Performance Appraisal Methods of Multinational organization

1. SCHOOL OF BUSINESS
Assignment on
Performance Appraisal Methods of Multinational
organization
Course No: BBA 322
Course Title: Human Resource Management
Course Teacher: Mr.‟s Parul Akhter
SUBMITTED BY
MD. SAKHAWAT HOSSAIN KHAN
ID: 17-01-02-031
3rd
Year 2nd
Semester
Section: A
Date: 10-September-2020

2. Table of Content:
1. Executive Summary………………………………………………………………….03
2. Introduction………………………………………………………………………….03
2.1. What is Performance Appraisal?........................................................................05
2.2. How Performance Appraisals Work?……………………………………………05
3. Performance Appraisal Types……………………………………............................06
4. The strategic importance of performance management in a global context…………07
5. DISCUSSION ……………………………………………………………………….08
6. Characteristics of Performance Management………………………………………...09
6.1. Performance management and performance appraisal…………………………..10
7. What influences the purpose?…………………………………………………………11
8. Ethics in Performance management…………………………………………………..12
9. Conclusion……………………………………………………………………………13
Reference

3. 1. Executive Summary
Performance Appraisal (PA) is an important management tool and a superior motivation weapon.
Through PA technique a company can discover the real diamond of the organization and polish
them to the drizzling brilliance. PA also enable and organization to strike a workable balance
between the company‟s need for feedback and motivation.
The vital role that GP plays in the economy can be carried out only with the help of an
organized, efficient and motivated work force. The study being proposed aims is evaluating the
performance which will hopefully point out the strength and weakness of the system of
appraising merit and performance of the staff members. This will, in turn, help the management
to design a better appraisal system to improve Human Resource Management in the Grameen
Phone Bangladesh.
As a manager ,an important part of his/her job is to motivate and encourage the employees to be
productive contributors .Performance appraisal system is a powerful tool to assist the managers
.By approaching performance appraisal as an ongoing process ,manager will be able to
• Increase communication with subordinates,
• Establish clear expectation,
• Reinforce good performance,
• Improve unsatisfactory performance of the employee,
• Identify special talents,
• Guide in planning the employees further needs and
• Foster a spirit of co-operation and team work.
2. Introduction
Performance appraisals are widely used in Australia to evaluate the performance of managers
and professionals, and to a lesser extent they are used to assess other employees. Despite their
wide spread use, the execution of performance appraisals are frequently flawed in a number of
ways. These limitations include lack of clarity about the purpose of the appraisal, inaccurate
judgments about performance, ineffective feedback, invalid performance criteria and indicators.
Host country managers (HCM) are responsible for the overseas operations of companies doing
business internationally. Their responsibilities include managing the performance of the

4. subsidiary, managing staff and achieving profitability targets within the guidelines handed down
by the board and the company Executives. Their performance is therefore critical to the success
of the foreign operation. However, very little is known about the conduct of performance
appraisals for HCM. This article examines research on performance appraisals for HCMs in a
sector of the healthcare industry.
The first part of the article examines the characteristics of an effective performance appraisal and
highlights the implications of these characteristics for HCMs. The second part reports on
common limitations associated with performance appraisals, and draws particular attention to the
experience of HCMs. The third part describes the methodology used to explore the nature of
performance appraisals for HCMs in Australian subsidiaries of healthcare companies. The fourth
part presents the results and focuses the discussion on the factors that influence the appraisal
process. The final part concludes.

5. What is Performance Appraisal?
A performance appraisal is a regular review of an employee's job performance and overall
contribution to a company. Also known as an annual review, performance review or evaluation,
or employee appraisal, a performance appraisal evaluates an employee‟s skills, achievements,
and growth--or lack thereof. Companies use performance appraisals to give employees big-
picture feedback on their work and to justify pay increases and bonuses, as well as termination
decisions. They can be conducted at any given time but tend to be annual, semi-annual, or
quarterly.
How Performance Appraisals Work
Because companies have a limited pool of funds from which to award raises and bonuses,
performance appraisals help determine how to allocate those funds. They provide a way for
companies to determine which employees have contributed the most to the company‟s growth so
companies can reward their top-performing employees accordingly.
Performance appraisals also help employees and their managers create a plan for employee
development through additional training and increased responsibilities, as well as to identify
shortcomings the employee could work to resolve.
Ideally, the performance appraisal is not the only time during the year that managers and
employees communicate about the employee‟s contributions. More frequent conversations help

6. keep everyone on the same page, develop stronger relationships between employees and
managers, and make annual reviews less stressful.
3. Performance Appraisal Types
Most performance appraisals are top-down, meaning supervisors evaluate their staff with no
input from the subject. But there are other types:
 Self-assessment: Individuals rate their job performance and behavior.
 Peer assessment: An individual's work group rates his performance.
 360-degree feedback assessment: Includes input from an individual, her supervisor, and
her peers.
 Negotiated appraisal: A newer trend that utilizes a mediator and attempts to moderate the
adversarial nature of performance evaluations by allowing the subject to present first.
Also focuses on what the individual is doing right before any criticism is given. This
structure tends to be useful during conflicts between subordinates and supervisors.
Performance Appraisal Criticism
An issue with performance appraisals is that differentiating individual and organizational
performance can be difficult. If the evaluation's construction doesn't reflect the culture of a
company or organization, it can be detrimental. Employees report general dissatisfaction with
their performance appraisal processes. Other potential issues include:
 Distrust of the appraisal can lead to issues between subordinates and supervisors or a
situation in which employees merely tailor their input to please their employer.
 Performance appraisals can lead to the adoption of unreasonable goals that demoralize
workers or incentivize them to engage in unethical practices.
 Some labor experts believe that use of performance appraisals has led to lower use of
merit- and performance-based compensation.
 Performance appraisals may lead to unfair evaluations in which employees are judged not
by their accomplishments but by their likability. They can also lead to managers giving
underperforming staff a good evaluation to avoid souring their relationship.
 Unreliable raters can introduce a number of biases that skew appraisal results toward
preferred characteristics or ones that reflect the rater's preferences.
 Performance appraisals that work well in one culture or job function may not be useful in
another.

7. 4. The strategic importance of performance management in a global context
In order to understand the strategic significance of performance management in a global setting,
it is important to recognize that the purpose and approach of performance management changes
as the MNC expands and subsidiaries develop. These changes have been attributed to the human
resource staffing structures and strategies (Birkinshaw & Morrison, 1995). Evidence suggests
that it is these structures and strategies that determine the types of employees that will be
employed in an international setting (Dowling et al 2008) and the importance placed on the
purpose and approach of performance management (Maley, 2011).
There are three key types of international employees that have been identified:
 Parent country nationals (PCNs). These employees are from the parent country,
expatriates are always PCN.
 Host country national (HCNs). These employees work in their host subsidiary.
 Third country nationals (TCNs). These employees are not from the parent office and do
not work in their host country.
For example, the US MNC General Electric employs Australian citizens in its Australian
operations (HCNs), often sends US citizens (PCNs) to Asia Pacific countries on assignment, and
may send some of its UK employees on an assignment to its Japanese subsidiary (TCNs). The
nationality of the employee has been found to be a major factor in determining the person‟s
category.
The employees in the subsidiaries (HCNs: TCNs) become increasingly more important to the
success of the MNC as the globalization strategy advances and the subsidiary takes a central role
in the success of MNC. For that reason, the international performance management process must
consider, not only the employees from the parent (HCNs) but also these new forms of employees
(Milliman et al., 2002). In chapter three, the concept of the “Global Professional” was
introduced. In this chapter, the concept is extended to illustrate three distinct categories of global
employees. What is more, as the MNC continues to expand there will be an increasingly larger
percentage of the organization that is both geographical and culturally distant from the parent
MNC (Harzing & Noordhaven, 2005). The widening cultural distance has been found to have a
major effect on the purpose, criteria, acceptance and ethics of performance management
(Fenwick, 2005). Consequently, the international performance management process needs to
adopt a broader cultural perspective with an appreciation for cultural diversity

8. 5. DISCUSSION
Key influences on performance appraisal
Performance appraisals were widely used for the HCMs in the study and are influenced by the
interactions between the emphasis given to the „bottom-line‟, the nature of „the relationship with
the superior‟ and „the effect of the parent MNC‟. However, most of the HCMs believed a limited
range of criteria were used to assess their performance as a result of the emphasis given to
financial and quantitative results. The appraisal would appear to be used largely for making
bonus decisions based on performance of the subsidiary. The PA was not used generally for
training and development, which is in contrast with the findings in recent Australian studies
(Kramar 2000, Compton, 2005; Nankervis & Compton, 2006).
The assessment of the HCMs‟ performance by their supervisors was probably unreliable in many
instances because of the poor relationship between the HCMs and their supervisors. This resulted
from a lack of contact during the year and the supervisor‟s a lack of understanding of the
conditions in the Australian subsidiary. The value of the appraisal as a process to improve
individual performance was also limited, as almost all the HCMs had limited feedback, no
follow-up or training and development resulting from the appraisal.
The structure and the strategy of the parent company appeared to influence the HCM‟s
perceptions of the appraisal process. When HCMs feel an integral part of the MNC because of
experience in other parts of the company and the prospect of career progression, it is more likely
that they will be satisfied with their appraisal process. This situation is more likely to occur when
companies adopt a transnational approach to strategy and a geocentric or regiocentric structure.

9. It is possible that the purpose of the PA changes as the strategy and structure of the parent
company changes. When companies adopt an ethnocentric or polycentric structure and an
international or multinational/multidomestic strategy, the purpose of the appraisal could be to
make bonus decisions based on the performance of the subsidiary. As HCMs have almost no
career prospects outside the subsidiary when these structures and strategies are used, the
superiors probably see no value in using the appraisal information to make training and
development decisions. However, the situation is different when a transnational strategy is used
because HCMs have the opportunity for career progression beyond the subsidiary.
If the company continues to conduct appraisal in the early stages of subsidiary evolution, it needs
to be taken seriously by both the subordinate and supervisors. They have to prepare for the
appraisal, it must be conducted in a suitable venue, and it must be followed-up. Moreover it
would appear that the purpose needs to be more clearly articulated to the HCMs. Even if the
company was not going to invest in training and development of the HCM, some identification
of development needs could enable the individual manager to undertake learning to enhance their
performance. Although HCMs are isolated from the parent company, in Australia more frequent
contact between the HCM and the superior, even by e-mail and telephone, would improve
informal feedback and probably facilitate more accurate and reliable assessments. This may help
build an environment of trust. The use of additional sources of feedback in the form of self, peer
and subordinate assessment were found to be useful to the informants of the study and should
also be considered.
While it may not be possible for the HCM to be seconded to head office on a long-term
assignment, some extended visits to head office or short term assignments may be feasible along
the lines suggested by Fenwick (2004). If the HCM were to undertake regular and occasionally
extended visits to head office, it may assist in several ways. It would help the supervisor to better
understand the HCM, building up rapport and trust, which are vital for successful feedback. In
addition the HCM will better understand the head office culture and the parent effect. Overall
both parties would have a better understanding of each other and their cultures.
6. Characteristics of Performance Management
Performance management and performance appraisal
Performance management is the general term for a number of human resource functions that are
concerned with managing performance. It is the systematic process that involves employees, as
individuals and members of a group, in improving organizational effectiveness in the
accomplishment of the firm‟s mission and goals. Employee performance management includes:
planning work and setting expectations, continually monitoring performance, developing the

10. Appraising
Planning
MonitoringDeveloping
Rewarding
capacity to perform, periodically appraising performance, and rewarding good performance. It is
important to reiterate here that these numerous functions are much more complex to administer
in an international setting.
The aspects of the performance management cycle are magnified and become more complex
when a firm globalizes. When a company does internationalize it‟s operations, the human
resource manager needs to become familiar with the aspects of performance management that
may be influenced by the political, economic, legal and cultural feature of the countries in which
the MNCs is operating. In addition the human resource manager must be aware of the various
stages of evolution of the subsidiary and how these stages may impact on the individual
functions of the performance management system. The appraisal is therefore a component of the
performance management system, albeit, a major component. It is forms part of the umbrella of
performance management along with the other important functions. The cycle can form a
structure for the design of a performance management system in diverse cultures. However its
particular form and method of implementation may vary in different cultures.
The Performance Management Cycle

11. 7. What influences the purpose?
The strategic human resource literature (Wright & McMahan 1992; Delery & Doty, 1996;
Ulrich, 1997) and international human resource management literature (De Cieri & Dowling,
1998; Ghoshal & Bartlett, 1998; Harvey, Speier & Novicevic, 2002) establish that strategic
alignment and internationalization have an enormous influence the purpose of performance
management. Claus and Briscoe (2009) argue that context-specific issues need to be taken into
account when executing performance management activities and multiple contextual elements
are critical to understanding the universality and purpose of performance management practices.
Similarly, Milliman , Nason, Zhu & DeCieri, (2002) propose that contextual factors direct the
purpose of the performance appraisal, for example the firm‟s strategy, structure, industry, culture
(both national and organizational) and local regulations may influence the type and selection of
performance management purposes
• Subsidiary structure &
strategy
• Industry
• Culture
• Legal
Influences
The Performance
Management Process
• Accountability
• Feedback
• Relationship with
supervisor
• Observation
• Recall
Implications
The purpose of performance management in multinational corporations
Milliman, et al. (2002) contend that the purpose of performance management is based on a
similar fundamental premise in most countries; that is to control individuals in firms to maximise
the MNCs financial performance. This view is shared by Cardy & Dobbins (1994) and Ouchi
(1982). Milliman et al., (2002) add that, while performance management is based on similar
fundamental notions in many countries, their specific purpose and practice may vary slightly

12. between nations. Performance management is also seen as an important way to identify
employee strengths and weaknesses, evaluate training needs, set plans for further development
and provide motivation by ascertaining rewards and career advancement (Cardy & Dobbins,
1994). Lansbury and Quince (1988) proposed that one of the first steps in establishing a
performance management scheme should be to determine what the scheme is supposed to
achieve.
A pragmatic depiction of performance management purpose is offered by De Cieri and Kramar
(2010), who describe the purpose as three-fold: firstly, as a strategic link to the firm‟s goals;
secondly, to supply data for administrative use; and thirdly for developmental purposes.
Milliman et al., (2002) expand this viewpoint by describing five foremost purposes, which
include documentation, development, and administrative purposes involving pay and promotion,
and subordinate expression.
Box 1
Chiang and Birtch (2010) recently investigated culture's consequences on the purposes of
performance appraisal from the banking industry in seven countries across Europe, Asia, and
North America. They found that the effects of power distance, collectivism, masculinity, and
uncertainty avoidance should not be overstated nor are they straightforward. Multinational
organisations must be cognizant of the potential influence that a range of other organizational,
institutional, and economic factors may wield on appraisal. These findings hold significant
implications for the theoretical underpinnings of appraisal, a management tool largely rooted in
US equity, expectancy, and procedural justice values and traditions. They conclude that not only
is the transferability of appraisal and its operationalization affected by interactions with divergent
cultures and contextual settings, but new hybrid appraisal architectures are emerging that
necessitate further research.
Moreover, subordinate expression is an important addition and highlights the significance of
feedback in the appraisal (Cascio, 2003; 2000; Cardy & Dobbins, 1994; DeNisi & Pritchard,
2006). Milliman et al., (2002) found that high individualistic cultures (Hofstede, 1980) and, in
particular Australians, place an enormous emphasis on subordinate expression and feedback, and
view this as a crucial part of the appraisal purpose.
It appears that the purpose of the performance appraisal may vary between cultures and change
as the subsidiary evolves through various structures and strategies. Murphy and Cleveland
(1995) claim that while over 85% of US MNCs use appraisals for administrative purposes, in
particular salary decisions, performance management is less frequently used for training and
development purposes. They also expressed a key concern that information from performance
appraisals is used by raters, ratees and firms for many purposes and that the goals pursued by the
rater and ratees are not necessarily the same as those pursued by the firm. However, Murphy and
Cleveland (1991) suggested in an earlier study that too many purposes could be conflicting, and
that one or two purposes tend to dominate and cancel out the others. The above argument was
also advanced by Milliman et al., (2002) who propose that expectations may be high in relation
to what can be realistically achieved and that firms need to devote more time and effort to the
appraisal process. Furthermore they concluded that the purpose of appraisal has fallen short not
only in the US but in ten other countries they sampled. A simple definition of the purpose of

13. performance management has been proposed by DeNisi and Pritchard (2006). They forwards
that the purpose is to accurately diagnose individual and group performance so as to be able to
reward good performance and remedy poor performance such that, in the aggregate overall
organisational performance will be enhanced.
In sum, the evidence in the literature points to a MNC‟s purpose for conducting appraisals to be
shaped by several contextual factors. In addition the purpose may influence various aspects of
the appraisal process and outcome. It is for these reasons that the purpose needs to be clearly
verbalised by the firm or at least understood by all international employees. In other words, not
only should the subordinate and supervisor‟s expectations be aligned, both need to be in
congruence with the MNC‟s rationale for conducting a performance management system
(Milliman et al., 2002). The literature on the purpose of performance management indicates that
the purpose is vitally important and has widespread and pervasive implications that impinge on
many aspects of the MNCs operations
8. Ethics in Performance management
For a performance appraisal to be acceptable it must be ethical. One of the key intentions of an
ethical performance appraisal should be to provide an honest assessment of performance. While
some supervisors are competent and lawful in reviewing an employee‟s performance, evidence
suggests that when a firm goes global there is an inconsistency in the approach to ethics of
performance management which may cause employees to become frustrated, cynical, and
withdrawn (Murphy, 1993). Survey results in one large study (Aydinlik, Arzu, Ulgen, 2008),
examined the ways that the largest private sector organizations in Sweden and Turkey
communicate the intent of their codes of ethics to their employees. The research identified some
interesting findings that showed that the small group of companies in Turkey that have a code
may appear to be more “advanced” in ethics artifacts usage than Sweden. Such a conclusion is
counter-intuitive as one would have expected a developed nation like Sweden to be more
advanced in these measures than a developing nation such as Turkey. Culture may play a large
role in the implementation of ethics artifacts in corporations and could be a major reason for this
difference. Moreover, it has been reported that in performance appraisals, non performing
factors (for example race) are one of the top ten serious ethical considerations for human
resource managers in MNCs. It is, therefore, paramount that firms ensure that their performance
management processes are conducted to a high ethical standard.
The climate in some organizations does not encourage people to think through ethical
considerations because of the overwhelming focus on the bottom line (Maley & Kramar, 2007).
The pressure from the parent company to meet unrealistic performance objectives may
encourage managers to cut corners or act in an unethical manner. A case in point can be found in
the Enron chronicle (see page15). Managers at Enron were given unrealistic performance
objectives that resulted in dysfunctional and unethical behaviour.
In a cross cultural setting, the supervisor must take extra precautions to ensure that the
performance management process maintains equality, equity and justice. Stakeholder theory
states that “the MNC and its managers are responsible for the effects of activities on others” and
that “the MNC should be managed for the benefit of the stakeholders”. This theory supports

14. utilitarian ethics. In performance management this relates to equity, procedural and distributive
justice, autonomy, respect and safety in the workplace. As a rule, these principles to some degree
are understood by many cultures. Notwithstanding, basic rights in a performance management
process also include principles which are not easily translated across all cultures. These
principles include: feedback, openness and consultation which are not usual traits of collectivist,
high- power distance cultures. The international human resource manager must be alert to
sensitivities of these ideals within the four key dimensions of cultures (Hofstede, 1980).
International research evidence indicates that, if the firm‟s purpose for doing the performance
appraisal is clearly communicated throughout the organisation, and the criteria of strategic
congruence, validity, reliability and acceptability are upheld to a high ethical standard, the
performance management is more likely to be successful.

15. 9. Conclusion
Performance Appraisals is not only an evaluation process of a person‟s performance with
reward / punishments as an outcome of it. Rather, its intent is to align and improve the
performance of an individual to meet the overall organizational goal.
A good Performance Appraisal should
1. Serve as holistic measurement system -impartial & impersonal and can be used across
the organization
2. It should provide a way to create an effective individual development plan, completely
tailored to individual needs and aspirations
The supervisor and employee should couple together to have a free flow of discussion on
strengths, weaknesses, career aspiration and competency gaps, this reciprocation and
involvement is important for performance management to yield any benefits.Different
forms of appraisal systems can be used to conduct the performance appraisal. 360 Degree
Feedback enhances the effectiveness of the performance appraisals by providing a all-
round view of the employees accomplishments.
The difference between the Standard Performance and Actual performance gives rise to
training needs. Training and Development is about imparting knowledge to improve the
skills and abilities of the employees to meet the current or future competency needs. In
all, the performance appraisal and the performance management system should help an
employee in achieving the results efficiently and effectively thereby also fulfilling the
organizational goals. Constant learning and improving based on the performance
appraisal allows for more effective decision making followed by leading and influencing
larger teams to achieve their goals.

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MNCshttps://www.scribd.com/presentation/321152586/HR-Practice-of-MNCs