globalization of performance

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Globalization of performanceappraisals: theory and

applicationsSteven H. Appelbaum

John Molson School of Business, Concordia University, Montreal, Canada

Michel RoySt-Laurent, Canada, and

Terry GillilandLocweld Inc., Montreal, Canada

AbstractPurpose The purpose of this article is to provide a more complete perspective regarding the bestpractices for performance appraisals of distant employees in global organizations.

Design/methodology/approach A range of published works (1998-2009) on multinationalcorporations and performance appraisals was reviewed. The literature was used to determine humanresource challenges associated with globalization as well as the types of performance appraisals, commonpitfalls and elements for improvement of appraisal systems. Concepts were then combined to determinethe best practices for performance appraisal in a global setting. Finally, a small questionnaire consistingof six questions was constructed and sent to managers in two companies in the health care industrymeeting the criteria of having distant employees. The questions were open-ended in order to allow for avariety of responses enabling the researchers to view trends and make comparisons with the literature.

Findings Adequate training must be provided to both the appraiser and the appraisee in order toavoid the many rating errors that are common in performance appraisal. Training should include

cultural, legal and customer differences by country providing managers with the tools to improve onthe process. Managers must also be given the opportunity to build the required relationship with theseemployees.

Research limitations/implications A questionnaire was sent to several key managers in twocomplex pharmaceutical firms meeting the criteria with responses received. Further empirical researchon the best practices of performance appraisal for distant employees in global organizations should bepursued.

Practical implications This article provides a source of information on what practices are followedin order to support the performance appraisal of distant employees in different parts of the world.

Originality/value There is limited literature dealing with distant employee performanceappraisal in global organizations and this article attempts to fill this gap.

KeywordsBest practice, Performance appraisal, Globalization, Multinational companies,Workplace training

Paper typeGeneral review

IntroductionGlobalization has become the mainstream for many industries and with it comes thedifficulties associated with social, political, environmental and cultural consequences.The purpose of this article is to help identify, through a review of literature, the bestpractices in performance appraisals within a globalized or multi-national corporation(MNC). In general, performance appraisals in MNCs are not unlike performance

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appraisals in any other organization. The area where the authors have chosen to focus,however, is on upper management levels where it is not uncommon for a manager tohave employees scattered throughout the world. This distant relationship adds otherchallenges for both the appraiser and the appraisee. These challenges may in some

cases be similar to those experienced by matrix organizations where an employee doesnot report to his/her direct superior on a day to day basis, but rather to the businessunit where they are located and supplying their services.

The article will be broken into five sections. The first section will look at some of thereasons for globalization of organizations, the strategies and structures needed tooperate on a global basis, and some of the challenges faced by Human Resources (HR)in a globalized environment. The next section will look at performance appraisals andwill highlight the different methods currently in use, some of the common pitfalls,positive and negative outcomes and, finally, elements that can be implemented in orderto improve on current practices. The third section will discuss performance appraisalsin a global setting and what systems prove to be most effective and which do not. Thiswill be accomplished through discussion of the challenges, trust and relationship

requirements, cultural differences and the types of appraisal systems best suited forthis environment. Next, the researchers will compare the results from the review ofliterature to two companies in the health care industry, MDS Pharma Services(Contract Research Organization) and Pfizer (Biopharmaceutical). In order to make thecomparison, a small questionnaire consisting of six questions was constructed and sentto managers meeting the criteria of having distant employees. The questions wereopen ended in order to allow for a variety of responses enabling the researchers to viewtrends and make comparisons to literature. Finally, the authors will offerrecommendations for performance appraisals in the global environment.

Trends and reasons for globalization structures and strategiesThe availability of foreign products and services in many countries of the world has

dramatically increased since the 1990s and it is not uncommon to see stores such as aCarrefour in competition with superstores such as Wal-Mart (Hammond and Grosse,2003). An explanation for this might be found in the definition of globalization, as citedby Hammond and Grosse (2003). It is the homogenization of peoples tastes anddemand patterns around the world, due to increased access to internationalcommunication of information about products and services as well as increased accessto transportation of products and people across borders. However, with expansioncomes the difficulty of employing people in more than one country, and the need for astructure-strategy on how the operations are to function in this foreign environment.

When organizations globalize operations, they are faced with the question of how tointegrate the new operation with the existing one. One concern is the relationship thatwill be maintained between the corporate center and its foreign-based subsidiaries

(Kamoche, 1996). It has been stated that a central issue for management of MNCs is theextent to which the operations will adapt to the foreign hosts environment versusmaintaining parent company practices (Prahalad and Doz, 1987; Rosenzweig andSingh, 1991). One obvious reason for this is when organizations find themselvesoperating in foreign countries, the subsidiaries will face pressures to both adapt locallyand integrate globally (Sauerset al., 2009). This conflict of goals and practices leads toMNCs having to adopt one of two strategies; multidomestic or global orientation(Porter, 1990; Roth et al., 1991).

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According to De Wit and Meyer (1998), with the similarities in internationaldemand, organizations can reap the benefits of product standardization on a globalscale. With product standardization, the international integration is facilitated throughthe pursuit of further economies. The greater the standardization, the greater the

economies of scale that can be had by the firm which means the organizations pursuitwill likely be towards global integration as opposed to multidomestic.

However, the firm must meet the needs of its customers and in a foreign country theseneeds may differ from what is considered standard. Furthermore, globalization is seenby some as a threat to national identity and a loss of national sovereignty (Hammondand Grosse, 2003). In Latin America for example, the benefits of globalization are heavilydebated. Those having benefitted little, claim that the appearance of it being the solutionto poverty and underdevelopment has been false. In Europe on the other hand, the viewsare more positive, and in Asia, although there is resistance to cultural homogenization,the opening of borders has resulted in staggering growth rates. In order to satisfy theseconcerns, perhaps MNCs should seriously consider the benefits of adopting themultidomestic strategy and forego some of the benefits of standardization.

While these two strategies would seem at odds with one another, there remains athird possibility. This strategy, referred to as global localization benefits from thebest of both approaches. Described by Ohmae (1994) as the most advanced stage ofcorporate globalization; where management of the MNC is both global and local inorientation. Rather than develop only local responsiveness, knowledge transfer orpursue global efficiency, Bartlett and Ghoshal, 1989, 1992) believe that all must bepracticed simultaneously. This structure would require managers to act based on ashared perspective rather than on an organizational chart. This was referred to byBartlett and Ghosal (1992) as creating a matrix in the managers minds. The globallocalization strategy and structure diffuses power across the MNC creating aninterdependent network of firms (Kidger, 2001).

Ultimately, the strategies put in place by the corporation will dictate the HumanResource Management (HRM) policies and procedures that Human Resources (HR) willput in place as well as the challenges that will be faced. This is the next challenge to beanalyzed.

Human resource challenges with globalizationAs organizations enter globalization they face the decision of what strategies they willuse in the foreign host country. This decision will also help dictate what HR strategywill be implemented. As global strategies are adopted by the firm, higher levels ofglobal integration of key HRM processes are needed (Brewster and Suutari, 2005). Assuch, HR managers can no longer simply adapt past processes for the future and the

changes will affect everything from recruitment and team selection to performancemeasurement and training. The companys subsidiary strategy and cultural and legaldifferences are some of the challenges that must be considered by the global HRdepartment. Along the same lines as the globalization strategy, HR will need toconsider the benefits of both local and standardized policies. The four main challengesidentified during the literature review were:

(1) duality challenge;

(2) legal/cultural challenge;

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(3) leaders and international teams challenge; and

(4) performance challenge

For the purpose of this paper, the authors will focus on performance appraisals and the

challenges that ensue.

A (brief) background on performance appraisal failuresMany researchers have published articles on the pitfalls and the failures ofperformance appraisals including Schweiger and Sumners (1994), Longenecker (1997),Longenecker and Fink (1998), Rees and Porter (2003), Piggot-Irvine (2003) and Rees andPorter (2004). All of these researchers have identified different results as to whyperformance appraisals fail. Psychometric errors are one of the main reasons whyperformance appraisals are done ineffectively within corporations. These errors,leniency, halo effect, restriction of range, recency and contrast, are attributed to thepsychological predisposition of the appraiser during the appraisal process.

Some researchers have suggested that one possible way to minimize psychometricerrors is by using a multi-rater system of evaluation (Appelbaum et al.,2008; Edwardsand Sproull, 1988; Rees and Power, 2003). A self-performance appraisal is anothermethod that can support the multi-rater system to reduce the presence of psychometricerrors. As compared to the multi-rater system, very little research has been carried outrelated to the self-assessment appraisal method. However, most studies that were doneon self-evaluation indicated positive results relating to the appraisal process. Farth et al.(1991) state that self-evaluations can increase the effectiveness of the appraisal systemand result in a positive impact on an employees satisfaction with the evaluation andhis/her perception of justice and fairness. Similar results were found by Jackson et al.(2003). Employees who had a chance to rate themselves became more involved andcommitted to his/her personal goals.

Elements to improve performance appraisalsPiggot-Irvine (2003) conducted three studies from 1996 to 2001 on the topic ofperformance appraisals. Based on the findings, the author mapped out (Figure 1) all ofthe essential elements required to perform an effective performance appraisal.

Training is a crucial factor to conducting effective performance appraisals.Companies must train their managers on how to conduct performance appraisals andmanagers must know how to set proper goals and objectives at the beginning of thecalendar or evaluation year. There is a general consensus among researchers on thetopic that companies must give some sort of training to their managers on how to giveproper appraisals to employees. Managers must receive training in supervision skills,coaching and counseling, conflict resolution, setting performance standards, linking

the system to pay and providing employee feedback.In addition, the appraiser must receive periodic re-training in order to maintain their

performance assessment skills. The rater should also be evaluated each year on howthey conduct performance appraisals with their employees (Boice and Kleiner, 1997).

According to the (Piggot-Irvine, 2003) model the most important elements toconducting an effective performance appraisal are respect, openness and trust. Thesekey features must not only be present during the appraisal but they must be practicedbetween managers and subordinates throughout the year. One way to develop this


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relationship is for managers to give feedback to their employees on a frequent andongoing basis.

In the first section of this article the different aspects of globalization and their

associated challenges were covered while the second part provided an overview of theperformance appraisal process. In the next sections the authors will attempt tosynthesize both topics in a global context while providing a brief review of theliterature. The discussion will identify some of the main challenges companies arefacing today and provide a real-life comparison of two major companies in the lifesciences industry with the findings relevant on conducting performance appraisals ona global scale.

Performance appraisals in global corporationsThe trend towards globalization has created many challenges for Human ResourceManagement (HRM) and much of it focuses upon performance appraisals.International performance appraisal is a topic that attracts considerable interest

from practitioners and academics, but most of the research on this subject hasconcentrated on expatriate performance appraisals. To date, not many articles havebeen published on MNCs and international performance appraisal. The review ofliterature suggests that conducting international performance appraisals is verychallenging given that a performance appraisal done in a local context can already be acomplex process. When performing in a different country, variables such as languagebarriers, different values, and different cultures come into play, and make the taskmore complicated (Brewster, 1988). The main reason cited was the difficulty for

Figure 1.Elements of appraisaleffectiveness

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managers to know exactly what their employees accomplished each day at work, dueto the geographic distance (Shen, 2004).

Shen (2004) looked at the differences between Chinese and Western performanceappraisals. The key differences were:

. Chinese performance appraisals are usually less transparent than Westernappraisals;

. Chinese performance appraisals are usually limited in feedback and communication;

. Chinese companies do not provide training in order to improve appraisers skills;

. Chinese appraisees cannot change his/her results in the appraisal document; and

. Chinese appraisers will not communicate negative feedback to appraisees.

Shen mentioned that all the managers that he interviewed from the Chinesemultinational companies commented on the fact that the Chinese performanceappraisal needs to be improved. They believe the appraisers should be able to

communicate on a regular basis with the appraisees and they should also be able toinform the appraisees on their weaknesses so that they can improve (Shen, 2004).One possible solution to correct these differences is for the Chinese multinational

companies to adopt Western-style performance appraisals in order to measuremanagers and employees performance. However, Hempel argued that Western-styleperformance appraisal might not be the answer (Hempel, 2001).

According to the literature it seems there is a universal consensus on theimportance of international performance appraisals but there is a lack of agreementon what are the best practices to conduct them at the global level. Brewster (1988)argues that the performance appraisal at the international level is extremelycomplex because there is no correct way to assess the performance of someone whois located a distance from the appraiser. Long distance assessment can be quite

challenging and complications may arise due to differences in culture and society. Inaddition, the appraiser cannot evaluate the appraisees body language, which makesit more difficult. There are other factors that make an international performanceappraisal extremely complex, such as different norms and policies, different legalsystems and different economic environments. This article will focus on thechallenges of conducting performance appraisals at the global level due to culturaldifferences and geographic distance.

Challenges of conducting performance appraisals in global corporationsConducting performance appraisals is an extremely complex process despite all the toolsin place. As previously mentioned; there are many variables that can interfere with the

process and; as a result; the performance appraisal would be perceived as ineffective andunfair particularly when this process is performed at an international level. This articlefocuses on three major challenges when conducting global performance appraisals:

(1) individualist and collectivist cultures;

(2) cultural differences and their relationship to leniency psychometric error; and

(3) trust and open relationships.

These were generally described earlier in the article.


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Individualist and collectivist culturesGlobalization has become a major trend for many companies and as such, studies weredone at an international level allowing researchers to make cross-cultural comparisons.Bailey et al. (1997) analyzed employees performance in individualist and collectivist

cultures. The results demonstrated that employees of an individualistic culture tend torate their performance more favorably as compared to collectivist culture. Anindividualistic culture is a culture in which the members primary focus is that ofthemselves and their immediate families (e.g. US and UK are considered as individualistcultures). In contrast, a collectivist culture is one in which people tend to view themselvesas members of groups (families, work units), and usually consider the needs of the groupto be more important than the needs of individuals (e.g. China and Japan). There aresome additional studies that correlate with the results found by Bailey et al. (1997)Furnham and Stringfield (1998) and Stoker and Van der Heijden (2001) found thatemployees from Western countries have a tendency to rate their performance higher thantheir supervisors do. Cheng and Kalleberg (1996) analyzed two individualist countries(USA and UK). They found that US employees were more likely to report that the quality

and quantity of their work was higher than those of their British counterparts.It is a known fact as the literature supports that there is a gap between the

evaluations of the rater and the ratee, but this gap exists for different reasonsdepending on the culture. The next section will look at one specific culture to explainwhy this performance evaluation gap exits between supervisors and employees. Thisgap is caused by the leniency psychometric error.

Cultural differences and the leniency psychometric errorLeniency errors occur when a manager tends to be more lenient than his or her peerswhen rating employees or is more lenient towards one employee when compared toanother. As a result employee ratings are inflated and do not reflect the reality ofemployee performance for the year.

A considerable number of studies were devoted to the leniency error in Westerncultures and, as previously stated, these researchers are in agreement that self-ratingsare significantly higher than the corresponding supervisors ratings (Bailey et al., 1997;Stoker and Van der Heijden, 2001). The authors of this article described a study thatwas conducted in the United Arab Emirates (UAE) and noticed that the gap betweenthe rater and ratee is still present for more or less the same reason as Westerncountries. Mohyeldin and Suliman (2002) suggested that UAE employees tend to ratetheir performance evaluation higher than their supervisors. The Arabic culture isconsidered to be an individualist culture and therefore their rewards are linked to highindividual performance (behavior similar to Western countries). However, Arabiccountries still have certain old-fashioned historic practices. For instance, when anArabic employee is punished he/she will never know or be informed of the reasons forthe punishment. This type of behavior is contradictory to the notion of fairness, justiceand ethics management. Arabic culture is very similar to Asian culture at that level inthat they are not transparent when conducting performance appraisals.

Mohyeldin and Suliman (2002) also indicated that a married person would alwaysget a better performance appraisal as compared to a non-married person in Arabicculture. Married employees do not want to lose their jobs or status within the company,as this would be considered a disgrace to them and their family. Supervisors aretherefore inclined to overestimate a married employees performance, in order to avoid

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his/her complaints and confrontations. Furthermore, married supervisors want toavoid any issues coming from their employees, as they too do not want to lose their

jobs or status within the company.Mohyeldin and Suliman (2002) suggested that it is time now for all the organizations

that are operating in the United Arab Emirates to transfer from a secret performanceappraisal to an open appraisal. When employees openly discuss their performanceresults with their supervisors, the perception gap will be reduced. Reducing the gapbetween the appraiser and appraisee will improve the communication, trust andrelationship between them. We now consider how building trust and an openrelationship may be challenging in the global environment.

Trust and open relationshipsDeveloping trust and open relationships between supervisors and employees isfundamental to achieving an effective performance appraisal. Normally, this process iseasily achieved when both manager and employee are working locally. The dailyface-to-face interaction makes it easy for the supervisor to provide informal feedbackon how well the employee is performing at work. This mitigates any surprises at theyear-end performance appraisal. However, developing trust and open relationshipscould be quite challenging when supervisors and employees are working in differentcountries. Different cultures and background can slow down the development of trustand open relationships between managers and subordinates. For instance, Chinese and

Japanese employees will not trust anyone immediately. It may take years before youearn their trust, and be able to have an open relationship. However, once this has beenachieved, they will be very loyal and it will take much to destroy that trust and therelationship. On the other hand, North Americans will trust and develop relationshipsmuch faster than Asians. Other factors such as time zone differences, languagebarriers, gender and social status can interfere with the development of trust and the

relationship process between supervisor and employee. These factors and challengescan widen the gap between the rater and the ratee and in the end the performanceappraisal could be perceived as unfair (Piggot-Irvine, 2003). We can now compare thecomplexity of performance appraisals as found in the literature with actual situationsobtained from two organizations in the life sciences industry.

Applications in practiceIn order to compare the information obtained through the review of literature, theauthors conducted a small research study with two international companies operatingin the health care industry: MDS Pharma Services and Pfizer. The survey consisted of asix-question questionnaire and was sent to several managers meeting the criteria ofhaving distant employees. The sample was small due to the limited number of

managers responsible for distant employees. The questions were open ended in orderto allow for a variety of responses. A face-to-face interview was also conducted withthe Vice President of Human Resources of Pfizer Global Pharmaceuticals located in theUK. Seven MDS managers were also interviewed, and two managers declined.

The following terms used in the questionnaire are defined as follows. The termdistant employee is where a manager and his employee are separated by a significantdistance normally another country and another time zone. This separation oftenmakes it difficult to communicate with or see the employee on a regular basis. Also the


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term multi-rater performance appraisal refers to an employee being rated by morethan one source. Typically, this will be their direct manager, as well as other managers,for whom they may have provided services throughout the year. The questionnaireasked the following, with the modest results to follow:

. What approach do you use to make a fair performance appraisal of your distantemployees (e.g. standard appraisal, self- appraisal, 360 degree, multi-rater appraisal)?

. Are performance appraisals performed face-to-face with distant employees? Isthis budgeted?

. Which performance appraisal system do you believe would be the mostappropriate for distant employees (e.g. standard appraisal, self-appraisal, 360degree, multi-rater appraisal)?

. How do you build the trust and open relationship required with a distantemployee to give a performance appraisal that will be considered justified andappropriate by the employee (e.g. Asia historically requires years ofrelationship-building to trust someone. This may not be present, i.e. manageris in UK and employee in Japan)?

. How do cultural differences affect the way performance appraisals are receivedby distant employees (Westerners typically rate themselves higher on anindividual basis than Asian people. This is because the Western mindset is towork individually where as Asians work collectively)?

. What other difficulties do you see when conducting performance appraisals fordistant employees?

Approach for fair performance appraisalsThe first question asked managers what type of performance appraisal they used withtheir distant employees (i.e. standard, self-appraisal, 360 degree, multi-rater). In all

cases, managers stated that they used some form of a multi-rater system whetherformal or informal. In most circumstances the feedback from outside stakeholders wasobtained via e-mail or phone conversations. Another method, said to be used, by onemanager, was self-appraisal. This would seem to be in line with the best practicesobtained through the review of literature and the use of performance appraisals knowtoday basically as modern methods (Schweiger and Sumners, 1994; Appelbaumet al.,2008). The interview with Pfizers VP of HR revealed that Pfizer has implemented acommon understanding of the rating among leaders as well as a calibration processthat is used to ensure fairness across teams and team members. Furthermore, bothfirms use Specific, Measurable, Achievable, Realistic and Time bound (SMART)objectives, a form of management by objectives, that are set at the beginning of theappraisal year, and evaluate personnel on these objectives, accordingly.

Face -to-face appraisalsOne issue that continually appeared in the literature was the need for a relationshipand trust between appraiser and appraisee. Managers tended to agree with this and feltthat a face-to-face appraisal was extremely important. However, in situations such asthe economic turmoil that many industries are facing today, the availability of a travelbudget for the purpose of performance appraisals is rare. As such, many managers aremodifying their travel schedules in an effort to ensure they are able to be at a particular

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location when performance appraisals are due. This is usually acceptable for theannual review, but is far less likely to be accepted for the quarterly or midyear reviews.Since face-to-face encounters are not always possible, the appraisal should become aprocess more than a dialog as stated by the Pfizer VP of HR. This was also viewed, by

many authors, as the type of information that must be spread to managers andemployees. This understanding will help to cement the fact that even the weekly phonecalls can and should be used to provide feedback on an ongoing basis.

Appropriate performance appraisal systemBrewster (1988) argues that the performance appraisal at the international level isextremely complex because there is no correct way to assess the performance ofsomeone that is located a distance from the appraiser. The difficulty for managers toknow exactly what their employees accomplished each day at work due to thegeographic distance (Shen, 2004) was echoed by one manager that wrote Im not onsite to witness my teams performance. As such, all managers felt that a multi-rater

system would be of greatest value. Some managers felt that a combination ofmulti-rater and self-appraisal could provide even more information however theybelieved this to be labor intensive. One comment that was found to be interesting bythe authors in the literature was that distant employees are considered trustedemployees without the need for direct supervision. This suggests that these employeeswere actively sought out as potential candidates and developed to operate in the globalenvironment. A final comment on this subject was that caution must be taken whendoing international performance appraisals across cultures. It was mentioned thatalthough appraisal methods such as the 360 degree was of great value, somecultures, such as a collectivist culture, are not accepting of these methods.

Trust and relationships

Managers felt that the first year and hence the first impression that they had on theirdistant team members was critical. They believed that the first meeting had to beface-to-face and the standards and expectations had to be designed up front. Whilesetting expectations the managers could also state what they were promising to do forthe employees, however the managers had to ensure that they delivered on thesepromises. This built the foundation of trust upon which a relationship could beconstructed. Interaction, communication and regular feedback were also cited asrequirements as well continuous fairness amongst team members to continue the trustbuilding. Furthermore, employees need to feel that the manager is accessible,regardless of the distance that separates them. For this reason, face-to-face meetingsshould occur throughout the year. However, there must be formal and informalinteractions between the manager and his/her team at least once a week; either

virtually, by phone or in person. Another comment related to the need for the managerto find out what made each employee tick. They would work to find what eachemployee valued (title, work, money, etc.) and help the employee to satisfy thoseparticular needs thereby building the trust and relationship with the employee. Factorssuch as time zone differences, language barriers, gender and social status, can interferewith the development of trust and open relationships between the supervisor andemployee. These factors can widen the gap between the rater and the ratee, and in theend, the performance appraisal could be perceived as unfair (Piggot-Irvine, 2003). It


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would seem that most managers have developed some tactics with which to avoidthese problems, even though formal processes may not be in place.

Different cultures receive/perceive performance appraisal differentlyThe Pfizer VP of HR spoke of how different cultures may have a different understandingof ratings. Therefore Pfizer, starting with its leaders, is developing a commonunderstanding of ratings so as to ensure that an excellent translated quantitative ratingwill have the same meaning across different countries. MNCs will need to balance theneed to standardize HR best practices across borders with the need to integrate localpolicies and customs (Poutsma et al., 2006), but with standardization resources must be inplace to ensure a common understanding of the standards. Managers cited the need toclearly communicate what rating system was being used and what behaviours translatedinto what rating. There was also a consensus that managers need to familiarize them withthe culture they were dealing with and to use the approach that was appropriate for thatculture. This awareness of culture can also help managers accept the way a distant

employee may react to the performance appraisal. For example, one manager spoke abouthis employees in France being very protocol driven. As such, if they were to disagree withthe rating, they would go to the HR department with their concerns rather thandiscussing it one on one with the manager. The manager stated that he viewed this actiondifferently than if it were to happen with his North American employees. This suggeststhat cultural training is important for managers with employees in different countries andthe organization should take this into consideration during globalization. Much of thisdevelopment can be achieved through the use of international teams where managers cangain international experience and learn cross-cultural interaction (Brewster and Suutari,2005). Working in a team environment, leaders must be able synthesize diverse culturalneeds and perspectives of all team members (Odenwald, 1996) thereby preparing them fora future role in global management.

Other difficulties encounteredThe final question was used to elicit difficulties and concerns that may not have beenfound in the literature. Below are some points taken from the responses:

. I am used to walking around to read non-verbal cues of my people and I havelost that.

. Time zone differences force communication to largely be based on email andphone messages. This makes it difficult to ensure that messages are received andunderstood.

. Performance appraisals are very personal and if you cannot be there in person,it can magnify the sense of distance.

. Distant employees may have a sense of separation and loneliness and adds thechallenge of ensuring the employee feels included in the team or department.

. Not knowing the individual enough and not spending enough time to get toknow the employee.

. Not supplying sufficient development for a distant employee.

. Error in rating without a formal multi-rater process in place. Stakeholderfeedback was received too late.

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The last point was explained through the description of an incident the managerencountered. He felt that an employee had a very good year and had performed quitewell. He felt that some aspects merited an exceeds expectations rating, but not in allareas. The overall rating the employee was finally given was exceeds expectations.

One month after the appraisal, the manager visited the site to establish goals for thecoming year. At that time the manager received stakeholder feedback that would haveresulted in the employee getting a meets expectations had the information beenreceived prior to the evaluation. Distance can confuse and distort positive intentions ina most interesting manner.

Overall, there appears to be a correlation between the review of literature and theresponses obtained from the two firms even considering the limited responses andinterviewees. Although formal processes and procedures were not necessarily in place,all managers had a sense of what was required in order to meet the needs of theirdistant employees. A summary of conclusions and some recommendations will follow.

ConclusionsThe trend towards globalization has increased in the last decade and as borderscontinue to open and the world continues to get smaller through communication andease of transportation, it is likely to continue for the coming years. This realizationrequires MNCs to adopt strategies and structures that can operate across multi-culturalenvironments in order to optimize efficiencies while accounting for local policies andpractices. The final strategy that is adopted by the organization will inevitablyinfluence the HR strategies that are put into practice and the challenges that areassociated with those practices. This duality in the organization will presentmanagers with new difficulties in the management of employees and the organizationshould attempt to identify potential leaders and develop their skills through trainingand the use of multi-cultural teams as an opportunity and challenge rather than as a

problem in need of some nebulous solution.Theoretically, performance appraisals are a form of providing feedback, deciding

promotions or termination, determining compensation, identifying strength andweakness or areas for change and identifying development needs that can help withcareer planning. It is a tool that both the appraiser and the appraisee can use toenhance performance of employee and the organization. However, the type of appraisalused must be in line and congruent with the requirements and structure of theorganization in order to reap the benefits. Training must also be provided in order tolimit many of the common rating errors that are experienced with all appraisal systemsin order to ensure that the performance appraisals are effective and the consequencesof ineffective performance appraisals is avoided. Once the performance appraisal isexpanded to the global setting the challenges are enhanced.

Performance appraisals in a globalized environment, increase the challenges that themanager will experience, and myriad issues to be solved. The manager must nowconsider the cultural and legal differences that the foreign subsidiary, and hence distantemployees are accustomed to. They must ensure that the rating system has a commonunderstanding across the different cultures they manage and they must be aware of howeach culture may react to the appraisal and have respect and understanding of thereaction. However, the most difficult and yet extremely important aspect of effectiveperformance appraisals is the trust and relationship between appraiser and the appraisee


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and in a globalized setting, this becomes even more challenging. Managers must work tobuild the relationship through regular contact and if possible regular face-to-face contact.The contact allows the manager to provide feedback to the employee and allows forformal and informal communication, that is usually achieved in the local environment,

with daily interactions. Failing the ability for face-to-face contact, the manager isrequired to learn to leverage the technologies available today such as video-conferencing.This can enhance the communication by allowing the manager to view the bodylanguage of the employee without having to physically travel to the location.

Finally, with the use of a questionnaire, the authors were able to compare/contrast theliterature to actual organizational situations in the modest research situation described.Responses from managers supported the literature quite closely in the difficulties indealing with distant employees. It was apparent that the managers were aware of theimportance of communication and multi-rater appraisals even though formal processeswere not necessarily in place. The managers also identified other difficulties such as thedistant employees feeling a sense of loneliness or separation. They also believed that ifappraisals were not done in person, the sense of distance could be magnified.

The authors believe that the multi-rater method of performance appraisals willprovide the MNC and its managers with the most reliable and consistent metrics onemployee performance. However, training on how to perform performance appraisalsis of utmost importance, as it will enhance the effectiveness. Furthermore, managers ofdistant employees must be trained and developed in the cultural and legal differencesacross countries. Organization must actively seek out potential candidates and developthem to operate in the global environment through the use of international teams wheremanagers can gain international experience and learn cross-cultural interaction skills.Finally, organizations must help the manager to learn how to build the trust andrelationship needed to be effective with his/her employees through travel, phonecontact, and possibly virtual means to ensure the effectiveness and success of theglobalization of performance appraisals.

RecommendationsThe challenges involved in the performance appraisal process are present even in atraditional national environment. Rating an employee, unless it exceeds his/herexpectations, can be a very difficult task for a manager and is only amplified when putinto a global setting. Managers must be given the unique tools needed to perform theappraisal for a distant employee in order for it to be effective. This article hasattempted to identify these interventions.

The authors of this article believe that the recommended appraisal methods in aglobal environment are 360 degree or multi-rater. This method allows the manager toreceive feedback on his/her employees performance from the people or business unit

for whom the employee performed services. The system should also include astandardized measurement scale and the scale must have a common understandingacross the organization in order to provide for reliable and consistent metrics. Choosingthe proper performance appraisal method and rating system must then be followedwith training for the appraiser and the appraisee on effective performance appraisals,and specifically for the appraiser in the following areas:

. supervision skills;

. coaching and counseling;

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. conflict resolution;

. setting performance standards;

. linking the system to pay;

.

providing employee feedback; and. cultural differences.

In addition, to maintain their performance assessment skills, the appraiser must

continue to receive periodic training. The use of training will help to reduce and

possibly eliminate the common rating errors that are experienced with even traditional

performance appraisals.

In order to address the cultural and legal differences that exist from country to

country, a manager must be prepared for the task. The manager must be able to

recognize and respect the cultural differences and approach the employees appraisal in

a manner appropriate with that culture. Research suggests that training is imperative

and leaders should be developed through the use of global teams. This experience onglobal teams allows the managers to experience the different cultures preferences and

it provides a forum for the manager to build self-awareness of his/her own cultural

preferences and values. The authors also believe that when given a new position, a

manager should receive training specific to the culture(s) he/she will be managing (ex:

if employees are Chinese and German and the supervisor is located in Canada then she

must receive training in the Chinese and German cultures).

The issue of building trust and a relationship with a distant employee is difficult for a

manager. The manager must make regular contact with the employee in order to help

build the trust, but he/she must also be aware of what is needed to build trust in that

culture. The manager needs to call/contact the employee weekly in order to provide

feedback, and to simulate the casual interact, that would be obtained if the employee werelocal. The lack of face-to-face meetings where body language can be assessed and moods

can be determined can inhibit the interactions that are generally used to build a connection.

Ideally, the authors believe that organizations should budget for visits by managers to

distant employees on a regular basis. Not only would this help to build a relationship, but it

also allows the manager to speak with local stakeholders and assess the employees

performance on an ongoing basis. Furthermore, with the technologies available today,

managers should learn to leverage its use. For example, many organizations cannot budget

travel due to their economic situation. As such, a manager should consider the use of

applications like video conferencing. This will allow the manager to interact with the

distant employee and view the body language missed over the phone.

Finally, the authors recommend that additional empirical research be done onperformance appraisals for distant employees in a global organization. The current

literature is quite limited, requiring the researching/writing of articles such as this one to

help close the gap and/or expand the base. Additional studies should be conducted in this

area in order to prove they can reduce the performance appraisal gap at the global level.

Firms are continuing to globalize in order to reap the benefits and further research will

help these organizations to implement and maintain the appropriate performance

appraisal systems required for the optimum management of these organizations.


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Further reading

NaukriHub (2009), Performance appraisals, NaukriHub Human Resources Management Site,available at: http://appraisals.naukrihub.com/process.html

Corresponding authorSteven H. Appelbaum can be contacted at: [email protected]


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