Concerns of a Global Company and Human Resources – Management Essay
Introduction – In this high competitive environment, a multinational company must have global perspective and international knowledge in order to keep competitive advantage.(Babara et al., 1995).So expatriate performance management is very important for the success of multinational enterprises( MNEs). But the management
of international companies look like more critical than domestic companies (Tung, 1984). Most people have less understanding of expatriate employees management than other employees.(Dowling et al.,1999,Tung, 1998). In this situation, more research about how to improve the performance management of international employees is necessary for all MNEs.
Hence, in this study, we focus on performance management and performance appraisal of international employees. When people trying to make a decision about expatriate performance, several factors are very important for their consideration. These facts including compensation package, nature of expatriate job, host environment and culture adjustment.(Peter J.& Denice W.,2004)
When expatriate employees trying to accept the posting, they will think predictable financial benefits, the career progression potential related with the assignment (Peter& Denice 2004). Therefore the compensation package is one of the most important factors that affect expatriates’ decision (Barnch, 2004). As discussed before, successful expatriates can lead the competitive advantage for the global organization in today’s exceeding competitive market. So compensation of expatriates is one of important component in the efficacity of MNEs (Lowe et al., 2000)
In this research, we analyse this part from two orientations: “how” and “why” of expatriate compensation (Robert et al.)
“To keep employees whole” is the goal of expatriate compensation (Omig,1999, p40). In order to maintain expatriates’ feeling “wholeness”, organizations need to consider following factors (Robert et al.)
a. host country market cost of living
Scholars suggest that cost of living in the host country is the greatest impact on expatriate compensation (Frazee, 1998b, Overman, 2000). Also housing, children’s education, and healthcare costs are the details need to be discussed when people considering the cost of living in the host country (Robert et al). For example, an expatriate family leaves their own country American and move to Japan. Maybe their home used to be a big house located in a quite suburb. But now their rooms are small apartment stated in central area in Tokyo. It will be a big changing for them and it is very hard for these family members to start their new life. (Omig,1999). Also expatriate employee can not do his(her) assignment very well. In order to make sure expatriates’ working quality, compensation package should include the detail about housing change, introduce the new environment, list advantage and disadvantage of these changing. Then expatriates know what will happen in the future and also they can do lots of prepare to adopt the new home.
Then about healthcare, healthcare is also one of important factors of compensation package according the research by Frazee (1998a).Lots of international company have different insurer between home country and expatriate. For instance, the expatriate worked in Hong Kong, while the insurer is Australian .In this situation, normally the claims document is finished in Chinese. But it is so inconvenient for the Australian headquarters reading this work. It should be translated and will take a long time (Franzee, 1998a). So these days, some enterprises contracting with insurance company which have special plan for expatriates. These plans including special progress to deal with expatriates’ claim more quickly than normal insurance company (Robert et al.)
In addition, researcher indicates there are two main approaches to developing international compensation: the Going Rate Approach and the Balance Sheet Approach.(Peter& Denice, 2004)
Firstly, the Going Rate Approach is simple and easy to understand .But it can be easily variation between same nationality expatriates in different locations. For example, Towers Perrin make a survey about the compensation for CEOs:
“ USA: US$ 1932580
Argentina: US$ 879068
Canada: US$ 787060
China(Hong Kong SAR): US$736599
UK : US$668526
Italy: US$ 600319
Secondly, there are more than 85 percent of organizations use the Balance Sheet Approach from the research (Overman, 2000; Wentland , 2003). “The Balance Sheet Approach provide equity between expatriates of the same nationality” and it is easy to communicate (Peter& Denice 2004). Furthermore, the balance sheet approach help to “provide equivalent purchasing power abroad”(Overman, 2000, p88)
Nature of the expatriate job
The nature of the expatriate job is very important for the whole expatriate management system (Tahvanainen,2000). Expatriate employees want to achieve different tasks based on the different nature of their job(His-An Shih et al.,2003). This also means “expatriate performance appraisal should according to the nature of the expatriate mission” (His-An Shih et al.,2003). The difficult part for the expatriate manager is that the nature of their job is defined by their home country, but performed in host country (Peter& Denice 2004). Especially when the expatriate need to complete important tasks and stay at host country for long time, the host country manager will be involved more in the expatriate objects’ decision (Tahvanainen, 2000).
Scholars do some research about expatriates of four information technology industry who worked in Taiwan. They found different nature of the expatriate’s mission related to different goal-setting arrangement. Hitachi(Japan), Philips(Dutch), Samsung(Korea) use the same way: the host country manager approbate the goals set by expatriates (His-An Shih et al.,2003).
“ I need to set my own work goals every six months and discuss them with my direct supervisor here (Philip).”
“ We have to set our own performance goals and get our(host) manager’s approved?(Samsung)”.
But Applied Materials Taiwan’s expatriates set their performance after they satisfied their clients.
“ We are also evaluated by our clients for instance, part of my performance goals is decided jointly by my boss and my client firm’s executives(AMT)” (His-An Shih et al.,2003).
These findings provides hypothetic support to EPM model which suggested by Tchvanciner(1998). And this model can help MNEs improve their global management to get competitive advantage.
From past experience, hard to accept the new environment and difficult to operate effectively are main problems for most expatriates (Brewster and Harries, 1999).
Pre-departure training, like language and sensitive training is very important for improving expatriates’ culture awareness and cross-culture suitability (Dowling et al., 1999).
However, lots multinationals’ cross-culture training is not enough. Some are insufficient, some are incomplete ( Brewster,1995; Waxin et al.,1997, Selmer, 2000). Why these things happen? Because it’s very hard to evaluate the effectiveness of such training (Marie-France Waxin et al)
Teaching expatriate employees from one culture to coordinate with people of another culture is the goal of cross-culture training (Brislin and Peterson, 1986; Mendenhall and Oddou, 1991)
For example, these days more and more multinational companies enter Chinese market. There is one crucial reason decide success or failure of multinational enterprise. This reason is culture difference (zhuang, 2003)
Scholars suggest expatiates managers should pay attention to two aspects, “how to handle culture difference, how to effectively communicate with staff members.”(Yuan qiang, zhou et al.,)
Also there are some research about one American company and one European company conduct in China. The American company believes training is a good way to make expatriate employees recognize the host country culture and communication is useful to reduce the gap of difference.
The European company considers culture fusing by training and providing opportunities, like business travels and making people appreciate different cultures. Communication is the most useful way to deal with the misunderstanding problems between expatriate managers and local staffs (Yuan qiang, zhou et al.,).
Both of these companies have common sense on the culture identification. They all believe culture identification should be realized through training and daily influence ((Yuan qiang, zhou et al.,).
Also some global company offer extensive pre-departure training, such as culture awareness programs:
“ I attend Chinese classes three months before my assignment here (Samsung manager)
In conclusion, researches show cross-culture training already has positive effect on culture adjustment.
Performance appraisal of international employees
After we discussed the variables influence performance , now we will focus on research about expatriate managers’ performance appraisal (Peter & Denice, 2004). It include performance criteria, issues surrounding the use of multiple raters, methods and use of performance appraisal (Peter W.et al.)
Criteria should be balanced between “ achievement in relation to objectives, behaviour on the job as it relates to performance and day to day effectiveness” (Armstrong, 1994,p93). “Achievements in relation to objectives” represents by “hard” criteria. How such criteria be determined? Scholars suggest returned expatriates should be involved in developing the appropriate criteria (Peter W. et al.). Furthermore, this action should occur every five years. Otherwise the performance evaluation criteria will not make sure to remain current with the overseas environment (Peter W. et al.).
Day to day effectiveness is more difficult to measure the expatriate manager (Black et al.,1999). So people call it “soft” criteria. Normally, “ soft” criteria tend to be like leadership style or interpersonal skills (Peter & Denice, 2004).
For example, an American company expatriates work in India. They should choose odd or erratic demands for delivery in order to follow India’s culture. But no one notice this, in this situation, the US suppliers can’t operate the right way. So there should be an interview ask returned expatriate about the technical nature of their work which related to the company’s interrelation. Also the home country human resource manager can ask the expatriate these questions every three or six months (Gary & Mark, 2000)
Normally, the immediate supervisor will evaluate the employee’s performance (Marply and Cleveland, 1995). But Jackson and Schuler suggest expatriates’ performance can be evaluated by multi-raters which includes supervisors, peers, subordinates, self-appraisal and customers.
People do some research about US-based international consulting companies, they found immediate supervisor still can be the expatriate’s main evaluater (Gregersen et al., 1996). Some MNE use self-appraisal way. While few international companies use peers and customer to evaluate expatriate’s performance. Example about several international IT companies with subsidiaries in Taiwan shows all these companies use multiple raters. They combined self-rating and immediate supervisor’s rating.
“ I need to conduct a self-appraisal on how well I meet my goals since the previous evaluation period ( Winbond).
“?My self-evaluation will be reviewed by my immediate supervisor here and sent to the divisional general manager in the home office, who write my final performance appraisal report (Samsung).
But Philip’s organizational structure is the performance rater.
Under our company’s organization structure, we enjoy certain autonomy here (Philip).
And ATM regard as clients as rater.
“Doing so is necessary, I spend over half of my working time in my clients’ factory during my expatriate assignment(AMT). (His-An Shih et al.,2003)
In conclusion, every company arrange their performance rater based on practical reasons, whole structure and parent company’s culture.
The standardized or customized performance form can make comparisons between expatriates around the world more easy.
Gregerson et al(1996) do some research about empirical evidence. They make a conclusion that more than three-quters of survey sample used a standardized performance form.
Also the research about five famous global industries , they all use the same appraisal form.
“ Before my assignment here( in Taiwan), I had another expatriate experience in Singapore. They use the same performance appraisal form to evaluate my performance(AMT).”
“ In our company , the performance appraisal procedure for expatriates is largely the same as that used in our headquarters (Samaung).
In summary, both Western and Asian companies may use standardized appraisal forms used by headquarters. But the disadvantage is these forms without adjustment to cooperate host country. (His-An Shih et al.,2003)