INTERNATIONAL PERFORMANCE MANAGEMENT

Isha Mehra (07bs1638)Prachi Sharma(07bs2885)N Rakesh (07bs2382)

Performance Management Performance Management is a means of getting better results

from the organizations, teams and individuals within an agreed

framework of planned goals, objectives and standards.

-ARMSTRONG AND MURLIS

The essence of performance management is the development of

individuals with competence and commitment, working towards

the achievement of shared meaningful objectives within an

organisation which supports and encourages their achievement

- LOCKETT

A communication tool to measure each individual's contribution

To evaluate talent and achievement with sensible consistency and accuracy

To help distinguish barriers to top performance

Why Appraise Performance?

Periodic evaluation helps mangers to have a better understanding of each employee's skills with the goal to facilitate, train and develop abilities and power to their employees A chase to assess job development, encourage

interest and enhance job performance by pointing out the development and recognizing productive work

A feedback system that might otherwise be overlooked

Aims of Performance management….

When we know what is expected of us, and have

played a role in forming these expectations, we will

do our best to meet the expectations.

We can meet expectations only through our capability

and if we get support from the ‘management’ through

processes, systems and resources.

Design process for expatriate performance

Goal setting for expatriates

Performance appraisal

The Expatriate….

Individual Performance and Appraisal

Factors to be considered in the Individual Performance and

Appraisal process :

• Expatriate Performance Management System

• Compensation Package

• Task

• Headquarters’ Support

• Host Environment

• Cultural Adjustment

International Compensation Key components of an International Compensation Program -

Base Salary

Foreign Service Inducement/Hardship Premium

Allowances

Benefits

Tax differentials

Components:

BASE SALARY

An expatriate’s base salary is normally in the same range as the

base salary for a similar position in the home country.

FOREIGN SERVICE PREMIUM

A foreign service premium is extra pay the expatriate receives

for working outside his or her country of origin

It is offered as an inducement to accept foreign postings

ALLOWANCES Hardship allowances

Payments to compensate expatriates for exceptionally hard living and working

conditions at certain foreign locations.

Housing allowances

Cost-of-living allowances

Education allowances

Relocation allowances

Parent country wages everywhere

Wean expatriates from allowances

Pay based on local or regional markets

Cafeteria selection of allowances

Global pay systems

TAXATION

Unless a host country has a reciprocal tax treaty with the expatriate’s home country, the expatriate may have to pay income tax to both the home country and the host-country governments

When a reciprocal tax treaty is not in force, the firm typically pays the expatriate’s income tax in the host country

BENEFITS

Many firms also ensure that their expatriates receive the same level of medical and pension benefits abroad that they received at home

Expatriate Manager Compensation: Other Approaches

Headquarters-based compensation: paying home

country wages regardless of location

Host-based compensation system: adjusting wages to

local lifestyles and costs of living

Global pay systems: worldwide job evaluations,

performance appraisal methods, and salary scales are

used

Earnings in Selected Occupations in Seven Cities

Expatriate Performance Appraisal: Challenges

Fit of international operation in multinational strategy

Unreliable date

Complex and volatile environments

Time difference and distance separation

Local cultural situation

In most cases, two groups evaluate the performance of expatriate managers - host

nation managers and home office managers - and both are subject to unintentional

bias

Home country managers tend to rely on hard data when evaluating expatriates

Host country managers can be biased towards their own frame of reference

Steps to Improve the Expatriate Performance Appraisal

1. Fit the evaluation criteria to strategy

2. Fine-tune the evaluation criteria

3. Use multiple sources of evaluation with varying periods of evaluation

To reduce bias in performance appraisal:

Most expatriates believe more weight should be given to an on-site manager's appraisal

than to an off-site manager's appraisal

A former expatriate who has served in the same location could be involved in the

appraisal process to help reduce bias.

When the policy is for foreign on-site mangers to write performance evaluations, home

office managers should probably be consulted before an on-site manager completes a

formal termination evaluation

The Expatriate Manager: Compensation

The balance-sheet approach

Provides a compensation package that equates purchasing

power

Allowances for cost of living, housing, food, recreation,

personal care, clothing, education, home furnishing,

transportation, and medical care

This approach equalizes purchasing power across countries so employees can enjoy the same standard in their foreign positing that they enjoyed at home

Balance Sheet Approach To Expatriate Compensation

One of the greatest challenges

Balance sheet approach: adjusts manager’s compensation so that manager receives same standard of living as in the home country + extra pay for locating overseas

packages are complex b/c of determining adequate base salary because of difference in currencies, variance in tax rates, & determining what benefits can be utilized & are of value in foreign countries.

Appraising Expatriate Managers Challenges in appraising overseas managers

Determining who should appraise the manager.

Deciding on which factors to base the appraisal.

Improving the expatriate appraisal process

Stipulate the assignment’s difficulty level, and adapt the performance criteria

to the situation.

Weigh the evaluation more toward the on-site manager’s appraisal than

toward the home-site manager’s.

If the home-office manager does the actual written appraisal, use a former

expatriate from the same overseas location for advice.

WHO SHOULD RATE?More weight given to onsite

manager’s evaluation.

Expat who worked in same location should assist home-office

manager with evaluation.

If foreign on-site manager preparing evaluation, home-office manager should

be consulted before finalization.

Performance Appraisal at Pepsi-Cola International

Common performance appraisal system:

focuses on motivating managers to achieve and maintain high standards of motivation.

Factors associated with high performance in diverse markets were identified:

Handling business complexity Results orientation Organizational savvy Leadership Executive excellence Composure under pressure Maturity

Contd… Technical knowledge Positive people skills Effective communication and impact

Five feed-back based mechanism:

instant feedback

coaching

accountability-based performance appraisal

development feedback

human resource plan

Guidelines for appraisal, modification to suit cultural differences.

PCI tried to balance the cultural and administrative imperatives of successfully managing the performance of a diverse workforce.

THANK YOU