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To cite this article: Allen D. Engle, Sr., Marion Festing & Peter J. Dowling (2015) Gaining altitude
on global performance management processes: a multilevel analysis, The International Journal of
Human Resource Management, 26:15, 1955-1964, DOI: 10.1080/09585192.2015.1041761
Introduction
In today’s competitive and globalized environment, multinational enterprises (MNEs)
need to manage the performance of their managers. International human resource
management (IHRM) practices are an important device in this context. ‘A very important
pillar within HRM is performance management (PM), because it ties together
organizational and individual performance by adjusting respective objectives and
designing appropriate evaluation and rewards systems across business units and national
boundaries’ (Festing & Knappert, 2014, p. 332; see also Evans, Pucik, & Björkman, 2011).
When the focus is on cross-border dimensions of PM, we speak about global performance
management (GPM). This is usually the case in MNEs.
While many conceptions of GPM focus on the way organizational goals are
transformed into individual goals (Varma, Budhwar, & McCusker, 2015), this conceptual
review of GPM takes a different approach by focusing on how individual performance
results are systematically aggregated in large, diverse MNEs. The authors propose a four-
level vertical framework of the uses, metrics, systems and processes at four levels
(1. individual; 2. local – regional; 3. strategic business unit; and 4. global corporate) and
suggest appropriate GPM processes which can be used at each stage. Therefore, the main
contribution of this paper is a new encompassing framework which considers GPM results,
transforming them by using specific processes such as funneling, summation, conversion
and sharpening. These transformations lead to strategic actions and initiate further
revisions to GPM processes and systems.
The paper is structured as follows. First, we review the literature by discussing to
what extent GPM is strategic. Second, we propose a new four-stage GPM transformation
process. Third, we discuss this concept using various geographical levels before we discuss
the framework and examine its limitations. A conclusion section considers the implications
for future research and practice in GPM.
performance metrics to the next vertical level, (3) ‘conversion’ of individual metrics into
a different form of metric altogether before being forwarded to the next vertical level
and (4) ‘sharpening’ or recalibration of macro level firm strategic performance metrics
as a consequence of how well individual and subunit performance targets are met
(see Figure 1).
Funneling
Interviews with a number of practitioners and consultants lead to the view that some
MNEs emphasize the holistic, personal talent aspect of the GPM system through a series of
talent tournaments. From this initial process, the top performers move on from a local
talent pool to a regional, division or global talent pool. Using this approach, the strategy is
to identify and move high performance employees to increasingly challenging work
assignments so that their abilities and experience can be more effectively utilized in the
MNE. The GPM results allow the talented individual to ‘bubble up’ to more challenging
positions in the MNE. To the extent that GPM systems are perceived by employees to be
accurate and valid, high performers may be more committed to continue to engage with
such a system (Kwon, Bae, & Lawler, 2010).
The link between this form of strategy of aggregation and the rapid increase in talent
management systems is a topic that warrants further research. Empirical evidence suggests
that some national institutional systems as well as firms of different sizes may be more
interested in funneling than others. A recent review of talent management practices
suggests that small- and medium-sized German firms may ‘choose a more inclusive
approach to Talent Management and target all or most employees, in contrast to large
1958 A.D. Engle, Sr. et al.
MNEs where a more elitist approach is favored’ (Festing, Schaefer, & Scullion, 2013,
p. 1872). The latter describes the funneling that occurs in MNEs and is supported by GPM.
It is an important measure to retain talent in the organization. This short analysis shows
that it makes sense to explicitly consider context variables, not only in talent management
(Collings & Mellahi, 2009) but also when GPM is concerned. While this is recognized
with respect to cultures (Festing et al., 2012; Festing & Knappert, 2014), other context-
variables are under-researched.
Summation
Under summation systems, an extensive set of uniform performance metrics (often referred
to as ‘balanced scorecard’ systems) are captured and may be organized and presented at
plant, division, national, regional or SBU level using an advanced, software-based decision
support system and network. The key characteristic here is the use of common performance
metrics throughout the MNE. The vocabulary of performance may have more or less
emphasis as the aggregated GPM results move up the firm, or vary depending on the specific
purpose of the inquiry (reward feedback and justification, assessment of employee
satisfaction and commitment, career planning, etc.), but the essential vocabulary of
performance is constant (Corporate Leadership Council, 2003, 2012).
Much time is spent in MNEs creating a broad, integrated and consistent ‘scorecard’ or
‘dashboard’ that provides information on personal competencies, job performance and
goals or targets achieved. Metrics should capture the past (financial performance), but also
present performance-in-process and the personal and professional self-development
investments that are thought to be linked with future performance. Beyond dollars, Euros
or Yuan, metrics must capture the more intangible aspects of performance such as
customer service orientation, embracing MNE culture and values and a capacity to
proactively act to support dynamic strategic initiatives. Engle et al. (2008) classify the
appraisal criteria into input, process, and output criteria which need to be chosen according
to the firm’s strategy. As has been shown by Festing, Knappert, and Kornau (2015),
output-oriented performance appraisal criteria are commonly applied across national
boundaries.
Conversion
The conversion approach is typified by the translation of operational level GPM results
into differing forms of performance information. In this way, it is the opposite of the
summation approach. At each level in the movement of performance information, an
assessing group will take the results from the lower level and recast them (e.g. alter the
performance dimensions, scales and levels) into a new set of performance variables more
appropriate to that group’s immediate purposes. By the time the results reach the global
level, the individual performance results may be unrecognizable and presented exclusively
in terms of the vocabulary of strategic intent; functional value chain excellence, R&D
capacity or progress to goals, or product awareness penetration for upwardly mobile
potential customers in particular markets of importance to the MNE (Dossi & Patelli,
2010). Gimbert, Bisbe, and Mendoza (2010) draw an interesting distinction between the
terminology used in strategic performance measurement systems (SPMS) and
performance measurement systems in their research on 349 medium and small Spanish
firms. At the micro level, one vocabulary of performance is presented as commonly shared
and understood. At the more macro level, a very different measurement system
(performance dimensions, descriptor levels and weights) is applied.
The International Journal of Human Resource Management 1959
Sharpening
This approach is the most sophisticated and, not surprisingly, most interesting. A four-
stage routine is envisioned. First, corporate level indicators of strategic intent are designed
and delivered to operational level units. Second, units modify these performance
dimensions to capture local conditions and priorities and subsequent revisions are
approved by corporate officers (Regnér & Edman, 2014). Third, performance systems go
into operation and results are captured and reported through the multilevel system. Finally,
results are used to modify both strategic direction and expected goals as well as to modify
(i.e. sharpen) the local performance metrics in the light of system results evaluation. The
strategy sharpens (and modifies) the GPM system which in turn acts as feedback and
sharpens (and modifies) the strategic configuration of the MNE. For an example of how
GPM results can be used to assess the impact of gender on GPM systems characteristics,
a most useful strategically linked piece of information, see Festing et al. (2014).
Shipton, Budhwar, and Crawshaw (2012) refer to ‘organizational change capacity’
(pp. 780 –781) repeating Judge et al.’s definition (2009, p. 1739) of the ‘dynamic resource
bundle comprised of effective human capital at varying levels of the business, with
cultural predispositions toward innovation and accountability and organizational systems
that facilitate organizational change and transformation.’ This capacity is said to be critical
for continued performance and firm effectiveness in highly dynamic global environments
in the developing world. In this article, we may see an only slightly differing, more
general, perspective on the nexus between an HR system (GPM) and timely and rational
MNE strategic transformation that makes up the ‘sharpening’ form of gaining altitude.
Kolehmainen (2010) presents an example of SPMS at DynComp, a global
telecommunications firm, as one component in a ‘dynamic strategic alignment system’.
As per the four-stage ‘sharpening’ model above, macro-level strategic intentions are
converted into individual level ‘action plans’ and then used in a combined and
decentralized, heavily delegated process. Variety and flexibility in targeting are at a
premium. Although the DynComp case does not provide any significant evidence of major
modifications in strategic direction or intent, the capacity for alteration is present in the
‘value framework’ emphasis on flexibility. The decision to invest in such an advanced,
central and complex form of making GPM results available for strategic purposes may be
contingent on firm size, number of employees, institutional heritage and having relatively
1960 A.D. Engle, Sr. et al.
advanced HRM systems (i.e. GPM) – factors which may be independent of having a
formal HRM strategy (Doving & Nordhaug, 2010).
reviewer will note that the macro literature is of a differing form, with a differing
methodologies, models, favored theories, syntax and vocabulary, and, not surprisingly,
comes from a very differing academic point of origin – in a sense, this research is looking
at these issues and problems from a higher altitude which presents a more macro view.
Some 20 plus years after a call for more strategic IHRM, many SIHRM researchers are not
aware of the business models, logic and forms of macro-level strategic management
theorizing (Dossi & Patelli, 2010). More cross-discipline reading is an essential first step
in any effort to speed multilevel research efforts and fit pieces of the puzzle originating
from differing altitudes.
of analysis and, working together, develop research designs and uncover research sites that
allow them to span across the disciplinary divides and hopefully to ‘meet in the middle’
(Cheng, Birkinshaw, Lessard, & Thomas, 2014).
Disclosure statement
No potential conflict of interest was reported by the authors.
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