INTERNATIONAL

PERFORMANCE
MANAGEMENT

Isha Mehra (07bs1638)

Prachi Sharma(07bs2885)
N Rakesh (07bs2382)
Performance Management
 Performance Management is a means of getting better results
from the organizations, teams and individuals within an agreed
framework of planned goals, objectives and standards.
-ARMSTRONG AND MURLIS

 The essence of performance management is the development of

individuals with competence and commitment, working towards
the achievement of shared meaningful objectives within an
organisation which supports and encourages their achievement
- LOCKETT
A communication tool to measure each
individual's contribution

 To evaluate talent and achievement with sensible

consistency and accuracy

 To help distinguish barriers to top performance

Why Appraise Performance?
 Periodic evaluation helps mangers to have a better
understanding of each employee's skills with the goal to
facilitate, train and develop abilities and power to their
employees
 A chase to assess job development, encourage interest and
enhance job performance by pointing out the development
and recognizing productive work

 A feedback system that might otherwise be overlooked

Aims of Performance management….
 When we know what is expected of us, and have

played a role in forming these expectations, we will

do our best to meet the expectations.

 We can meet expectations only through our capability

and if we get support from the ‘management’ through

processes, systems and resources.

Design process for expatriate
performance

 Goal setting for expatriates

 Performance appraisal
The Expatriate….
Individual Performance and
Appraisal
 Factors to be considered in the Individual Performance and
Appraisal process :

• Expatriate Performance Management System

• Compensation Package
• Task
• Headquarters’ Support
• Host Environment
• Cultural Adjustment
International Compensation
 Key components of an International Compensation Program -
 Base Salary
 Foreign Service Inducement/Hardship Premium
 Allowances
 Benefits
 Tax differentials
Components:
BASE SALARY

 An expatriate’s base salary is normally in the same range as the

base salary for a similar position in the home country.

FOREIGN SERVICE PREMIUM

 A foreign service premium is extra pay the expatriate receives

for working outside his or her country of origin
 It is offered as an inducement to accept foreign postings
ALLOWANCES
 Hardship allowances
 Payments to compensate expatriates for exceptionally hard living and working
conditions at certain foreign locations.
 Housing allowances
 Cost-of-living allowances
 Education allowances
 Relocation allowances
 Parent country wages everywhere
 Wean expatriates from allowances
 Pay based on local or regional markets
 Cafeteria selection of allowances
 Global pay systems
TAXATION
 Unless a host country has a reciprocal tax treaty with the
expatriate’s home country, the expatriate may have to pay
income tax to both the home country and the host-country
governments
 When a reciprocal tax treaty is not in force, the firm typically
pays the expatriate’s income tax in the host country

BENEFITS
 Many firms also ensure that their expatriates receive the same
level of medical and pension benefits abroad that they
received at home
Expatriate Manager
Compensation: Other
Approaches
 Headquarters-based compensation: paying home
country wages regardless of location
 Host-based compensation system: adjusting wages
to local lifestyles and costs of living
 Global pay systems: worldwide job evaluations,
performance appraisal methods, and salary scales are
used
Earnings in Selected
Occupations in Seven Cities
Expatriate Performance
Appraisal: Challenges
 Fit of international operation in multinational strategy
 Unreliable date
 Complex and volatile environments
 Time difference and distance separation
 Local cultural situation
 In most cases, two groups evaluate the performance of expatriate managers
- host nation managers and home office managers - and both are subject to
unintentional bias
 Home country managers tend to rely on hard data when evaluating
expatriates
 Host country managers can be biased towards their own frame of
 Expatriate Performance
Appraisal
1. Fit the evaluation criteria to strategy

2. Fine-tune the evaluation criteria

3. Use multiple sources of evaluation with varying periods of evaluation

To reduce bias in performance appraisal:

 Most expatriates believe more weight should be given to an on-site
manager's appraisal than to an off-site manager's appraisal
 A former expatriate who has served in the same location could be
involved in the appraisal process to help reduce bias.
 When the policy is for foreign on-site mangers to write performance
evaluations, home office managers should probably be consulted before
an on-site manager completes a formal termination evaluation
The Expatriate Manager:
Compensation
 The balance-sheet approach
 Provides a compensation package that equates purchasing
power
 Allowances for cost of living, housing, food, recreation,
personal care, clothing, education, home furnishing,
transportation, and medical care
 This approach equalizes purchasing power across
countries so employees can enjoy the same standard
in their foreign positing that they enjoyed at home
Balance Sheet Approach To
Expatriate Compensation
One of the greatest challenges

 Balance sheet approach: adjusts manager’s compensation

so that manager receives same standard of living as in the
home country + extra pay for locating overseas

 packages are complex b/c of determining adequate base

salary because of difference in currencies, variance in tax
rates, & determining what benefits can be utilized & are of
value in foreign countries.
Appraising Expatriate
Managers
 Challenges in appraising overseas managers
 Determining who should appraise the manager.
 Deciding on which factors to base the appraisal.
 Improving the expatriate appraisal process
 Stipulate the assignment’s difficulty level, and adapt the performance
criteria to the situation.
 Weigh the evaluation more toward the on-site manager’s appraisal than
toward the home-site manager’s.
 If the home-office manager does the actual written appraisal, use a
former expatriate from the same overseas location for advice.
WHO SHOULD RATE?
More weight given to onsite
manager’s evaluation.

Expat who worked in same

location should assist home-office
manager with evaluation.

If foreign on-site manager preparing

evaluation, home-office manager should
be consulted before finalization.
 Performance Appraisal at
Pepsi-Cola International
 Common performance appraisal system:
focuses on motivating managers to achieve and maintain high
standards of motivation.
 Factors associated with high performance in diverse markets
were identified:
 Handling business complexity
 Results orientation
 Organizational savvy
 Leadership
 Executive excellence
 Composure under pressure
 Maturity
Contd…
 Technical knowledge
 Positive people skills
 Effective communication and impact

 Five feed-back based mechanism:

instant feedback
coaching
accountability-based performance appraisal
development feedback
human resource plan
 Guidelines for appraisal, modification to suit cultural
differences.

 PCI tried to balance the cultural and administrative

imperatives of successfully managing the performance of a
diverse workforce.
THANK YOU