Global Performance Management

High performance work systems

—  Linked to all areas of HRM

—  Systems Focus

—  Universalist versus Contingency Configurations

—  Benefits

¡  Improved efficiency

¡  Cost reduction

¡  Cooperation

¡  Communication

¡  Retention

—  Evidence: HPWS more effective than individual measures (see textbook)

—  Transferability and Measurement

Criticisms of HPWS

—  Argued to be based on a US model

—  Impact of culture, NBS etc.

—  Questions over claims to ‘mutuality’

¡  Work intensification

¡  Control

¡  Peer pressure

¡  Redundancy

¡  Deskilling

Global PM

—  USA

—  UK

—  China

—  India

—  Expatriate Performance Appraisal

USA

—  Individualistic Culture

—  Focus on administrative processes rather than development

—  Results orientation

—  Legalistic – linked to strong legal framework

—  General lack of acceptance of PA

UK

—  Developmental orientation (to a degree)

—  Issues of cost/benefit

—  Focus on highly skilled and talented employees

—  Increasing relationship between performance  and reward

—  Problems with bias and WLB

China

—  Collectivist

—  Growing since 1980s

—  Issues of ‘face’, harmony  and hierarchy

—  Group orientation

—  Behavioural focus

—  Formal yet subjective

India

—  Impact of MNCs

—  Shift from collectivist to individualist orientation

—  Link to reward

—  Possible bias due to paternalism

—  Diversity

Example

Performance Management at Shenhua Guohua Electric Power

Gong Yaping and Yang Weiguo (2012)

Hayton et al Global Human Resource Management Casebook

Background

—  State owned

—  Formerly Huaneng Fine Coal Co. Ltd.

—  Restructuring of power industry led to merger and creation of the new company

—  Redundancy and retirement costs

—  Despite reforms – no link between individual contribution and wages

—  Profitable, but no means of distinguishing between good and poor performance

—  Poor motivation

Performance Management

—  Performance system based on KPI’s and compensation management

—  Annual business goals and objectives – devolved to subsidiaries

—  Divide into monthly and departmental objectives

—  Departmental performance index defined by PM committee

—  Further division into teams and individuals

—  Peer comparison basis of promotion

—  Middle managers evaluated in relation to departmental performance

Organization of PM

—  Leadership team – senior managers

¡  Develop performance objectives, reviews, reports, compensation plans

—  Appraisal team – functional leaders

¡  Organize  performance evaluation, submit performance reports to leadership team, implement improvement targets

—  Appraisal of plants and subsidiaries

—  Individual and departmental evaluation within plants

Forced Normal Distribution

—  Law of the vital few’

—  S: Excellent

—  A: Good

—  B: Satisfactory

—  C: Need to improve

—  C classification subject to discussion of improvement opportunities

Compensation System

—  Executive compensation

¡  Annual fixed salary plus performance-based rewards and long-term incentives

¡  Linked to economic results of the business

¡  Salary system linked to plant size and staffing, safety, profitability, productivity, contribution to capita

¡  Designed to encourage achievement of operational objectives

¡  Increased weight of variable component based on performance

¡  Expanded pay differentials between key and general positions

Appraising the Expatriates Performance

—  Host National Management’s Perceptions of Actual Job Performance

¡  Local managers’ cultural frame of reference

¡  i.e. American expatriate manager  used a participative decision-making style in India. Was viewed as incompetent by local workers

¡  Indian managers viewed as the  experts

¡  Issues of class

¡  Negative local appraisal led to denial of promotion on return because local managers appraisal seen as most accurate

—  Home Office Management’s Perceptions of Actual Job Performance

¡  Geographic distance can lead to lack of awareness

¡  Use different set of performance criteria

¡  I.e. US manager averted a strike in Chile. However, only concern for home managers was profit.

¡  Profit erroded due to exchange rates

¡  Manager viewed as mediocre

¡  Headquarters often fail to understand situation of expatriates

—  Management ethnocentricity

—  The communication gap

—  Lack of international experience

¡  More than 2/3 of upper management in corporation lack international experience

—  Actual job performance

¡  Technical know-how

Adjustment to new culture