Chapter 4 Managing Performance Internationally. IHRM Welingkar Hybrid Program

Transcription

1 Chapter 4 Managing Performance Internationally IHRM Welingkar Hybrid Program

2 Chapter Objectives By the end of this chapter, you will understand: The relationship between Culture and Performance Management Challenges in managing performance internationally

3 Chapter Structure 1. Impact of culture on performance 2. Expatriate Performance Appraisals: Problems 3. Factors affecting expatriate job performance 4. Solutions to better Expatriate Performance 5. Summary

4 1. Impact of culture on performance

5 While the need to earn a salary ensures people will show up for work, organizational behavior suggests that employees need to be motivated to perform to the best of their ability. Employees are most likely to be motivated when they see a clear link between the effort they put in and the reward that they receive. Rewards must be seen as fair and equitable in order to inspire employees to work hard. Managers can motivate employees by setting realistic, achievable goals and measuring attainment. Achievement of these goals should be rewarded, either through recognition from the manager or financially.

6 Impact of culture on performance Culture and Personal Motives There is some evidence that motives such as self-efficacy, need for achievement, and intrinsic needs for competence are universal. Yet the specific factors that drive such motives vary across cultures. Earley et al. (1999) showed that personal feedback influences self-efficacy beliefs in individualistic cultures, whereas group feedback also influences self - efficacy beliefs in collectivistic cultures. Some researchers have argued that achievement motivation is stronger in individualistic than in collectivistic cultures, the meaning of it varies across cultures.

7 Impact of culture on performance Culture and Personal Motives Culture also affects performance and learning motivational orientations. In Confucian philosophy, there is an emphasis on the need to perfect oneself, and as a result, in the Chinese culture, learning appears more fundamental than achievement per se (Li 2002). Learning and performance orientation were highly correlated and both were associated with performance among Hong Kong students, whereas they were more distinct among American students (Lee et al. 2003).

8 Impact of culture on performance Culture and Goals Several studies suggest that elements of goal setting theory do not necessarily generalize across cultures. Kurman (2001) found that in collectivistic and high-power-distance cultures, choosing achievable moderate goals was more highly motivating than choosing difficult goals. Sue-Chan & Ong (2002) found that power distance moderated the effect of assigned versus participative goal setting on goal commitment and performance, with higher commitment and performance for assigned goals in high- rather than low power-distance cultures. Self-efficacy mediated the goal-assignment commitment, and performance relationships only in low-power distance cultures.

9 Impact of culture on performance Culture and Feedback Feedback giving and feedback seeking are theorized to vary across cultures. For example, Morrison et al. (2004) showed that individuals from the United States reported more newcomer feedback seeking than did individuals from Hong Kong, which was related to cultural differences in assertiveness and power distance. Positive feedback is universally perceived to be of higher quality than negative feedback, and even more so in collectivistic cultures. Japanese had stronger emotional reactions to negative feedback (Kurman et al. 2003), yet were more responsive to it than are Americans, who tended to engage in compensatory self-enhancement. Individual versus group performance induced more positive evaluations from individualists and collectivists, respectively.

10 Impact of culture on performance Culture and Rewards Cultural values shape the preferences for organizational rewards and their implementation across cultures (Erez & Earley 1993). Good pay and bonuses were the most preferred rewards for students in Chile and China, whereas promotion and interesting work were the most preferred rewards for American students, which may be attributable to cultural and economic conditions. (Corney & Richards 2005, King & Bu 2005). Regardless of the strength of money as a motivator, work appears to be valued beyond just monetary rewards in developing as well as developed countries (Adigun 1997).

11 Impact of culture on performance Culture and Rewards At a more macro level, cultures differ in their dominant reward systems. Brown & Reich (1997) showed that U.S. firms implemented payment-byresult systems, congruent with individualistic values, whereas Japanese firms endorsed seniority-based pay systems, congruent with respect for seniority. Group-based profit sharing and saving plans are effective motivators for reducing turnover rates in American-owned plants in Mexico as they fit with the strong collectivistic Mexican culture (Miller et al.2001). Culture affects incentives in multinationals, with higher incentives in subsidiaries that are culturally close to the headquarters (Roth & O Donnell 1996).

12 Quick Check Choose the correct option: 1. Culture impacts the following aspects of performance: A. Personal motives, Goals, Feedback and Rewards B. Personality traits, Goals, Feedback and Rewards C. Personal motives, Appraisal Methodology, Feedback and Rewards 2. Studies have found that Americans find feedback from Japanese managers frustrating because: A. Japanese don t provide any feedback B. Japanese provide implicit and informal feedback C. Japanese provide tangible and direct feedback Answers: 1. A 2. B

13 Chapter Structure 1. Impact of culture on performance 2. Expatriate Performance Appraisals: Problems 3. Factors affecting expatriate job performance 4. Solutions to better Expatriate Performance 5. Summary

14 2. Expatriate Performance Appraisals: Problems

15 Expat Appraisals : Problems Host National Management's Perceptions of Actual Job Performance Local management typically evaluates the expatriate's performance from its own cultural frame of reference and set of expectations. For example, one American expatriate manager we talked to used participative decision making in India but was thought of by local workers as rather incompetent because of the Indian notion that managers, partly owing to their social class level, are seen as the experts. Therefore, a manager should not have to ask subordinates for ideas. Being seen as incompetent negatively affected local management's review of this expatriate's performance, and he was denied a Promotion on return to the United States.

16 Expat Appraisals : Problems Home Office Management's Perceptions of Actual Job Performance Because the home office management is geographically distanced from the expatriate, it is often not fully aware of what is happening overseas. As a result, for middle and upper management, home office management will often use a different set of variables than those used by local management. Typically, more visible performance criteria are used to measure the expatriate's success (for example, profits, market share, productivity levels). Such measures ignore other, less visible variables that in reality drastically affect the company's performance. Local events such as strikes, devaluation of the currency, political instability, and runaway inflation are examples of phenomena that are beyond the control of the expatriate and are sometimes "invisible" to the home office.

17 Expat Appraisals : Problems Management Ethnocentricity Mendenhall & Oddou state that it is clear from their research that most U.S. senior management does not understand the value of an international assignment or try to utilize the expatriate's skills gained abroad when they return to the home office. Two of the most significant aspects of management's inability to understand the expatriate's experience The communication gap between the expatriate and the home office: Being physically separated by thousands of miles and in different time zones poses distinct problems of communication. The lack of domestic management's international experience: How can one understand what another person's overseas managerial experience is like-its difficulties, challenges, stresses, and the like - without having lived and worked overseas oneself?

18 Quick Check Choose the correct option: 1. The process of host nationals evaluating expats is problematic because: A. They evaluate from their own cultural perspective B. They are not trained to evaluate expats C. Their evaluations are always lower than home country 2. One of the reasons for home office not completely understanding the expat s situation is: A. Home office not knowing the host culture B. Irregular contact between the two C. Expat not understanding the manager Answers: 1. A 2. B

19 Chapter Structure 1. Impact of culture on performance 2. Expatriate Performance Appraisals: Problems 3. Factors affecting expatriate job performance 4. Solutions to better Expatriate Performance 5. Summary

20 3. Factors affecting Expatriate Job Performance

21 Factors affecting Expatriate Job Performance Technical Job Know How Research by Mendenhall & Oddou indicates that approximately 95 percent of the expatriates believe that technical competency is crucial to successful job performance. Although common sense supports this notion, research shows that technical competence is not sufficient in itself for successful job performance. Cultural variables, flexibility with local personnel, policies and practices, humility all this in the long run are more effective for the expat in successful job performance.

22 Factors affecting Expatriate Job Performance Adjustment to new culture Just as important as the expatriate's technical expertise is his or her ability to adapt to the foreign environment, enabling him or her to deal with the indigenous people. Survey by Mendenhall & Oddou felt understanding the foreign culture, having an ability to communicate with the foreign nationals, and being able to reduce stress were as-if not more-important to successful job performance than was technical competence. Regardless of how much an expatriate knows, if he or she is unable to communicate with and understand the host nationals, the work will not get done.

23 Factors affecting Expatriate Job Performance Adjustment to new culture An expatriate's adjustment overseas is also related to at least two personal variables: one's marital and family status (that is, whether accompanied by a spouse and children) the executive's own personal and the family's predisposition to acculturation Research clearly indicates that expatriates who have their family abroad are often less successful because of the stress on the family of being in a foreign environment.

24 Factors affecting Expatriate Job Performance Company Variables If the firm is not selective about the personality of the expatriate or does not appropriately prepare the employee and dependents, the firm may be building in failure before the manager ever leaves the home country. More time is thus required to learn the ins and outs of the job than for the expatriate's domestic counterpart who might have just taken a comparable position stateside. Performance evaluations at the company's normal time interval may be too early to accurately and fairly reflect the expatriate's performance.

25 Quick Check Choose the correct option: 1. The factors that help an expat perform well are: A. Technical job know how and adjustment to new culture B. Only technical job know how C. Only adjustment to new culture 2. Expat job performance is affected by Company Variables such as: A. Size and location B. Expat selection and training methodology C. Industry and business environment Answers: 1. A 2. B

26 Chapter Structure 1. Impact of culture on performance 2. Expatriate Performance Appraisals: Problems 3. Factors affecting expatriate job performance 4. Solutions to better Expatriate Performance 5. Summary

27 4. Solutions to better Expatriate Performance

28 Human resources departments can do a couple of things to help guide the evaluator's perspective on the evaluation. A basic breakdown of the difficulty level of the assignment should be done to properly evaluate the expatriate's performance. Major variables such as the following should be considered when determining the difficulty level of the assignment: Operational language used in the firm Cultural "distance," based often on the region of the world Stability of the factors affecting the expatriate's performance

29 Many foreigners speak English, but their proficiency does not always allow them to speak effectively or comfortably, so they rely on their native language when possible. In addition, they usually do not speak English among themselves because it is not natural. Although sharing the same language facilitates effective communication, it is only the surface level of communication. More deep-rooted, culturalbased phenomena can more seriously affect an expatriate's performance. Rather than having the manager try to subjectively build the difficulty level of the assignment into his or her performance appraisal, human resources could have a built-in, numerical difficulty factor that is multiplied times the quantity obtained by the normal evaluation process

30 Objectifying the evaluation Several things can be done to try to make the evaluator's estimation more objective: Most expatriates agree that it makes more sense to weight the evaluation based more on the on-site manager's appraisal than the home-site manager's notions of the employee's performance. In reality, currently the home-site manager usually performs the actual written performance evaluation after the on-site manager has given some input. When this is the case, a former expatriate from the same location should be involved in the appraisal process. When it is a foreign, on-site manager who is making the written, formal evaluation, expatriates agree that the home-site manager should be consulted before the on-site manager completes a formal terminal evaluation.

31 Performance Criteria Special consideration needs to be given to the expatriate s performance. Two recommendations: Modify the normal performance criteria of the evaluation sheet for that particular position to fit the overseas position and site characteristics. Returned expatriates who worked at the same site or in the same country should be involved in developing the appropriate criteria or ranking of the performance criteria or both. Include an expatriate's insights as part of the evaluation. "Soft" criteria are difficult to measure and therefore legally difficult to support. Nevertheless, every attempt should be made to give the expatriate credit for relevant insights into the interdependencies of the domestic and foreign operations.

32 Quick Check Choose the correct option: 1. To develop appropriate modifications for expats in the existing performance criteria: A. The oversees position and site characteristics should be kept in mind B. The host country and technical characteristics should be kept in mind C. The same role in home country and behavioural skills should be kept in mind 2. The expat must be given credit for: A. His technical competence B. Relevant cultural insights C. Learning the local language Answers: 1. A 2. B

33 Chapter Structure 1. Impact of culture on performance 2. Expatriate Performance Appraisals: Problems 3. Factors affecting expatriate job performance 4. Solutions to better Expatriate Performance 5. Summary

34 4. Chapter Summary

35 There is some evidence that motives such as self-efficacy, need for achievement, and intrinsic needs for competence are universal. Yet the specific factors that drive such motives vary across cultures. Several studies suggest that elements of goal setting theory do not necessarily generalize across cultures. Feedback giving and feedback seeking are theorized to vary across cultures. Cultural values shape the preferences for organizational rewards and their implementation across cultures. Several problems are inherent to appraising an expatriate's performance like - Local management typically evaluates the expatriate's performance from its own cultural frame of reference and set of expectations and because the home office management is geographically distanced from the expatriate, it is often not fully aware of what is happening overseas.

36 Two of the most significant aspects of management's inability to understand the expatriate's experience, value it, and thereby more accurately measure his or her performance are - The communication gap between the expatriate and the home office and the lack of domestic management's international experience. Primary factors relating to the expatriate's actual job performance include his or her technical job know-how, personal adjustment to the culture, and various environmental factors like thoroughness of the company s expat selection process and type of cross cultural training Human resources departments can do a couple of things to help guide the evaluator's perspective on the evaluation - a basic breakdown of the difficulty level of the assignment should be done to properly evaluate the expatriate's performance, make the evaluator's estimation more objective, Modify the normal performance criteria of the evaluation sheet for that particular position to fit the overseas position and site characteristics and Include an expatriate's insights as part of the evaluation.