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FACTORS THAT MAY HINDER A SUCCESSFUL EXPATRIATE

PERFORMANCE MANAGEMENT

Introduction
For Multinational Companies, expatriate managers are very crucial to the success of their
organisations as they serve as a source of competitive advantage because these managers
deal with challenges of the goals been set out for them (Shih et al., 2001) to achieve in the
their subsidiaries. As a result, the strategic aspects of human resources such as recruitment
and selection; training and development; compensation and reward (Black et al., 1992; Shen,
2005) of these managers become vital to their performance. In addition, these activities are
facilitated through the use of a performance management, but “expatriates are often far
from being the best-managed employees” (Dowling et al., 1999; Tung, 1998; cited in Chiang
and Kim, 2004).

The purpose of this paper is to reveal the factors that will hinder the deliverance of effective
international performance management especially cultural factors. Studies have focused on
the effect and limitations of performance management in the domestic setting but only a
few have studies have highlighted problems involved in international performance
management. The paper further gives a case study of an MNC that has delivered a
successful performance management.

Performance Management
Armstrong and Baron (1998) defined performance management “as a process which is
designed to improve organisational, team and individual performance and which is owned
and driven by line managers”. LGMB, (1994: 6) also describes it as “systems and attitudes
which help organisations to plan, delegate and assess the operations of their services” (cited
in Redman and Wilkinson, 2006). From these definitions, one can sum up that performance
management is a process used by line managers in assessing, evaluating and controlling
(Otley, 1999; Chang and Taylor 1999) their subordinates with regards to achieving ideal
goals set by the company.

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An important area of performance management is the performance appraisal which is used
to evaluate the performance of managers against some criteria that the firm judges to be
important of strategy and the attainment of a competitive advantage (Hill, 2007: 639).
Martin and Bartol (2003) stated that the appraisal process begins with a designation of
corporate goals and strategies to support the achievement of the goals.

Performance appraisal has several advantages for both domestic and international
companies. According to Mohrman et al., (1989) some of the benefits are:
• Provide feedback to employees and gain new insight into staff and supervisors
• Increases motivation to perform effectively and boost staff self-esteem
• Clarification and definition of job functions, responsibilities and organizational
goals so they can be more readily accepted
• Develop valuable communication among appraisal participants
• Encourage increased self-understanding among staff as well as insight into the
kind of development activities that are of value
• Distribute rewards on a fair and credible basis
• Clarify organizational goals so they can be more readily accepted
• Improve institutional/departmental manpower planning, test validation, and
development of training programs

Additionally, for overseas assignment, there are extra benefits and requirements on the part
of both company and expatriate manager: They are used by firms to make major decisions
regarding their expatriates in the organisations; assists MNE develop long lasting &
competitive advantages in the industry which also helps them achieve their goals (Geringer
and Frayne, 1990); it is also used for identification, selection and development of future
leaders of multinational organisations (Martin and Bartol, 2003).

Besides these benefits, the skills and knowledge required for overseas jobs are different to
the ones used in domestic environments. Expatriate managers are expected to develop and
be able to be open-minded and flexible in performing their duties (); manage different
cultural employees; prepare and be capable of managing a vibrant and complex

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environment (Hills, 2007), hence, they are being appraised to evaluate if they have acquired
or delivered the set goals.

Despite these, studies have found out that expatriate performance assessment do not work
very well due to several reasons such as: the criteria being assessed, expatriate cultural
adjustment, the host country, competence of the rater and frequency, subjectivity of the
rater as well as the expatriate manager (Briscoe et al., 2004). Like other aspects of HR, the
performance appraisal of expatriates is affected by cultural differences and external factors
between parent company and host country (Gregersen et al., 1996; Myloni et al., 2004)
making them faced with a relatively more intense pressure in comparison to working in
home countries because they also have to adjust to the new environment to for success
(Selmer, 2000). These bases would be analysed below explaining factors that hinder their
performance.

Identification of the problems


The criteria
The critical question is how valid are the criteria regarding its suitability to the host country,
what variables make up the criteria being assessed, are they based upon hard, soft,
contextual or a combination of these three “multiple criteria”? Gregersen et al., (1996). Are
these criteria appropriate in the host country and how relevant are they?

Gregersen et al., (1996) in their study of expatriate managers showed that 76 percent of
multinational companies use the standard appraisal used in the domestic headquarters for
their expatriates, in addition, their study also revealed that expatriates felt that the parent
organisation did not take into consideration, essential factors of the host country which
might be important for their success. Woods, (2003: 12) study of Australian and
Singaporean expatriates’ perception of performance management also revealed that the
expatriates felt that issues “unique to the expatriate’s situation are not often used”. This
problem usually occurs in situations where the parent country adopts an ethnocentric
approach of imposing her policies on its affiliates without consideration to the host
countries environment (Shen, 2005), for example the application of a standard appraisal

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system in a host country might be an error because of externalities that might hinder the
performance of an expatriate (Gregersen et al., 1996). External factors such as high inflation;
lack of skilled labour; devaluation of currency; thirteenth month salary (as practiced in
countries like Nigeria) (see Notes) might be problems not related to the home country and
maybe beyond the control of the expatriate manager.

Is it possible to deliver a U.S. standard criterion based on hard measures (Carroll and Schneir,
1982 cited in Gregersen et al., 1996) such as profit making, return on investment to
African/Asian subsidiaries?

This also depends on the cultural dimensions of the countries (Hofstede, 1980). For
individualistic cultures like the US, performance orientation is based on an employee’s
productivity, timeliness, quality of output and job specification knowledge and proficiency
(Aycan, 2005) while in collective cultures such as Japan, loyalty to the group is more
important than productivity (Triandis et al., 1988) to serve the interest of the group,
therefore, team cohesion is valued above individual effort. For this reason, there is a high
possibility of there being an invalid performance criteria if an expatriate is evaluated based
on standard measures.

Another dimension which could affect performance appraisal is Hofstedes’


masculinity/femininity element. According to Hofstede (1984) “certain societies could be
characterised as being essentially assertive and competitive (masculine in nature), whereas
others could be considered to be more caring and therefore more feminine” (cited in
Browaeys and Price, 2008). Deducting from this indirect quotation, compensation based on
individual performance would not be appropriate for low masculine countries but high for
masculine countries due to their high competitiveness (Riahi-Belkaoui, 1995). As a result,
this might lead to both host country and parent country pursuing different congruent goals
(Maley and Kramer, 2007) and as well unrealistic goals could put pressure on expatriate
managers to behaviour unethically giving of bribery so as to cut corners and win contracts
(Hills, 2007: 133).

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Examining these externalities, the use of a universal benchmark without considering the
situational factors of the host country is inappropriate and could lead to a void result.
Though, expatriates may be aware and approve of the goal targets that have been set for
them by their superiors, but on-getting to the place of assignment they might discover that
these goals are unachievable. A solution would be for the multinationals to design and apply
a customised criteria based on the situation of the place of assignment; most importantly
the cultural dilemmas as mentioned above such as uncertainty avoidance have to be taken
into account because they would have an impact on the relationship affect the performance
of the managers.

Nevertheless, these issues discussed above also depend on the cultural adjustment of the
expatriates. How well prepared are the expatriate managers in adapting to a different
culture. Though recent research such as (Tungli and Peiperl, 2009; Peterson et al., 2000)
showed that there is a reduction in expatriate failure but research has shown that lack of
cultural skills and an inability of expatriates’ family to adjust have been factors for the
failure of international assignments which is a decisive aspect of performance management
(Briscoe and Schuler, 2004). It is valuable for expatriates to have a comprehensive
knowledge about the culture, institution of the host country so that they can would have a
prior understanding of what to expect and what might affect their set criteria. Additionally,
the consent of previous expatriates who have worked in the host country should be used in
devising criteria.

Types of Appraisal & Feedbacks


Gosselin et al, (1997) study on U.S managers showed that they preferred receiving ongoing
informal feedback throughout the appraisal period, and receiving formal appraisals at least
twice a year. Researches’ have shown that feedbacks have been very important to the
achievement of performance appraisal in MNC’s because it aids in identifying areas that
need improvement and acts as guidance (Gregersen et al., 1996). However, data have
depicted that expatriates do not receive feedbacks after been appraised and in situations
where they do receive feedbacks, they are not usually frequent. Possible factor that could
influence a regular feedback could be geographical factor, psychic distance “the distance
between the home market and a foreign market resulting from the perception and

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understanding, of the cultural and business differences” (Evans et al., 2000). Maley and
Kramar (2007) study showed that 78 per cent of the managers were discontented with the
feedback and 95 per cent experienced no follow up after the feedback. Though this research
was conducted on host country managers, it just points out how the use of polycentric
method might lead to negligence by MNC whereby there could be a gap between host
country and parent country (Hill, 2007).

Bayley et al., (1997) showed that unlike Americans who favoured successful feedbacks, the
Japanese and Chinese preferred individual failure feedback as a result of commitment to
total inclusion. Nevertheless, they also discovered that the Chinese were highly concerned
about success and failure feedbacks which could be as a result of transformational changes
in the China. This, however, shows that societies evolve with time and it is important for
organisations to continuously understand recent analysis of where they operate or intend to
and not to rely overtly on previous culture clusters.

Also, it is important to take into account what type of appraisal is been used because this
will have an effect on the feedback. As we know, a 360 degree or an upward appraisal is
commonly appreciated in Anglo-clustered countries like the United States, U.K., which
involves assessment and feedbacks from various stakeholders like colleagues, subordinates,
supervisors and atimes customers (Walker and Smither, 1999) for the former while an
upward involves subordinates appraise their managers (Antonioni, 1994) improving
performance. But its application in a high power-distance, collective and ascriptive cultures
like Japan, china and Mexico (Browaeys and Price, 2008) would not work because
performance appraisals and feedbacks are usually top-down processes (Bailey et al., 1997)
where the superiors evaluate subordinates. In such cultures, individuals accept that power is
unevenly distributed and believe that superiors have the ultimate decisions while in
ascriptive cultures status is assigned to people based on factors like age, caste, birth right.
Aycan (2000) stated that “people refrain from giving and taking negative performance
feedback in collectivist cultures to protect face and reduce social anxiety”. Additionally, this
method of appraisal could lead to unrealistic ratings by subordinates as a result of reprisal
from their managers (Antonioni, 1994).

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Taking into account these factors, it is important for the organisation to acquire a great
understanding of appraisal and feedback methods being used in these host countries and its
impact on expatriate performance management.

Competency, bias and subjectivity of the rater


The choice of an evaluator is very important for the success of a performance management.
For expatriate managers, who the evaluator is very crucial (Briscoe et al., 2004), how
competent is the expatriate with respect to the expatriates’ assignment. Surveys have
shown that 75 percent of multinationals of top executives of MNC had no overseas
experience (Black et al., 1998; Bartol and Martin, 2003) which might lead to their inability to
develop empathy into what the assignees might come across thus affecting their evaluation.
Additionally, as well as top executive, Gregersen et al (1996) study disclosed that only 28
percent of the interviewed HR practitioners had been on foreign duty which also shows that
there is a tendency of their inability in developing empathy and applying an appropriate
criteria. This however, shows that there could be a limitation if expatriate evaluation is done
entirely by the home company. Also (Gregersen et al., 1996) showed that there is limited
frequency of contact between the expatriate and their evaluators and most appraisals are
usually conducted annually (Shen, 2005).

Should the assessor(s) comprise of the host country managers?

This indeed is an important consideration because the host evaluators have experience of
the country and culture and would be able to interpret what the performance is however,
there is a possibility of a bias judgement on the path of the evaluator on what criteria the
performance appraisal should consist of (Dawkins et al., 1995), using their beliefs, previous
experiences and initiatives of what is expected which affects their evaluation of the
expatriates. However, this is more common when the rater is from the host country.
Dawkins et al. (1995) from their study on Australian expatriate managers working in South
East Asia found that they were poorly rated by the local business people.

To overcome such a problem, it would be of use for the company to have a combination of
both home and host country appraisals in assessing performance. In addition, it has been

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suggested that the use of a competent experienced expatriate who have had knowledge of
the place of assignment should be employed to limit subjectivity and enhance raters’
capability (Black et al., 1992 cited in Gregersen et al., 1996).

A Case Study Example (Nokia)


Tahvanainen (2000) did a study on “how the performance of expatriates managed in
different types of international assignments?” by Nokia a Finnish multinational
communications corporation which specialises in wireless and wired telecommunications.
The author used a qualitative case study approach in gaining an in-depth understanding in
expatriate performance management from a selected sample of experienced expatriate
(managers who had very good understanding of expatriate PM) drawn from the home
country and four subsidiaries located in the United states, United Kingdom, Thailand and
china. The samples were separated into five groups based on the nature of their jobs. The
groups were: top managers; middle managers; business establishers; custom project
employees and R&D project personnel so as to get a holistic view of the process.

The findings of her study showed that the higher the level of the expatriate, the more
independent they are and the more distant they were from their superiors. In addition, the
study found common trends amongst the group of expatriates such as:
• All expatriates knew what was expected of them
• How well they were performing and
• That they received the opportunity to develop new competencies in order to meet
the requirements of present and future job requirements.

However, five differences existed in the expectation of the groups:


• Whether and how performance goals were set, who set them, and what type of
goals they were;
• How expatriates’ performance was evaluated and who conducted the evaluation;
• Whether training and development plans were agreed upon with expatriates;
• Whether expatriates had the opportunity to attend training while on assignment;
and
• What type and how clear the linkage was between expatriate performance and pay.

Tahvanainen (2000)

This study above shows that despite Nokia having a standardised performance management
system in place to be used for all its employees, it pays attention to specific situations such
as the location of the managers; expatriate managers agree to the set performance goals
and then evaluates their performances; differing types of goals set for different managers;
likelihood of receiving training courses while on assignment; and the type and clarity of
linkage between performance and pay.

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Conclusions
This treatise has reviewed the issues of expatriate performance management by Multinational
organisations. It has illustrated problems that may hinder the application of an effective
international performance evaluation. For multinationals to realize a competitive advantage through
the use of assessing the performance of their expatriates, they have to understand that it is derisory
to only use the home country’s’ performance management method in subsidiaries without making
some modifications for cultural, institutional and current climate of the countries. They also have to
recognize like Nokia that expatriates jobs require different performance goal set for their managers.
Organisations have to also make sure that the raters are well trained, objective and have had
international working experience in a similar country to the expatriates so as to avoid incorrect
criteria, bias. Finally, Multinationals have to ensure that their expatriates also receive a thorough
cross-cultural training which will enable them adjust and enhance their performance in the host
country.

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Notes
The citing of the thirteenth salary in the paper is a phenomenon which is practiced in Nigeria.
Though not referenced to provide practical evidence, is a trend which the author of this piece has
witnessed and is also in practice and takes responsibility for citing it.

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