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Globalization of performance appraisals: theory and applications

Steven H. Appelbaum
John Molson School of Business, Concordia University, Montreal, Canada

Michel Roy
St-Laurent, Canada, and

Terry Gilliland
Locweld Inc., Montreal, Canada
Purpose The purpose of this article is to provide a more complete perspective regarding the best practices for performance appraisals of distant employees in global organizations. Design/methodology/approach A range of published works (1998-2009) on multinational corporations and performance appraisals was reviewed. The literature was used to determine human resource challenges associated with globalization as well as the types of performance appraisals, common pitfalls and elements for improvement of appraisal systems. Concepts were then combined to determine the best practices for performance appraisal in a global setting. Finally, a small questionnaire consisting of six questions was constructed and sent to managers in two companies in the health care industry meeting the criteria of having distant employees. The questions were open-ended in order to allow for a variety 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 to avoid 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 on the process. Managers must also be given the opportunity to build the required relationship with these employees. Research limitations/implications A questionnaire was sent to several key managers in two complex pharmaceutical rms meeting the criteria with responses received. Further empirical research on the best practices of performance appraisal for distant employees in global organizations should be pursued. Practical implications This article provides a source of information on what practices are followed in 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 performance appraisal in global organizations and this article attempts to ll this gap. Keywords Best practice, Performance appraisal, Globalization, Multinational companies, Workplace training Paper type General review

Management Decision Vol. 49 No. 4, 2011 pp. 570-585 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251741111126495

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

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 to have employees scattered throughout the world. This distant relationship adds other challenges for both the appraiser and the appraisee. These challenges may in some cases be similar to those experienced by matrix organizations where an employee does not report to his/her direct superior on a day to day basis, but rather to the business unit where they are located and supplying their services. The article will be broken into ve sections. The rst section will look at some of the reasons for globalization of organizations, the strategies and structures needed to operate 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 and will highlight the different methods currently in use, some of the common pitfalls, positive and negative outcomes and, nally, elements that can be implemented in order to improve on current practices. The third section will discuss performance appraisals in a global setting and what systems prove to be most effective and which do not. This will be accomplished through discussion of the challenges, trust and relationship requirements, cultural differences and the types of appraisal systems best suited for this environment. Next, the researchers will compare the results from the review of literature to two companies in the health care industry, MDS Pharma Services (Contract Research Organization) and Pzer (Biopharmaceutical). In order to make the comparison, a small questionnaire consisting of six questions was constructed and sent to managers meeting the criteria of having distant employees. The questions were open ended in order to allow for a variety of responses enabling the researchers to view trends and make comparisons to literature. Finally, the authors will offer recommendations for performance appraisals in the global environment. Trends and reasons for globalization structures and strategies The 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 a Carrefour in competition with superstores such as Wal-Mart (Hammond and Grosse, 2003). An explanation for this might be found in the denition of globalization, as cited by Hammond and Grosse (2003). It is the homogenization of peoples tastes and demand patterns around the world, due to increased access to international communication of information about products and services as well as increased access to transportation of products and people across borders. However, with expansion comes the difculty of employing people in more than one country, and the need for a structure-strategy on how the operations are to function in this foreign environment. When organizations globalize operations, they are faced with the question of how to integrate the new operation with the existing one. One concern is the relationship that will 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 the extent to which the operations will adapt to the foreign hosts environment versus maintaining parent company practices (Prahalad and Doz, 1987; Rosenzweig and Singh, 1991). One obvious reason for this is when organizations nd themselves operating in foreign countries, the subsidiaries will face pressures to both adapt locally and integrate globally (Sauers et al., 2009). This conict of goals and practices leads to MNCs 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 international demand, organizations can reap the benets of product standardization on a global scale. With product standardization, the international integration is facilitated through the pursuit of further economies. The greater the standardization, the greater the economies of scale that can be had by the rm which means the organizations pursuit will likely be towards global integration as opposed to multidomestic. However, the rm must meet the needs of its customers and in a foreign country these needs may differ from what is considered standard. Furthermore, globalization is seen by some as a threat to national identity and a loss of national sovereignty (Hammond and Grosse, 2003). In Latin America for example, the benets of globalization are heavily debated. Those having benetted little, claim that the appearance of it being the solution to poverty and underdevelopment has been false. In Europe on the other hand, the views are 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 these concerns, perhaps MNCs should seriously consider the benets of adopting the multidomestic strategy and forego some of the benets of standardization. While these two strategies would seem at odds with one another, there remains a third possibility. This strategy, referred to as global localization benets from the best of both approaches. Described by Ohmae (1994) as the most advanced stage of corporate globalization; where management of the MNC is both global and local in orientation. Rather than develop only local responsiveness, knowledge transfer or pursue global efciency, Bartlett and Ghoshal, 1989, 1992) believe that all must be practiced simultaneously. This structure would require managers to act based on a shared perspective rather than on an organizational chart. This was referred to by Bartlett and Ghosal (1992) as creating a matrix in the managers minds. The global localization strategy and structure diffuses power across the MNC creating an interdependent network of rms (Kidger, 2001). Ultimately, the strategies put in place by the corporation will dictate the Human Resource Management (HRM) policies and procedures that Human Resources (HR) will put in place as well as the challenges that will be faced. This is the next challenge to be analyzed. Human resource challenges with globalization As organizations enter globalization they face the decision of what strategies they will use in the foreign host country. This decision will also help dictate what HR strategy will be implemented. As global strategies are adopted by the rm, higher levels of global integration of key HRM processes are needed (Brewster and Suutari, 2005). As such, HR managers can no longer simply adapt past processes for the future and the changes will affect everything from recruitment and team selection to performance measurement and training. The companys subsidiary strategy and cultural and legal differences are some of the challenges that must be considered by the global HR department. Along the same lines as the globalization strategy, HR will need to consider the benets of both local and standardized policies. The four main challenges identied during the literature review were: (1) duality challenge; (2) legal/cultural challenge;

(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 failures Many researchers have published articles on the pitfalls and the failures of performance appraisals including Schweiger and Sumners (1994), Longenecker (1997), Longenecker and Fink (1998), Rees and Porter (2003), Piggot-Irvine (2003) and Rees and Porter (2004). All of these researchers have identied different results as to why performance appraisals fail. Psychometric errors are one of the main reasons why performance appraisals are done ineffectively within corporations. These errors, leniency, halo effect, restriction of range, recency and contrast, are attributed to the psychological predisposition of the appraiser during the appraisal process. Some researchers have suggested that one possible way to minimize psychometric errors is by using a multi-rater system of evaluation (Appelbaum et al.,2008; Edwards and Sproull, 1988; Rees and Power, 2003). A self-performance appraisal is another method that can support the multi-rater system to reduce the presence of psychometric errors. As compared to the multi-rater system, very little research has been carried out related to the self-assessment appraisal method. However, most studies that were done on 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 system and result in a positive impact on an employees satisfaction with the evaluation and his/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 and committed to his/her personal goals. Elements to improve performance appraisals Piggot-Irvine (2003) conducted three studies from 1996 to 2001 on the topic of performance appraisals. Based on the ndings, the author mapped out (Figure 1) all of the 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 and managers must know how to set proper goals and objectives at the beginning of the calendar or evaluation year. There is a general consensus among researchers on the topic that companies must give some sort of training to their managers on how to give proper appraisals to employees. Managers must receive training in supervision skills, coaching and counseling, conict 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 how they conduct performance appraisals with their employees (Boice and Kleiner, 1997). According to the (Piggot-Irvine, 2003) model the most important elements to conducting an effective performance appraisal are respect, openness and trust. These key features must not only be present during the appraisal but they must be practiced between managers and subordinates throughout the year. One way to develop this

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Figure 1. Elements of appraisal effectiveness

relationship is for managers to give feedback to their employees on a frequent and ongoing basis. In the rst section of this article the different aspects of globalization and their associated challenges were covered while the second part provided an overview of the performance appraisal process. In the next sections the authors will attempt to synthesize both topics in a global context while providing a brief review of the literature. The discussion will identify some of the main challenges companies are facing today and provide a real-life comparison of two major companies in the life sciences industry with the ndings relevant on conducting performance appraisals on a global scale. Performance appraisals in global corporations The trend towards globalization has created many challenges for Human Resource Management (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 has concentrated on expatriate performance appraisals. To date, not many articles have been published on MNCs and international performance appraisal. The review of literature suggests that conducting international performance appraisals is very challenging given that a performance appraisal done in a local context can already be a complex process. When performing in a different country, variables such as language barriers, different values, and different cultures come into play, and make the task more complicated (Brewster, 1988). The main reason cited was the difculty for

managers to know exactly what their employees accomplished each day at work, due to the geographic distance (Shen, 2004). Shen (2004) looked at the differences between Chinese and Western performance appraisals. The key differences were: . Chinese performance appraisals are usually less transparent than Western appraisals; . 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 Chinese multinational companies commented on the fact that the Chinese performance appraisal 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 to inform 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 measure managers and employees performance. However, Hempel argued that Western-style performance appraisal might not be the answer (Hempel, 2001). According to the literature it seems there is a universal consensus on the importance of international performance appraisals but there is a lack of agreement on what are the best practices to conduct them at the global level. Brewster (1988) argues that the performance appraisal at the international level is extremely complex because there is no correct way to assess the performance of someone who is located a distance from the appraiser. Long distance assessment can be quite challenging and complications may arise due to differences in culture and society. In addition, the appraiser cannot evaluate the appraisees body language, which makes it more difcult. There are other factors that make an international performance appraisal extremely complex, such as different norms and policies, different legal systems and different economic environments. This article will focus on the challenges of conducting performance appraisals at the global level due to cultural differences and geographic distance. Challenges of conducting performance appraisals in global corporations Conducting performance appraisals is an extremely complex process despite all the tools in 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 and unfair particularly when this process is performed at an international level. This article focuses 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 cultures Globalization has become a major trend for many companies and as such, studies were done 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 to rate their performance more favorably as compared to collectivist culture. An individualistic culture is a culture in which the members primary focus is that of themselves and their immediate families (e.g. US and UK are considered as individualist cultures). In contrast, a collectivist culture is one in which people tend to view themselves as members of groups (families, work units), and usually consider the needs of the group to be more important than the needs of individuals (e.g. China and Japan). There are some additional studies that correlate with the results found by Bailey et al. (1997) Furnham and Stringeld (1998) and Stoker and Van der Heijden (2001) found that employees from Western countries have a tendency to rate their performance higher than their 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 reasons depending on the culture. The next section will look at one specic culture to explain why this performance evaluation gap exits between supervisors and employees. This gap is caused by the leniency psychometric error. Cultural differences and the leniency psychometric error Leniency errors occur when a manager tends to be more lenient than his or her peers when rating employees or is more lenient towards one employee when compared to another. As a result employee ratings are inated and do not reect the reality of employee performance for the year. A considerable number of studies were devoted to the leniency error in Western cultures and, as previously stated, these researchers are in agreement that self-ratings are signicantly higher than the corresponding supervisors ratings (Bailey et al., 1997; Stoker and Van der Heijden, 2001). The authors of this article described a study that was conducted in the United Arab Emirates (UAE) and noticed that the gap between the rater and ratee is still present for more or less the same reason as Western countries. Mohyeldin and Suliman (2002) suggested that UAE employees tend to rate their performance evaluation higher than their supervisors. The Arabic culture is considered to be an individualist culture and therefore their rewards are linked to high individual performance (behavior similar to Western countries). However, Arabic countries still have certain old-fashioned historic practices. For instance, when an Arabic employee is punished he/she will never know or be informed of the reasons for the punishment. This type of behavior is contradictory to the notion of fairness, justice and ethics management. Arabic culture is very similar to Asian culture at that level in that they are not transparent when conducting performance appraisals. Mohyeldin and Suliman (2002) also indicated that a married person would always get a better performance appraisal as compared to a non-married person in Arabic culture. 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 are therefore inclined to overestimate a married employees performance, in order to avoid

his/her complaints and confrontations. Furthermore, married supervisors want to avoid 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 performance appraisal to an open appraisal. When employees openly discuss their performance results with their supervisors, the perception gap will be reduced. Reducing the gap between the appraiser and appraisee will improve the communication, trust and relationship between them. We now consider how building trust and an open relationship may be challenging in the global environment. Trust and open relationships Developing trust and open relationships between supervisors and employees is fundamental to achieving an effective performance appraisal. Normally, this process is easily achieved when both manager and employee are working locally. The daily face-to-face interaction makes it easy for the supervisor to provide informal feedback on how well the employee is performing at work. This mitigates any surprises at the year-end performance appraisal. However, developing trust and open relationships could be quite challenging when supervisors and employees are working in different countries. Different cultures and background can slow down the development of trust and open relationships between managers and subordinates. For instance, Chinese and Japanese employees will not trust anyone immediately. It may take years before you earn their trust, and be able to have an open relationship. However, once this has been achieved, they will be very loyal and it will take much to destroy that trust and the relationship. On the other hand, North Americans will trust and develop relationships much faster than Asians. Other factors such as time zone differences, language barriers, gender and social status can interfere with the development of trust and the relationship process between supervisor and employee. These factors and challenges can widen the gap between the rater and the ratee and in the end the performance appraisal could be perceived as unfair (Piggot-Irvine, 2003). We can now compare the complexity of performance appraisals as found in the literature with actual situations obtained from two organizations in the life sciences industry. Applications in practice In order to compare the information obtained through the review of literature, the authors conducted a small research study with two international companies operating in the health care industry: MDS Pharma Services and Pzer. The survey consisted of a six-question questionnaire and was sent to several managers meeting the criteria of having distant employees. The sample was small due to the limited number of managers responsible for distant employees. The questions were open ended in order to allow for a variety of responses. A face-to-face interview was also conducted with the Vice President of Human Resources of Pzer Global Pharmaceuticals located in the UK. Seven MDS managers were also interviewed, and two managers declined. The following terms used in the questionnaire are dened as follows. The term distant employee is where a manager and his employee are separated by a signicant distance normally another country and another time zone. This separation often makes it difcult 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 more than 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 questionnaire asked the following, with the modest results to follow: . What approach do you use to make a fair performance appraisal of your distant employees (e.g. standard appraisal, self- appraisal, 360 degree, multi-rater appraisal)? . Are performance appraisals performed face-to-face with distant employees? Is this budgeted? . Which performance appraisal system do you believe would be the most appropriate for distant employees (e.g. standard appraisal, self-appraisal, 360 degree, multi-rater appraisal)? . How do you build the trust and open relationship required with a distant employee to give a performance appraisal that will be considered justied and appropriate by the employee (e.g. Asia historically requires years of relationship-building to trust someone. This may not be present, i.e. manager is in UK and employee in Japan)? . How do cultural differences affect the way performance appraisals are received by distant employees (Westerners typically rate themselves higher on an individual basis than Asian people. This is because the Western mindset is to work individually where as Asians work collectively)? . What other difculties do you see when conducting performance appraisals for distant employees? Approach for fair performance appraisals The rst question asked managers what type of performance appraisal they used with their 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 whether formal or informal. In most circumstances the feedback from outside stakeholders was obtained via e-mail or phone conversations. Another method, said to be used, by one manager, was self-appraisal. This would seem to be in line with the best practices obtained through the review of literature and the use of performance appraisals know today basically as modern methods (Schweiger and Sumners, 1994; Appelbaum et al., 2008). The interview with Pzers VP of HR revealed that Pzer has implemented a common understanding of the rating among leaders as well as a calibration process that is used to ensure fairness across teams and team members. Furthermore, both rms use Specic, Measurable, Achievable, Realistic and Time bound (SMART) objectives, a form of management by objectives, that are set at the beginning of the appraisal year, and evaluate personnel on these objectives, accordingly. Face -to-face appraisals One issue that continually appeared in the literature was the need for a relationship and trust between appraiser and appraisee. Managers tended to agree with this and felt that a face-to-face appraisal was extremely important. However, in situations such as the economic turmoil that many industries are facing today, the availability of a travel budget for the purpose of performance appraisals is rare. As such, many managers are modifying their travel schedules in an effort to ensure they are able to be at a particular

location when performance appraisals are due. This is usually acceptable for the annual 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 a process more than a dialog as stated by the Pzer VP of HR. This was also viewed, by many authors, as the type of information that must be spread to managers and employees. This understanding will help to cement the fact that even the weekly phone calls can and should be used to provide feedback on an ongoing basis. Appropriate performance appraisal system Brewster (1988) argues that the performance appraisal at the international level is extremely complex because there is no correct way to assess the performance of someone that is located a distance from the appraiser. The difculty for managers to know exactly what their employees accomplished each day at work due to the geographic distance (Shen, 2004) was echoed by one manager that wrote Im not on site 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 of multi-rater and self-appraisal could provide even more information however they believed this to be labor intensive. One comment that was found to be interesting by the authors in the literature was that distant employees are considered trusted employees without the need for direct supervision. This suggests that these employees were actively sought out as potential candidates and developed to operate in the global environment. A nal comment on this subject was that caution must be taken when doing international performance appraisals across cultures. It was mentioned that although appraisal methods such as the 360 degree was of great value, some cultures, such as a collectivist culture, are not accepting of these methods. Trust and relationships Managers felt that the rst year and hence the rst impression that they had on their distant team members was critical. They believed that the rst meeting had to be face-to-face and the standards and expectations had to be designed up front. While setting expectations the managers could also state what they were promising to do for the employees, however the managers had to ensure that they delivered on these promises. This built the foundation of trust upon which a relationship could be constructed. Interaction, communication and regular feedback were also cited as requirements as well continuous fairness amongst team members to continue the trust building. Furthermore, employees need to feel that the manager is accessible, regardless of the distance that separates them. For this reason, face-to-face meetings should occur throughout the year. However, there must be formal and informal interactions 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 manager to nd out what made each employee tick. They would work to nd what each employee valued (title, work, money, etc.) and help the employee to satisfy those particular needs thereby building the trust and relationship with the employee. Factors such as time zone differences, language barriers, gender and social status, can interfere with the development of trust and open relationships between the supervisor and employee. These factors can widen the gap between the rater and the ratee, and in the end, 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 avoid these problems, even though formal processes may not be in place. Different cultures receive/perceive performance appraisal differently The Pzer VP of HR spoke of how different cultures may have a different understanding of ratings. Therefore Pzer, starting with its leaders, is developing a common understanding of ratings so as to ensure that an excellent translated quantitative rating will have the same meaning across different countries. MNCs will need to balance the need to standardize HR best practices across borders with the need to integrate local policies and customs (Poutsma et al., 2006), but with standardization resources must be in place to ensure a common understanding of the standards. Managers cited the need to clearly communicate what rating system was being used and what behaviours translated into what rating. There was also a consensus that managers need to familiarize them with the culture they were dealing with and to use the approach that was appropriate for that culture. 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 about his employees in France being very protocol driven. As such, if they were to disagree with the rating, they would go to the HR department with their concerns rather than discussing it one on one with the manager. The manager stated that he viewed this action differently than if it were to happen with his North American employees. This suggests that cultural training is important for managers with employees in different countries and the organization should take this into consideration during globalization. Much of this development can be achieved through the use of international teams where managers can gain international experience and learn cross-cultural interaction (Brewster and Suutari, 2005). Working in a team environment, leaders must be able synthesize diverse cultural needs and perspectives of all team members (Odenwald, 1996) thereby preparing them for a future role in global management. Other difculties encountered The nal question was used to elicit difculties and concerns that may not have been found 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 have lost that. . Time zone differences force communication to largely be based on email and phone messages. This makes it difcult to ensure that messages are received and understood. . 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 the challenge of ensuring the employee feels included in the team or department. . Not knowing the individual enough and not spending enough time to get to know the employee. . Not supplying sufcient development for a distant employee. . Error in rating without a formal multi-rater process in place. Stakeholder feedback was received too late.


The last point was explained through the description of an incident the manager encountered. He felt that an employee had a very good year and had performed quite well. He felt that some aspects merited an exceeds expectations rating, but not in all areas. The overall rating the employee was nally given was exceeds expectations. One month after the appraisal, the manager visited the site to establish goals for the coming year. At that time the manager received stakeholder feedback that would have resulted in the employee getting a meets expectations had the information been received prior to the evaluation. Distance can confuse and distort positive intentions in a most interesting manner. Overall, there appears to be a correlation between the review of literature and the responses obtained from the two rms even considering the limited responses and interviewees. 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 their distant employees. A summary of conclusions and some recommendations will follow. Conclusions The trend towards globalization has increased in the last decade and as borders continue to open and the world continues to get smaller through communication and ease of transportation, it is likely to continue for the coming years. This realization requires MNCs to adopt strategies and structures that can operate across multi-cultural environments in order to optimize efciencies while accounting for local policies and practices. The nal strategy that is adopted by the organization will inevitably inuence the HR strategies that are put into practice and the challenges that are associated with those practices. This duality in the organization will present managers with new difculties in the management of employees and the organization should attempt to identify potential leaders and develop their skills through training and 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 and weakness or areas for change and identifying development needs that can help with career planning. It is a tool that both the appraiser and the appraisee can use to enhance performance of employee and the organization. However, the type of appraisal used must be in line and congruent with the requirements and structure of the organization in order to reap the benets. Training must also be provided in order to limit many of the common rating errors that are experienced with all appraisal systems in order to ensure that the performance appraisals are effective and the consequences of ineffective performance appraisals is avoided. Once the performance appraisal is expanded to the global setting the challenges are enhanced. Performance appraisals in a globalized environment, increase the challenges that the manager will experience, and myriad issues to be solved. The manager must now consider the cultural and legal differences that the foreign subsidiary, and hence distant employees are accustomed to. They must ensure that the rating system has a common understanding across the different cultures they manage and they must be aware of how each culture may react to the appraisal and have respect and understanding of the reaction. However, the most difcult and yet extremely important aspect of effective performance 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 to build 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 for formal and informal communication, that is usually achieved in the local environment, with daily interactions. Failing the ability for face-to-face contact, the manager is required to learn to leverage the technologies available today such as video-conferencing. This can enhance the communication by allowing the manager to view the body language 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 the literature to actual organizational situations in the modest research situation described. Responses from managers supported the literature quite closely in the difculties in dealing with distant employees. It was apparent that the managers were aware of the importance of communication and multi-rater appraisals even though formal processes were not necessarily in place. The managers also identied other difculties such as the distant employees feeling a sense of loneliness or separation. They also believed that if appraisals were not done in person, the sense of distance could be magnied. The authors believe that the multi-rater method of performance appraisals will provide the MNC and its managers with the most reliable and consistent metrics on employee performance. However, training on how to perform performance appraisals is of utmost importance, as it will enhance the effectiveness. Furthermore, managers of distant employees must be trained and developed in the cultural and legal differences across countries. Organization must actively seek out potential candidates and develop them to operate in the global environment through the use of international teams where managers can gain international experience and learn cross-cultural interaction skills. Finally, organizations must help the manager to learn how to build the trust and relationship needed to be effective with his/her employees through travel, phone contact, and possibly virtual means to ensure the effectiveness and success of the globalization of performance appraisals. Recommendations The challenges involved in the performance appraisal process are present even in a traditional national environment. Rating an employee, unless it exceeds his/her expectations, can be a very difcult task for a manager and is only amplied when put into a global setting. Managers must be given the unique tools needed to perform the appraisal for a distant employee in order for it to be effective. This article has attempted to identify these interventions. The authors of this article believe that the recommended appraisal methods in a global environment are 360 degree or multi-rater. This method allows the manager to receive feedback on his/her employees performance from the people or business unit for whom the employee performed services. The system should also include a standardized measurement scale and the scale must have a common understanding across the organization in order to provide for reliable and consistent metrics. Choosing the proper performance appraisal method and rating system must then be followed with training for the appraiser and the appraisee on effective performance appraisals, and specically for the appraiser in the following areas: . supervision skills; . coaching and counseling;

. . . . .

conict resolution; setting performance standards; linking the system to pay; providing employee feedback; and cultural differences.

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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 on global 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 specic 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 difcult 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 were local. 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 on performance 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 benets and further research will help these organizations to implement and maintain the appropriate performance appraisal systems required for the optimum management of these organizations.

MD 49,4


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