Performance Management of Mega Widgets - Essay Example

?Performance Management Introduction The performance management in the context of international human resources management depends upon the structureof the organization, management policies, strategies adopted for expansion and the control mechanisms in place. The policies of the management with reference to staffing, whether the approach is ethnocentric by filling up all the management positions with persons from the parent companies, polycentric by employing persons from the parent country for management positions in the head office whereas the nationals are employed in the local offices or geocentric where competency is the major criteria and not nationality of the employees which influence the functions of human resources management. Therefore, apart from overcoming the barriers such as language, cultural differences and influence of the trade unions, the management needs to concentrate on the matters relating to recruitment of staff, training to the employees, system for appraisal of performance, compensation to employees and maintaining cordial relationship with the employees, because these are the areas where the scope of the management significantly differs with the domestic HRM based on the corporate policies of the company. The paper seeks to study and analyse the international operations and expansion strategies of Mega Widgets, with the ambition of planning to list its company in Australian Stock Exchange in 2014 or 2015, for suggesting improvements in performance management. Organisation Structure The corporate culture at Mega-Widgets has been influenced by the founding family members. The structure of the organization plays an important role in the implementation of its strategies and controls. The decision making process is influenced by the structure of the organization which remains very centralized presently. All expatriate assignments have been individually negotiated by the Newcastle Plant Manager. The company has manufacturing plants and sales offices in Indonesia and India with senior management positions filled by Australian expatriates. The structure of the organization hampers decision making process and affects performance. The function of integration of the whole organization spread all over the world on day to day basis saps the energy of the management team located at the head office. Under such circumstances, the coordination of the corporate activities becomes very difficult. McGuire (2011) states “To treat organizations as singular entities devoid of diversity is to ignore the richness of employee backgrounds and experience. If organizations are to prioritise creativity and innovation, then it is imperative that unique perspectives are valued and appreciated.” (p. 179). There have been changes introduced in the organization in the wake of expansions proposed in China and US. The company has created a new post Executive Director Human Resources. This appointment combined with the efforts of the Project Control Groups established by him will enable the Board to consider proposals for international resource management programs. These programs are expected to facilitate current operational requirements and impact the future strategic direction of Mega-Widgets by improving its performance in the long run. Management Policy The management follows progressive policies for its growth strategies and is highly professional in its attitude. This reflects in the management policy: The family relatives are not guaranteed of a job – they must prove themselves like everyone else.  The Executive Director Human Resources, with the full support of the Board, has established international human resources management project control groups to lend support to the expansion strategies of the company for effectively implementing the expansion strategies. Garavan & Garbery (2012) state, “Strategic HRD (SHRD) is premised on the view that HRD practitioners possess the competence to assume the role of strategic partners, strategic players and players in the business rather than simply reacting to the events in the business” (p. 24). The strategic management decisions taken by the company in revamping the department of human resources development are expected to yield good results and reflect in its performance in the long run for its sustainable growth by facilitating current operational environment and impact the future strategic direction of Mega-Widgets. Strategies for Expansion The company is considering significant international expansion by establishing manufacturing plants in either Jiangsu or Anhui province in China and in Pittsburgh, Pennsylvania, USA. Management strategies for expansion are formulated after taking into account the international environmental factors, political, economical, social and technological and the internal strengths and weaknesses to exploit the opportunities provided by the environment and avoid threats to the business due to external or internal environments. The company’s expansion into Indonesia and India which are heavily populated with growing economies has encouraged the company to pursue its path of expansion into China and US. Their current plans to expand into US and China are expected to increase their stature further. The China is emerging as a regional economic super power with its stupendous economic growth in the past few decades. Therefore, the strategies proposed to be adopted by the company with regard to performance management should be viewed from this angle. The executive Director Human Resources, with the full support of the Board, has established international human resources management project control groups and its role is to raise the level of awareness and understanding amongst Board members of international human resource management issues and their impact on the international operations and expansion of Mega-Widgets. Coordination and Control Mechanism The decision making in the case of international human resources management should not be heavily centralized for the purpose of flexibility in the operations. The decision making process will become cumbersome and leads to delays in decision making. All expatriate assignments have been individually negotiated by the Newcastle Plant Manager. The lack of authority on the part of the regional heads in different countries to take decisions based on the circumstances and environmental changes may lead to inefficiency in the decision making process. This could affect the company’s competitiveness and performance in the long run. The control mechanisms would be ineffective under the highly centralized structure. Dowling et al. (2008) state, “To operate in an international environment, a human resources department must engage in a number of activities that would not be necessary in a domestic environment: international taxation; international relocation; administrative services for expatriates; host-government relations; and language translation services” (p. 5). The current thinking of the company’s management suggests that there are embarking on serious plans to decentralize the operations slowly for effective control of their international operations. Moreover, the joint ventures with the well established local partners, proposed in China and US, calls for aligning the style function to that of joint venture partners for better coordination in management of the joint ventures. Leadership The founding family members of the Mega-Widgets company are associated with personal values of honesty, integrity, ethical behaviour and abiding by the law and regulations. The leadership qualities in an organization are derived from the promoter group. However, in the wake of growth and expansion, delegation of authority is essential for effective management. The operations in different countries should be provided with leadership. This will make the local management competitive and perform better in their operations compared to the others in the industry. Fixing up of responsibility will become meaningful in such an environment. Moreover, the process of decentralization relieves the Chief Executive Officer or the Board of the issues relatively smaller which can otherwise be effectively handled locally. The top level management could concentrate on core issues by devoting more attention to them. Naturalization process An important function of the international human resources management is to make the regional operations look ‘local’. The local operations should not be considered ‘alien’ in the host country. This could be effectively achieved only when there are local people at all levels to improve the trust and confidence of the public. Therefore, its CSR (corporate social responsibility) activities should be directed towards naturalization process. However, the challenge to the HRD lies in its efficiency to achieve this objective at lesser cost. Presently in the company’s manufacturing plants and sales offices in India and Malaysia, the employees in senior management positions are predominantly Australian expatriates seconded from the Newcastle site on 5 year accompanied status assignments. The management incurs huge expenses by way of salaries, accommodation, medical and other facilities to the Australian expatriates, who could be easily replaced with talented locals. To date, local management and workers have not been offered expatriate assignments to Newcastle, Australia. Experienced locals could be deputed to Australia by way of training and development to improve their performance locally on their return. Therefore, the renewal of the agreements for employment of Australians in Indonesian and Indian operations can be conveniently dispensed with to improve the overall performance in the long run. Staffing Policy and Performance Management The management of human resources in a company with international operations the management has to deal with different types of employees such as local employees and expatriates. Harvey et al (2000) state, “One alternative to expatriation is inpatriation, which involves the transfer of subsidiary managers to the HQ for a specific period of time” (Harvey et al.). This would allow key subsidiary managers to get to know the workings of the parent company and build up informal communication networks. The human resources issues involved in the international context are different compared to the issues relating to the human resources management in a domestic company. The planning at every level is essential after taking into account various issues that could affect performance of the business in the long run. To date, local management and workers have not been offered expatriate assignments to Newcastle, Australia. Proper mix of people with different cultural backgrounds and languages will strengthen the organization with its cosmopolitan nature. Therefore, changes with reference to recruitment, compensation and labour relations need to be introduced in line with the changes in the structure of the business. The changes in the policy should be supplemented by training and development to the employees. These programs should be designed educate the employees about the policies and the objectives of the company and the need for control and reporting mechanisms to improve the performance, apart from the technical aspects of their job. This will increase team spirit among the employees and the organization will work in unison to achieve the corporate objectives and goals. Brisco & Claus (2008) states, “Most of the time, there are multiple reasons for unacceptable performance: lack of skills, competency, motivation, or simply the wrong person in the wrong job. Sometimes there are bad hires, bad promotions, and bad placements.” (p. 33) Performance Management In an international company there are local employees, expatriates from parent countries and employees from third countries. The composition may vary from company to company. The senior management personnel working for the company in India and Indonesia are predominantly Australian expatriates seconded from the Newcastle sit on five year accompanied status assignments. Their salary structure will be in line with their Australian counterparts, which would be higher compared to the salaries paid for the local employees for the same level of jobs or responsibilities. This will create resentment among the local employees and could be construed as discrimination by the fellow workers which would affect their performance. The company will not be in a position to initiate any meaningful promotion policies to the employees under these circumstances. Also performance evaluation will be very difficult under the existing policy. This is because, there are two or more types of employees as mentioned. The salary structures would be different, though the job content is more or less similar in nature. Therefore, the company cannot adopt the same yardstick for the measurement of performance for all types of employees. However, under these circumstances, adopting different yardsticks for the measurement of performance for different types of employees is also not equitable. From the administration and management perspective, equality in all respects should be ensured to the employees and they should be assured of equality in opportunity as well. The management is well known for its integrity. This is greatly exemplified in the policy of the company in not giving any preference to the family relatives – they must prove themselves like everyone else. Therefore, the HRD is in a position to initiate reforms in its policies with the support of the Board for overall improvement in performance. The proposed manufacturing plants in China and US will be joint ventures with local companies which have been operating for 10 and 60 years respectively. Joint ventures in China and US call for integration of company’s culture with that of the local companies. The company needs to work out a strategy for a proper mix of locals and expatriates, especially, when there are policies of quota for socially backward classes in countries like India where reservations in employment is enforced on this basis in government jobs. Barriers to Management Performance Language Language is an important issue in multinational organizations. Communication from the management to the workers at the grass root level suffers on account of differences in language. However, in the case of India and Indonesia, English is predominantly used for communication. Charles & Marschan-Piekkari (2002) point out that oral communication presents an additional challenge over written communication because of the differences in accents. The increase in local mix in the upper middle management will mitigate the communication problems to a greater extent. Culture “Globalisation is leading to significant cultural cross-pollination. Thus, cultures do not operate as uncorrelated independent variables, even though they are often treated like this when studying cross-cultural interactions” (Bird & Stevens, 2003, p. 403). Nevertheless, customs followed by the local people influences their behaviour and attitude towards the expatriates. However, through proper training and development programs the people will understand the common objectives of the organization. Bird (2002) states that within the world business community an identifiable and homogenous group is emerging that shares a common set of values, attitudes, norms, and behaviour, which overrule the diverse cultural backgrounds of the individuals involved. Trade unions A trade union is an organization of workers organized with a view to securing benefits for the staff, and improving their working conditions. The trade unions have political background in a democratic society. Cordial relationship maintained with the trade unions improves the performance level. It is in this backdrop, streamlining the appointment of expatriates to the positions in local offices has been discussed in this paper. This will clear the doubts in the minds of the workers with regard to the differential treatment, and the management’s intention to remove all the anomalies in this respect will be appreciated. Government policies Government policies with regard to taxation, imports and exports, labour laws and the judicial system in various countries will influence the performance of an organization. Since the company is already experienced in countries like India and Indonesia where there are complexities in these areas, and overcome the related issues successfully, they will be in a position to tackle such issues in China and US. Since, dealing with these issues requires discretion on the part of the local management, coordination with the headquarters who have little knowledge about the ground realities prevailing in various countries will be difficult. However, in a decentralized management process, these problems could be dealt with more appropriately without loss of time. State of the economy Economic growth, interest rates, volatility in exchange rates, inflation levels and other scores of economic factors will affect the performance significantly, if the company is not in a position to react to the situation with flexibility. The attitude of the public to the environmental issues and the statutory requirements in respect of corporate social responsibility of the companies calls for matured approach of the local management in creating a good working atmosphere. Conclusion Under free economy, globalization and liberalization is gaining momentum in all the countries. The emergence of internet and mobile telephony changed the rules of the game and the companies’ strategies should be constantly reviewed for gearing itself to the trend. Changes in the strategies made in tune with the changes in the environment enhanced adaptability of the organization to meet the challenges and exploit the opportunities effectively. After a careful analysis of the structure of the company, staffing policies and controlling functions, it is felt that the company needs to move towards geocentric policy of staffing for efficiency at all levels. The diversified employee force, in fact, will lend stability to the organization. The organization’s ability to adapt itself to the changes in the external environment will be very high in such a situation. Also, providing world class facilities to such employees and their families in terms housing, medical, entertainment and clubs is a challenge to the management of the local office. Though there are certain limitations in adopting this policy in view of compensation at higher level for superior talents at global level and immigration and taxation policies of various governments, the advantages in adopting this policy overweighs the disadvantages or limitations. References Bird, A. (2002) Obsolescing national culture and an emergent global culture. Paper presented at the Annual Meetings of the Academy of International Business. Southwest Chapter. Bird, A. and Stevens, M.J. (2003) Toward an emergent global culture and the effects of globalisation on obsolescing national cultures. Journal of International Management, 9 (4), 395-407. Brisco, D. R. & Claus, L. M. (2008). Employee performance management: policies and practices in multinational enterprise. Performance Management Systems: A Global Perspective. Ed. Arup Varma, Pawan S. Budhwar, Angelo S. DeNisi, p. Routledge, p. 15-39. Charles, M., & Marschan-Piekkari, R. (2002). 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