4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan1 INTERNATIONAL HUMAN RESOURCE MANAGEMENT Week 4

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan2 Managing Performance  Organizations seek to continuously improve upon their corporate performance (headquarters and subsidiary units) against clearly defined, preset objectives, goals and targets  The performance of individuals working in an organization is determined by numerous considerations, including pay, training and development measures, working environment, ability, expectations and motivation

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan3 Determining Expatriate Performance Expatriate Performance Compensation Package Task Headquarters Support Work Environment Cultural Adjustment

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan4 Determining Expatriate Performance: (The Compensation Package)  The compensation or remuneration package (salary, benefits, allowances etc.) offered to an expatriate is considered an important determinant of his or her performance on the international assignment  Another important consideration and motivator for expatriates is the career progression potential stemming from their acceptance of the international assignment

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan5 Determining Expatriate Performance: (The Task (1))  Expatriates perform different tasks on their respective international assignments, for e.g., top managers, middle managers, business establishers, project employees and R&D project personnel, or, as CEOs / Subsidiary Managers, Structure Reproducers, Troubleshooters and Operatives  Tasks are accompanied by roles, i.e., what behavioral patterns does the organization and the host environment expect from the expatriate’s position on his or her assignment?

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan6 Determining Expatriate Performance: (The Task (2))  A serious “role conflict” situation may arise for expatriates on their international assignments because of the different expectations prevailing at headquarters and amongst the stakeholders in the host environment  The inability to reconcile to role conflicts can result in a performance loss for expatriates  Research indicates that expatriates accord higher priority to satisfying the role expectations of the headquarters as their performance and career prospects are often determined there

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan7 Determining Expatriate Performance: (The Task (3))  Job Autonomy is another determining factor which has to be considered in an expatriate’s performance  For TCNs, the issue of role conflict is more complex than for HCNs because TCN expatriates may not only have to contend with the expectations of the culturally quite different host environment, but they may also have to contend with the culturally quite different headquarters of the organization Example – A U.S manager who works for a large Dutch multination operating a subsidiary unit in Indonesia

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan8 Determining Expatriate Performance: (Headquarter Support)  Headquarter support is important for the expatriate and his or her accompanying family members because of their requirement for adjustment in the new host environment which may be culturally quite different from their home environment  A perception on the part of the expatriate of insufficient support being rendered by headquarters (including support to the expatriate’s family) could result in disillusionment with the organization and a drop in the expatriate’s performance levels

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan9 Determining Expatriate Performance: (Headquarter Support) Transactional Specific, short- term, monetizable obligations limited involvement of parties Transactional Specific, short- term, monetizable obligations limited involvement of parties Relational Broad, open-ended long-term obligations monetizable and socioeconomic elements Relational Broad, open-ended long-term obligations monetizable and socioeconomic elements

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan10 Determining Expatriate Performance: (Host Environment)  The host environment may have a major impact on the expatriate’s performance due to the different economic, political, cultural, social, legal, technical, physical etc. framework conditions prevailing there and the policy of the organization’s headquarters towards its subsidiary units  The stage of maturity of the organization’s subsidiary unit also may considerably determine the expatriate’s performance

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan11 Determining Expatriate Performance: (Cultural Adjustment)  Cultural adjustment is a critical factor in an expatriate’s performance (see “expatriate failure”)  All individuals react differently, some can adjust more quickly than others (personality traits: authoritarian and dogmatic versus open-minded, culturally sensitive and emphatic)  The adjustment of the expatriate’s accompanying family members must be taken intro consideration as well

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan12 Determining Expatriate Performance: (Cultural Adjustment – Time Curve) Adjustment Time 1 2 (Culture Shock & Crisis Period) 3 4

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan13 Expatriate Performance Appraisal Goals can be used as the basis for performance criteria:  Hard Goals – objective, quantifiable and measurable (e.g.: ROI, market share)  Soft Goals – relationship or trait-based (e.g.: leadership style, interpersonal skills)  Contextual Goals – Factors that result from the situation or environment in which an expatriate performs (e.g.: host country regulations and restrictions) Often, organizations use only hard goals to assess their expatriates. Things like behaviour of the expatriates and ways of obtaining results (bribery?) must also be considered

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan14 Who Conducts Performance Appraisal?  Often high-level expatriates (subsidiary managers) are assessed by their immediate superiors at headquarters. This creates problems because the superiors are based at a distant location and may not be fully aware of the conditions and particular situations prevailing at the subsidiary unit  Relying on “hard criteria” as a means of assessing the performance of expatriates could result in these pursuing short-term quick results oriented strategies with adverse consequences for the longer-term (and which become evident after the expatriate has completed his or her assignment and departed from the host country)

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan15 Who Conducts Performance Appraisal?  Lower-level and other expatriates may be conducted by a host-country manager or supervisor who can take the contextual situation into account, but who may have their own cultural biases and hence cannot fully appreciate the expatriate’s performance in the broader organizational context  Where possible, several organizations use more than one assessor to evaluate an expatriate’s performance on his or her international assignment

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan16 How is Performance Appraisal Conducted? Traditionally, most organizations use standardized performance appraisal forms to evaluate their employees’ performance. Such forms allow cross-employee comparisons, but they are inappropriate for assessing expatriates on international assignments because the performance context changes. Many organizations continue to use performance appraisal forms meant for domestic employees in an international context

4 June 2015IHRM (MBA III) Course Instructor: Dr. Aurangzeb Z. Khan17 AAppraising the performance of HCNs may be a “culturally-sensitive” issue in some countries (save face syndrome) LLocal responsiveness to performance appraisal counteracts a standardized approach by the organization HHCN managers also may experience “role conflicts” because they are expected to perform roles imposed by the parent organization and, at the same time, live up to the expectations of the home environment HHCN managers who work in the parent organization and are then transferred back to their home countries may experience particular difficulties with “role conflicts” Appraising the Performance of HCNs