Expatriate performance management systems are crucial in the management of multinational corporations. The systems provide useful information that assists corporate managers to make significant decisions regarding the organization's expatriate employees. Such decisions include the identification and appointment of future leaders of multinational organizations. The primary objective of the systems is allowing the multinationals to develop internal talent management criteria through performance appraisal of the expatriate employees. The need for corporate leaders with international experience has increased in recent years as more businesses are joining the global market. As Twicco Beverages consider expanding its operations globally, several variables should be addressed as it develops an expatriate performance management system.
A study involving several U.S. based multinational corporations revealed that five essential variables should be addressed in an expatriate performance management system to ensure its success (Martin, & Bartol, 2003). The findings suggested that clarification of performance expectations, integration of career development incentives, and fairness of the performance management systems are essential elements that influence the management system's success. Also, describing the frequency of evaluation and considering the local environment in which the expatriate operates were identified to significantly impact the success of the management system (Martin, & Bartol, 2003). Each of the five valuables has essential elements that should be considered in developing a performance management system.
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Performance Expectation Clarification
Effective performance management requires informing the expatriates on their expected level of performance. This means that the employee has well-defined performance expectations upon which the evaluation will be done (Tahvanainen, & Suutari, 2005). In some situations, uncertainty about performance expectations may undermine the effectiveness of the performance management system. For instance, an expatriate employee may have multiple supervisors with different performance expectations. It is, therefore, essential to clarify the expatriate's performance expectations to ensure the success of the performance management system. One way of communicating the performance expectations is through adequate goal setting as part of the management process (Tahvanainen, & Suutari, 2005). Setting SMART (Specific, Measurable, Agreed, Realistic and Time-Related) goals should be included in the performance management system to ensure both the expatriate employee and the supervisors understand the performance expectations during the overseas assignment.
Frequency of Evaluation
The performance management system needs to inform the expatriates how frequently their performance will be evaluated and who will be responsible for the evaluation. Studies show that improved expatriate performance is dependent on the frequent assessment of their performance and adequate feedback on performance ( Martin, & Bartol, 2003). The feedback allows the expatriates to be informed of areas that require improvement. Research has also shown that employees prefer frequent evaluations.
Career Development Incentives
An effective performance management system should ensure that the expatriate receives adequate career development opportunities. One way to achieve this is through regular training of the expatriate employees (Tahvanainen, & Suutari, 2005). For instance, it is essential to train employees on the language used in the host country, cross-cultural training, and other job-related training in preparation for international adjustment. This would ensure that the expatriates have all the necessary skills to complete their international assignments adequately. The skills acquired through training would also allow the expatriate employees to have a chance to take up management jobs in the multinational in the future. Expatriate employees should know the link between their performance and future career advancement.
Consideration of the Local Environment
It is essential to realize that performance management systems may not work in the same way internationally as they do domestically. An effective expatriate performance management system should be sensitive to the environmental variations in the host country that may impact expatriates' performance (Martin, & Bartol, 2003). The performance management system should be unique to each expatriate supervisor to ensure fairness in the evaluation process.
Fairness of the Performance Management System
The fairness valuable refers to the procedural fairness of the performance evaluation process. In this context, the performance management system should be well designed to ensure it functions somewhat to the expatriate employees. Fairness can be realized if the system transparently links the business priorities to the employee’s personal goals and remains flexible to adjustments (Martin, & Bartol, 2003). It should also ensure that the supervisors have adequate training to use the system and uphold fairness. The system should also have a reward criterion for the outstanding performances of employees. Expatriate employees should also be aware of whether and how their performance is linked to their remuneration.
Challenges in Conducting Performance Evaluations for Expatriates
Several challenges are unique to the performance evaluation of expatriates.
Cultural Adjustment – this is arguably the most significant challenge during the evaluation of expatriate performance. Without adequate preparation, the expatriate employee may have difficulty adjusting to the organizational culture within the subsidiary corporation in the host country. Also, the employee may have challenges conforming to the new cultural beliefs and norms of the new country's people (AllianzCare, 2018). These challenges may significantly impact the expatriates' performance and, by extension, destabilize the expatriate performance management system.
Environmental Variations – multinationals and their subsidiaries operate in different business environments, which means that the external factors influencing business operations are different. Also, the type of business activities in the subsidiaries may vary from those in the multinational headquarters. This means that the same performance management system cannot be used in the parent company and the subsidiary (AllianzCare, 2018). An expatriate performance management system specific to the needs of the subsidiary must, therefore, be developed to measure employee performance. Time zones and distance variations between the parent company and its subsidiaries may also pose a significant challenge in expatriates' evaluation process.
The validity of Performance Evaluation Criteria – the cultural and social environment, economic systems, political structure, and organizational structures influence the effectiveness of a performance management system. Therefore, the performance criteria vary from those used in the parent company to those used in the host country (AllianzCare, 2018). Considering all these structures, before developing an evaluation system for the expatriates can be challenging and may limit the system's effectiveness.
References
AllianzCare. (2018). International performance management: Tips for success | Allianz partners . https://www.allianzcare.com/en/employers/employer-blogs/2018/11/performance-management.html
Martin, D. C., & Bartol, K. M. (2003). Factors influencing expatriate performance appraisal system success: An organizational perspective. Journal of International management , 9 (2), 115-132.
Tahvanainen, M., & Suutari, V. (2005). Expatriate performance management in MNCs. International human resource management: A critical text , 91-113.
