide, home-office based or even local. However, there exist factors that affect performance evaluation of the employees (Hutchings, & De, 207). Existence of a performance appraisal system clarifying the performance expectations is positively related to expatriates’ success. In the process of performance appraisal, impacts and effects of the local environment should be put into consideration. The local foreign environments differ dramatically from the domestic environment. The differences are presented in several areas; automation, technical sophistication magnitude, local markets, trained culture and human resource availability (Mendenhal, & Oddou, 195, Sims, 202).. Need for the consideration of local environment factors recognition is positively related to the performance appraisal system of the expatriate positively. Formal performance appraisal after any period can be conducted. For the sake of environmental factors consideration, performance evaluation should frequently be done. The frequent assessment helps in the understanding of the job and the improvement of the job performance. 4. Cultural adjustment Cultural adjustment is illustrated by the Lysgaard’s U-Curve Theory (UCT). Cultural change is one of the critical determinants of expatriates’ performance. Cultural change produces a range of psychological and emotional reactions to both family/spouse and the individual. The results lead to situations unfamiliar to the expatriate that impact on the performance. Below is Lysgaard’s (155) process of cultural adjustment U curve. International employee performance management Power-Point notes slide 13 (lecturer’s notes). The framework of U-curve describes the change process of cross-culture by expatriate sojourner or employee within the culture of the host (Usunier 198, Lysgaard, 195). The curve describes four stages of adjustment. The honeymoon/Tourist stage comes in upon arrival of the expatriate at the host country. Different and new cultures fascinate the individuals. The phase ends when the newcomer starts coping with the daily basis real conditions. Culture shock stage is characterised by hostility and frustration towards the nation and the people. The third phase is the adjustment phase/pulling up individuals gradually adapt the host-country’s new values and norms. The individuals can act appropriately more than before. The final stage is the Mastery or Adjustment stage. In the final phase, an individual can effectively function in the new culture. 5. Task/ position and role performance Organisations are human grouping or social units whose construction is deliberately aimed at seeking of specific set goals. For the attainment of the organisational objectives, tasks are distributed as roles to the employees of an organisation as per the respective positions. Each employee in a group occupies a particular position which is indirectly or directly related to other organisational posts in the hierarchy. The area constitutes the set roles. The tasks usually include the subordinate, superiors, outsiders and the peers with whom the employee has a related relationship. In every organisation, every person has to relate in a given way so as to perform the assigned role (Baker and Mendenhall, 190, Kumar, 211). Role conception; the following diagram illustrates on how meeting expectations of role senders. International employee performance management Power-Point notes slide 17 (lecturer’s notes). 5.1 Expatriate performance and failure Most existing literature focuses on factors affecting the performance of expatriate as the expatriate’s failure. Expatriate’s failure is narrowly defined as an expatriate premature return. Broadly, expatriate’s failure is under-performance during an international assignment, and it’s the retention upon completion. The magnitude of expatriate’s failure can be illustrated by; a country and the evidence is somewhat inconclusive to even up to 10%. A falling rate suggestion has been compared with the 198s studies. International employee performance management Power-Point notes slide 20 (lecturer’s notes). 5.2 Expatriate failure cost Like any other business resource, there are costs associated with expatriate failure. The cost is incurred by the multinational organisation, and they include direct and indirect cost. Direct cost: Direct costs are incurred directly to the involved individual and the associated position. The costs include training and salary expenses, relocation expenses associated and airfares and transport fee. Direct cost varies according to the concerned level of status, rates of exchange, or even whether an expatriate is replacing a failed manager. Indirect (Invisible) costs: Indirect cost is incurred in relation to the expatriate leading to an organisational loss though indirectly. Examples of the negative indirect cost are dynamic. Damaged key stakeholders relationship in the foreign location. Loss of market share by the organisation and impact on staffing approach are also forms of indirect cost. Adverse effects on local staff and the concerned expatriate are also forms of indirect cost. Family relationships may end up being damaged as a result of the effects. 6. Poaching of employees in the multinational context Poaching as human resource strategies in the case of multinational has of late factored to the increase in employ turnover. Employee turnover has been focusing on individual rather than institutional. Employees are held to the decision on whether to stay or leave given organisation. An institution would seek to maintain the productive workforce and find the quality human resource from other organisations. However, there exist a number of factors determining the level of employee turnover in a given body (Reichers, A. E. 185). Training; more the training done by a given organisation will retain more employees thus reducing turnover. Employee turnover increases the cost of production as more time and recourses are used in hiring to replace the lost workforce. An organisation should improve the level of training in the firm so as to retain the more experienced human resource. Leadership style; centralisation of authority facilitates labour turnover as compared to the one that encourages frequent participation and communication. Decentralisation of power brings with it the sense of belonging and thus, the employees feel being part of the entire organisation. Employees may move from a centralised multinational to a decentralised one. The involvement brings with it the needed satisfaction and thus reducing the rate of turnover. Expatriate to local workforce proportion; Expatriate proportion factors the local employee’s turnover. Transfer between companies has been regarded as a boundary less career development among the employees (Dowling, Festing, & Engle, 208). Performance and competence of an individual; well-performing experienced individuals act as an attraction to the market as a whole. Thus, other multinationals sharing the same market with such a company may poach the employee at a better offer so as to gain a larger market share. This practise is common with media houses, football clubs, Musicians as well as the film theatre. Poaching of the performing star in a given field brings a relatively large market share to multinationals. 7. Managing performance of international assignees Performance appraisal and management should not only be related to expatriates only but also to the non-expatriates, as well as those on non- standard assignments(Reichers, A. E. 175). During the management, factors affecting the practitioner need to be considered for the best results. Cultural background of the individual, languages known, duration of experience and the hierarchical position are some of the factors that may affect an individual’s performance. The assignee’s duties need also to be clearly defined and stated to avoid ambiguity in the fulfilment of the goals. 7.1 Different types of international assignments Different classifications depend on various consulting and academic companies surveys. Examples include; PricewaterhouseCoopers: commuter extended, rotator, longer-term, contractual, short-term and virtual international business travellers (Reichers, 175, Brewster, Sparrow & Vernon, 234). ORC, Crème: short-term, long- term, frequent flyer assignments and international commuter. 7.2 Main reasons for using each assignment (CREME SURVEY) Main reason for the utilization of each assignment is diagrammatically illustrated. The following is a crème survey illustration. International employee performance management Power-Point notes slide 26 (lecturer’s notes). 8. Conclusion In conclusion, the paper contributes to expatriate management knowledge both theoretically and practically. The paper demonstrates the importance of host environment experience and international skills in an expatriate assignment. The presence of multinational organisations facilitates global socialisation and tasks for skills gaining and market extension. The paper reveals the importance of job satisfaction to the expatriate in the host country. As per the journal, expatriation for the multinationals leads to improvement in the performance, as well as poaching of the employees. Intra-company transfer of managers; if the intra-company transfer is high, employee turnover will as well be high. Other factors such as size of the organisation are as well considered. Training; more the training done by a given organisation will retain more employees thus reducing turnover. Employee turnover increases the cost of production as more time and recourses are used in hiring to replace the lost workforce. An organisation should improve the level of training in the firm so as to retain the more experienced human resource. International Human Resources Management is an essential practice in the whole organisation. The management should thus consider the implementation of more effective and efficient tools of personnel management. 11. Abbreviation list 1. IHRM: International Human Resource 2. IPM: International Performance Management 3. HR: Human Resource 4. PM: Performance Management 5. UCT: U-Curve Theory 9. Reference Adler, N.J. (1983a) Cross-cultural management research: The ostrich and the trend.Academy of Management Review,8, 226-232 Adler, N.J. (1983b) Cross-cultural management: Issues to be faced. International Studies of Management and Organization,13, 3-45 Armstrong M. and Baron A. (1998) Performance Management: The New Realities . Wiltshire: TheCromwell Press. Baker, J.C. & Ivancevich, J.M. (1971). The assignment of American executives abroad.California Management Review,13(3), 39-41 Black, J.S. & Mendenhall, M. (1990). Cross-cultural training effectiveness: A review and atheoretical framework for future research. Academy of Management Review, 15(1), 113-136 Black, J.S., Mendenhall, M., & Oddou, G.R. (1991). Towards a comprehensive model of international adjustment: An Integration of multiple theoretical perspectives. Academy of Management Review, 16(2), 291-317 Cohen, J. (1988), Statistical power analysis for the behavioral sciences. New York, NY: Academic Press DeVellis, R.F. (1991).Scale development: Theory and applications. Newbury Park, California: Sage Kraemer, H.C. & Thiemann, S. (1987). How many subjects? Statistical power analysis in research. Newbury Park, CA: Sage Publications Kyi, K.M. (1998). ApJM and comparative management in Asia. Asia Pacific Journal of Management,5, 207-224 Louis, M.R. (1980). Surprise and sense making: what newcomers experience in entering unfamiliar organizational settings. Administrative Science Quarterly, 25, 226-251 Lysgaard, S. (1955) Adjustment in a foreign society: Norwegian fullbright grantees visiting the United States. International Social Science Bulletin, 7, 45-51. Mendenhall, M., & Oddou, G.R. (1985). The dimensions of expatriate acculturation: A review.Academy of Management Review,10(1), 39-47 Oberg, K. (1960). Culture shock: Adjustment to new cultural environment. Practical Anthropologist, 7, 177-182 Reichers, A.E. (1985). A review and reconceptualization of organizational commitment. Academy of Management Review,10,465-476 Schollhammer, H. (1975). Current research in international and comparative management issues. Management International Review, 13(11), 17-31 Tung, R.L. (1981). Selection and training of personnel for overseas assignment. Columbia Journal of World Business, 16(1), 21-25 Usunier, J. (1998) Oral Pleasure and expatriate satisfaction: An empirical approach. International Business Review, 7, 89-110. Windham International and NFTC (1999) Global Relocation Trends 1999 Survey Report . Yamane, T. (1967).Statistics - An introductory analysis. New York, NY: Harper and Row Stahl, G. K., Björkman, I., & Morris, S. (2012). Handbook of research in international human resource management. Cheltenham, UK: Edward Elgar Pub. Aswathappa, K., & Dash, S. (2008). International human resource management: Text and cases. New Delhi: Tata McGraw-Hill Pub. Collings, D. G., Wood, G., & Caligiuri, P. (2014). The Routledge companion to international human resource management. Daft, R. L. (2008). Management. Mason, OH, USA: Thomson Southwestern. Festing, M. (2008). Current issues in international human resource management and strategy research. München [u.a.: Hampp. Bhattacharyya, D. K. (2010). Cross-cultural management: Texts and cases. New Delhi: PHI Learning Ldt.. Daft, R. L. (2008). New era of management. Mason, Ohio [u.a: Thomson/South-Western. Gertsen, M. C., Søderberg, A.-M., Zølner, M., & Palgrave Connect (Online service). (2012). Global collaboration: Intercultural experiences and learning. Basingstoke: Palgrave Macmillan. Kumar, R. (2011). Human resource management: Strategic analysis text and cases. New Dehli: I.K. International. Samson, D., & Daft, R. L. (2011). Management. South Melbourne, Vic: Cengage Learning. Newlands, D. J., & Hooper, M. J. (2009). The global business handbook: The eight dimensions of international management. Farnham, Surrey, England: Gower. Mendenhall, M. E. (2001). Developing global business leaders: Policies, processes, and innovations. Westport Conn: Quorum Books. Dowling, P., Festing, M., & Engle, A. D. (2008). International human resource management: Managing people in a multinational context. South Melbourne, Vic: Thomson. Sims, R. R. (2007). Human resource management: Contemporary issues, challenges, and opportunities. Charlotte, N.C: Information Age Pub. Sims, R. R. (2002). Organizational success through effective human resources management. Westport, Conn: Quorum Books. Sitkin, A. (2013). International business. Oxford: Oxford University Press. Jackson, T. (2002). International HRM: A cross-cultural approach. London [u.a.: SAGE. Sengupta, N., & Bhattacharya, M. S. (2007). International human resource management. New Delhi: Excel Books. Beck, T. (2011). Differences and Similarities Between International and Domestic Human Resource Management. Munich: GRIN Verlag GmbH. Durai, P. (2010). Human resource management. Chennai: Pearson. Stolt, R. (2010). Differences and Similarities Between Domestic and International HRM. München: GRIN Verlag GmbH. Krausert, A. (2009). Performance management for different employee groups: A contribution to employment systems theory. Berlin: Physica-Verlag. Jackson, S. E., Schuler, R. S., & Werner, S. (2012). Managing human resources. Mason, Ohio: South Western cengage learning. Brewster, C., Sparrow, P., & Vernon, G. (2007). International human resource management. London: Chartered Institute of Personnel and Development. Hutchings, K., & De, C. H. (2007). International human resource management: From cross-cultural management to managing a diverse workforce. Aldershot, England: Ashgate. Read More