The performance management refers to the organizational activity which ensures that the goals and objectives of the organization are met. It focuses on the performance of an individual employee, an organizational department and the organization as a whole. In the performance management, the leaders and the managers of the organization take initiatives to monitor and review the performance of the employees. It includes the detailed evaluation of the objectives of the employees and their overall contribution to the organization. In addition to the performance evaluation, the organization also focuses on the setting continuous objectives, examining the individual progress, providing on-the-job training to foster the individual development of the employees. The primary objective of performance management is to ensure and assist the employees are meeting the goals and the career objectives. It can be critiqued that the performance management is a continuous process in which the managers and the employees work together to improve the performance of the employees. An effective performance management system requires both time and resources. With an effective performance management system, the organization can monitor the performance of the employees and the organization. The organization can also implement appropriate intervention methods to improve the performance of the individual employees. It is important that the management acts upon the results of the performance system (Brannen, Piekkari and Tietze, 2014). An organization can also create a positive organization culture with the performance management system as it assists the giving recognition to the talented individuals of the organization. It also assists the organization in giving adequate support or providing employee training to improve the performance of the employees. There are three main phases in the performance management of the organization, namely, planning, monitoring and performance evaluation.
However, performance management becomes an issue with the size of the organization. The management of the people is the most difficult task as it requires constant innovation and motivation. The challenge of human resource management is especially critical in the global organization which employ workforce which diverge in age, gender, education and culture. Although global workforce provides immense opportunities for the organization as they have a large talent pool from which they can choose their employees purely on the basis of talent and skill-set criteria (Hoenen and Kostova, 2015). However, the management of the global workforce posits immense challenge for the business organization. In this essence, in this report, the challenges faced by the human resources in the implementation of a performance management system has been discusses.The report also presents several recommendations which can address the issues faced by the multinational organizations.
Challenges that global organizations may encounter in operating a performance management program across all of their operations
Performance management is an integral part of the human resource management. Most of the human resource activities such as the new recruitment, the need of the staff training and the career development of the employees is dependent upon the performance management of the organization. The performance management basically entails the activities such as assessment of the current and the previous performance of the employees, team and organization. However, performance management is a complex process especially when the employees belong to different cultural backgrounds. The performance management has a positive correlation with the performance of the organization can be used as to develop s positive competitive advantage of the organization. The human resource management of the organization is also positively related with the financial performance of the firm. The performance evaluation can be conducted in two manners, either by exact performance data or at an individual level. In the individual level performance evaluation, the evaluation is completely subjective. It can also evoke emotions in the different parties and can lead to conflict. Another method of performance evaluation is based on the exact data. It results in the quantification and comparison between different employees (Nielsen and Nielsen, 2013).
In business organizations, performance management can be achieved with the help of several tools such as evaluation by objectives, multilaterally evaluation and ranking. These methods are used to quantify the efficiency of the employees. The performance measures of the employees should be relevant, balanced and developed according to the internal and the external stakeholders. The performance measures should also be directly related to the mission and the objectives of the organization. The performance measures should be developed according to the external and the internal environment of the organization. The performance management is also significant in the compensation process of the employees which influences the retention of the talented employees in the organization (Lin and Wu, 2014).
The performance management of the international employees is challenging as the most expensive employees a business organization are the expatriates. Several complex systems for the performance management of expatriates have been developed which try to understand the performance of expatriates in a foreign country. The performance management system should be specifically tailored for each country depending upon the cultural sensitivity and the process of the direct feedback (Popaitoon and Siengthai, 2014).
In addition to it, another challenge in the performance management of the international employees is who should carry out the performance evaluation of these employees. The international employees work under two managers, the local manager and the corporate manager. The corporate managers of the organization are not familiar with the operations in the home country whereas the local managers are not familiar with the working style at other nations. Therefore, it is difficult to implement the performance management of international employees. The 360 degree performance evaluation of the employees refers to the performance evaluation from above, below and sideways. Most often, it involves input from customers, subordinates, peers, direct manager, HR manager and self-evaluation. As a result, this evaluation method becomes very complex for the performance management team (Buckingham, and Goodall, 2015).
The performance management also entails the manner in which the feedback is provided to the employees and the appraisals methods. The employees of one place may be more open to criticism in comparison the employees of other location. The feedback mechanism of one place may have different impact on different employees. Some employees may work harder to achieve their goals and some employees may get demotivated to work. Therefore, it is important that the feedback mechanism of the employees is developed according to the culture of that specific country (Aguinis, 2013).
In multinational business organizations, the employees who are the nationals of the country in which the organization is working are neglected in the performance management system. These employees remain isolated with their supervisors or line managers and find difficulty in conducting self-assessment. In the performance assessment, the issues related to the geographical distance as well as the cultural distance should be considered by the human resource manager (Buckinghan and Goodall, 2015).
The primary challenge in the performance management system of the international organization is that there is a lack of universal or formal appraisal system for evaluating the performance of the international employees. There is also lack of consensus among the scholars for the most effective and objective criteria for the evaluation of the employees and what refers to the most effective evaluation. In the international appraisal, the competency and the bias of the rater has also emerged as a substantial issue in the performance management. The managers give preference to their subordinates who have emerged from the same cultural background (Podgórski, 2015).
In international settings, it is also difficult to isolate the job-related factors from other factors in the performance appraisal. The multinational companies also tend to examine the capabilities of their employees in terms of their technical capabilities. However, the technical skills of an employee cannot be considered as a sole criterion for evaluating the performance of a single employee. In the performance evaluation, the organizations should evaluate the personal attitude, cultural skills, cross-cultural skills, learning skills, tolerance and adaptability of the employees.
The performance management has a strategic significant in the global setting. The purpose and the approach of the performance management changes with the organizations move from the local to the international settings. The changes in the performance management occurs due to the changes in staffing structure and the evolving human resource policies. The performance management strategies also determine the types of the employees who will be suitable to work in international settings. In the multinational organization, there are three types of employees, namely, parent country nationals, host county nationals and the third country nationals. The parent country nationals are the employees from the parent country of the organization, the host country nationals are the local citizens of the host subsidiary and the third country nationals refers to the employees who are not from the parent country not from the host country (Armstrong and Taylor, 2014).
The employees in the subsidiaries are important for the success of the MNC as with the globalization, the subsidiaries of the organization are taking a central role in the success of business. Therefore, it is important that the human resource management does not take into account the employees from the foreign country but also from the host country. Moreover, with globalization, there will be larger number of organizations which will be geographically distant from the original organization; therefore, it is important that an individual performance management system should be developed for each of the subsidiaries (Seidu, 2012).
The purpose of the performance appraisal varies between different cultures and changes with the structure and the size of the subsidiaries. In the country with individualistic culture, the feedback of the subordinates is given high priority. In the USA, the performance management is rarely used for the training and the development purposes. Moreover, another significant challenge in the performance management is that the motive or the purpose of the performance evaluation of the rater and the ratees is different which may affect the efficacy of the performance management system (Van Dooren, Bouckaert and Halligan, 2015).
It can be critiqued that in international settings and multinational organizations, the performance management is essential for the organizational success. However, designing an effective performance appraisal system is a complex task. Several issues may arise in the implementation of an effective performance management system related to the aspects of employee performance which are to be evaluated, the description of the employee performance, criteria for the appraisal, type of scale and the process of appraisal (Aguinis, 2013).
It can be critiqued that the performance appraisal system in the international setting increases the satisfaction of the employees when the performance appraisal has specific aim and purpose. Moreover, of the employees presume that the performance appraisal is fair then they are more satisfied with the overall performance evaluation. Regular communication and positive relation between the rater and the rate can also uplift the standard of the performance evaluation system (Aguinis, 2013).
In international companies, the performance management team should also focus on timely and accurate communication between the managers and the employees. The performance appraisal has a direct influence on the motivation and the job satisfaction of the employees. Therefore, in order to create an effective performance appraisal environment, it is important to create an environment which is full of trust. The companies should encourage face-to-face contact between the rater and the rate to encourage mutual trust. The regular communication can be arranged with the help of regular visits of the rater and the ratee or with the use of the communication technologies (Harzing, & Pinnington, 2014).
Moreover, the business organizations should focus on the development of valid and reliable criteria for the performance criteria. The performance criteria should be easily accessible and easy to understand. If the employees can easily understand the performance criteria, they will be more motivated to get exceeded in it. It should also address the cultural differences between different countries. The organization should also conduct induction session or training so that the supervisors and the employees can understand the objective of the performance appraisal system. It should also ensure equal and fair treatment for all the employees (Varma, Budhwar, & DeNisi, 2008).
The business organization should also implement a performance appraisal system in which competent raters are recruited so that there is no bias in the review of the employees. The employees should also be assured that there review is honest and genuine.
The raters should also be well-versed and familiar with the process of the performance evaluation. They should understand the unique aspects in the performance management of the organization. They should be able to properly conduct the performance evaluation of other employees as well as self-evaluation. The employees should be made familiar with the organization’s expectations with them when they are recruited in the organization. If there are any changes in the job duties of the employees, they should be made familiar to them. The familiarity with objectives will assist thee employees to achieve their targets. The individual target of the employees should also be made connected with the targets of the organization and the employees should also be familiar with them. It will motivate the employees to achieve the organization’s objectives. The overall effectiveness of the performance assessment can be increased when the goals of the organization are both formal and written. The employees should be able to access the goals of the organization which has a positive effect in increasing the efficiency of the employees. In international assignments, the performance management system should be considerate of the working style and the efficacy of the employees in different locations. It could be recommended that in the multinational environment the performance of the employees must be e valuated in 360 degree or the multi-rater method. In this method, the overall performance of the employees is evaluated according to the feedback provided by different sources. It includes the feedback of the subordinates, peers or colleagues and the seniors. The rater should also be provided training to reduce the error and increase the reliance on the performance management system. The training should be provided for the proper use of the performance management system and how to use different tools in it. The training should be provided to determine the performance standards, counseling, and conflict resolution and provide accurate employee feedback. The manager should also be provided training to take into account the cultural differences between thee national of the home country and the foreign country while evaluating the performance of a particular employee (Smither & London, 2009).
The performance appraisal is an integral part of the performance management system. The feedback is an integral part of the performance appraisal as the rate of appraisal is completely dependent upon the performance of the employees. The performance appraisal is specifically important in international context where the employees are from diversified backgrounds. The performance management system should be able to implement feedback so that it is aligned with the performance of the system. It will increase the reliability of the system. The organization can also increase the reliability of the system by increasing the frequency of the feedback (Hearn, & Michelson, 2006).
In the performance management of the international employees, the organizations also face challenge in which the employees feel difficulty in communicating their personal needs and career growth options to their managers. In this regard, the multinational organizations should encourage the communication between employees and their managers (Guo & Gallo, 2017).
Conclusion
There are several issues related to performance management in the multinational companies. The performance management refers to the activities which enhances the performance of the employees. In the performance management, the business organizations monitor and evaluate the performance of different employees and implements intervention methods for the employee development. All the employees of an organization are provided certain objectives and their performance is evaluated according to the organization’s protocol. However, there are several issues in the effective performance management of the organization. The performance management refers to the accurate and precise monitoring of an individual employee‘s performance. However, it is very challenging for the organization to accurately determine the performance of the employees. Every employee has a few strengths and weaknesses and the organization should focus on the overall development of the employees. The performance management become increasingly difficult in the situations in which the employees come from diversified cultural and the geographical backgrounds. Therefore, the performance management is a challenge in the multinational organizations. The business organizations face several challenges such as the bias of the rater. The direct manager or the rater may be situated at a different geographical location which may impact his perception of the employees. The cultural differences may pose communication problem between then manager and his employees.
These issues can be mitigated be following several strategies. The business organizations must create a transparent performance management system which will increase the reliability and the trustworthiness of the system. The business enterprises should also encourage communication between the employees and the managers. It can be arranged by organizing meetings, making arrangements so that the managers can communicate directly with the overseas employees and use of information technology. The face to face meetings should be organized to increase the reliability of the performance management system.
References
Aguinis, H., 2013. Performance management (Vol. 2). Upper Saddle River, NJ: Pearson.
Armstrong, M. and Taylor, S., 2014. Armstrong’s handbook of human resource management practice. Kogan Page Publishers.
Brannen, M.Y., Piekkari, R. and Tietze, S., 2014. The multifaceted role of language in international business: Unpacking the forms, functions and features of a critical challenge to MNC theory and performance.
Buckingham, M. and Goodall, A., 2015. Reinventing performance management. Harvard Business Review, 93(4), pp.40-50.
Guo, X., & Gallo, F.T. (2017). Multinational Companies in China: Navigating the Eight Common Management Pitfalls. Emerald Group Publishing.
Harzing, A.W., & Pinnington, A. (2014). International Human Resource Management. SAGE.
Hearn, M., & Michelson, G. (2006). Rethinking Work: Time, Space and Discourse. Cambridge University Press.
Hoenen, A.K. and Kostova, T., 2015. Utilizing the broader agency perspective for studying headquarters–subsidiary relations in multinational companies. Journal of International Business Studies, 46(1), pp.104-113.
Lin, Y. and Wu, L.Y., 2014. Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of business research, 67(3), pp.407-413.
Nielsen, B.B. and Nielsen, S., 2013. Top management team nationality diversity and firm performance: A multilevel study. Strategic Management Journal, 34(3), pp.373-382.
Podgórski, D., 2015. Measuring operational performance of OSH management system–A demonstration of AHP-based selection of leading key performance indicators. Safety Science, 73, pp.146-166.
Popaitoon, S. and Siengthai, S., 2014. The moderating effect of human resource management practices on the relationship between knowledge absorptive capacity and project performance in project-oriented companies. International Journal of Project Management, 32(6), pp.908-920.
Seidu, Y., 2012. Human resource management and organizational performance: Evidence from the retail banking sector (Doctoral dissertation, Aston University).
Smither, J.W., London, M. (2009). Performance Management: Putting Research into Action. John Wiley & Sons.
Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the public sector. Routledge.
Varma, A., Budhwar, S., & DeNisi, A.S. (2008). Performance Management Systems: A Global Perspective. Taylor & Francis.
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