International HRM: Performance Management and Expatriates

This essay examines the complexities of International Human Resource Management (IHRM), particularly focusing on performance management within multinational corporations (MNCs). The essay begins by highlighting the increasing globalization and its impact on businesses, emphasizing the need for strategic deployment of human resources across borders. It then delves into the challenges of managing expatriates, including cultural differences, language barriers, and family adjustments, and the importance of tailored HR systems. The essay explores performance management systems, their objectives (strategic and operational), and how they are affected by cultural contexts. It analyzes various approaches MNCs use, such as polycentric, geocentric, and ethnocentric strategies, and the factors influencing IHRM practices. The essay also reviews relevant literature on expatriate adjustment and the challenges of performance management in different cultural settings. It concludes with recommendations for HR directors, emphasizing the need for customized performance measures that consider cultural context, legal frameworks, and situational variables to ensure fairness and effectiveness. The essay underscores the importance of creating a supportive environment for expatriates to achieve success in their international assignments.

Introduction
The world is getting flatter everyday as the business landscape accommodates globalization,
multi-cultural workforce, diversity, inclusivity, artificial intelligence, fast paced dynamic
technology, growth in mergers and acquisitions, increase in international trade,
internationalization of businesses, gig economy, and emerging economies. In such a
scenario, multinational corporations (MNCs) look towards their people management team to
provide competitive advantage through the strategic deployment of their human resources
across country borders. When competing on a global playing field, MNCs need to put their
best foot forward and utilize the talent that best suits their needs. In an international context,
this would mean that the talent has to be able to adapt to the difference in culture, language,
social norms, food habits, codes of conduct, and other such environmental factors in order to
perform well. MNCs may take the most appropriate form of staffing based on a due
diligence of their business requirements. An integrated approach towards international human
resource management consisting of staffing, performance management, rewards, career
development, learning and development, and conflict resolution systems would be advisable
in such cases (Shaffer, Kraimer, Chen, & Bolino, 2012).
An increasing number of organizations are looking to adopt a multinational strategy and
diversify geographically, seeing the business opportunities available in making such a
strategic move. This has also resulted in a large number of employees being sent from their
home country to foreign nations on short term and/or long-term work assignments.
International assignments for such employees, who are referred to as expatriates, are
challenging for the organizations as well as expats. HR systems pertaining to expatriation
management such as section, performance management, compensation and benefits, training
and development, grievance resolution, succession planning, repatriation, and separation need
to have a focussed approach.
Performance management systems
The formal organizational performance management process can be considered to be a
breeding ground for potential interpersonal conflicts and disagreements. Performance
management have broadly two objectives of rewards and development. In both cases,
employees perceive that what is measured by the organization is what is important to
performing better on the job. It is important to understand how effective the employees think
the performance management system is in order for them to accept and engage with it

(Keeping & Levy, 2000). For example, if the organization has mandated its team
leaders/managers to invest a significant portion of their time in providing detailed and
continuous feedback to their team members on a monthly basis with follow-up discussions
and face-to-face reviews, the managers/team leaders would continue to do so if they know the
time they put into this activity is clocked by the organization as part of their job duties. They
would be more committed to the process if they knew they are being observed and evaluated
for subordinate development. If the organization however does not include that in their
performance appraisals of leaders, it sends out a message that while it seems noble to care
about subordinate performance and development as a team leader, the organization does not
clearly prioritize it. The flaw in the design of the appraisal system then negates the very
purpose of the exercise.
Biron, Farndale, and Paauwe (2011) stated that performance management systems (PMS)
serve two major objectives, namely, strategic and tactical/operational. The strategic
objectives enable the alignment of individual and organizational goals for optimal
effectiveness. They also aid in setting the tone for the culture, the norms and expected
behaviors of the employees in the organization (Dewettinck & van Dijk, 2013). The
operational objectives provide the employees with an understanding of what is expected of
them, feedback on their performance, as well as rewards appropriated to that performance
(Sharma, Sharma, & Agarwal, 2016). Performance management systems in any organization
are thus inextricably linked to the other systems such as rewards and recognition, human
resource planning, goal setting, conflict resolution, career development, and training and
development.
Performance management in International HRM context
MNCs can undertake the polycentric, geocentric, or ethnocentric approaches to managing
their international talent. Managing expats is a major challenge for any MNC owing to the
tricky nature of the assignments as well as an important need to ensure that expats feel
comfortable and competent enough to perform to the best of their abilities even in a foreign
land (Horwitz, 2017; Tharenou & Caulfield, 2010). Various exogenous as well as
endogenous factors affect the IHRM practices of multinational organizations (Schuler,
Budhwar, & Florkowski, 2002). National culture, autonomy of state, labour laws are some of
the factors in the context of the country in which the multinational organization is operating.
The organization’s own culture, structure, processes, corporate strategy also have a major

impact on its human resource management practices such as staffing, compensation,
performance management and management development.
International assignments prove to be very challenging even for the most competent
candidates. A change in the job responsibilities is accompanied by an urgency to settle into a
new country with a different language, different culture and sometimes away from the family.
Even if the family is together, spouse may face difficulty in adjusting to the change as well.
With families where both partners are working, it is difficult for the spouse to relocate or find
a job to his/her liking on relocation. Such a kind of change also takes its toll on kids and any
other dependents. Even if the company provides financial assistance, the psychological
impact of such a change is huge. In the present context of increasing number of international
assignments, it is imperative that organizations know and understand whether to adopt a
global standardized HR policy or customize according to local demands or use a mixed
approach for effective utilization of their resources (Budhwar, Varma, & Patel, 2016; Chiang,
Lemanski, & Birtch, 2016).
In an extensive review, Hechanova, Beehr and Christiansen (2003) summarize that expatriate
adjustment is researched based on general aspects, their social interactions, and work
adjustment factors. General adjustment is about degree of comfort with general living
conditions like food, housing, medical facilities etc. Interactional adjustments would be of
socialization and interaction with locals while work adjustment is about job responsibilities,
performance expectations and work profile. Tung (1984) identified four groups of variables
that contribute to the success or failure for expats on international assignments namely
technical competence, personal traits, ability to cope with environmental variables and family
situation. From the MNC point of view, the challenges in management of expatriates are
their selection, training and development, compensation, performance management,
repatriation and retention. The degree of similarity to, or difference from, the country of
origin makes it easier or more difficult to manage international business activities (Budhwar
& Sparrow, 2002).
Tanure, Barcellos and Fleury (2009) studied how psychic distance comprising cultural,
economic, administrative and institutional differences between countries pose challenges for
MNCs of Brazil. They found out that Brazilian companies do not take into account such
factors as candidate’s intercultural sensitivity or family’s willingness to relocate when
selecting their expatriates to be sent to countries that are high and low on psychic distance.

Companies primarily looked at technical competencies of the expats to act as representatives
in the host country as the basis for selection. The expats however pay more importance to
personal comfort and willingness of family to relocate to the country in question. This gap of
expectations could lead to numerous incorrect selections and thus ultimately in expat failure.
In such a case, if the MNC has a similar set of performance appraisal for all its employees,
the expats would always rank lower since their performance may be affected by their inability
to adjust to their new surroundings. If the MNC cares only about their technical competence,
t may send employees without screening their cross-cultural sensitivity or their readiness to
adapt to a different way of living. In such cases, a common way of measuring performance
would seem unjust and unfair to the expats.
Enderwick and Hodgson (1993) examined the expat management practices of New Zealand
MNCs. The study reported that the firms, owing to late entry of New Zealand in international
business, had benefitted by learning from other organizations from different countries.
Selection was done keeping the firm’s interest and individual development in mind. Both the
individual and the spouse were interviewed to see their willingness to relocate and address
any concerns. The criteria for selection were however, based on conventional ideas such as
functional skills, period of incumbency and past record. There were no significant reports of
pre-departure training and most firms did not have any repatriation process in place. The late
entry has helped in avoiding certain mistakes but New Zealand firms definitely have a long
way to go to develop suitable expat management practices, especially in areas of pre-
departure training and repatriation. The failure rates for these firms were reported to be lower
than that in US and Europe. The performance management systems in such companies
would have been designed differently for the expats than from their counterparts at the offices
in the home country.
Recommendations to the HRM Director
Based on the extant literature review, I would advise the HR director to consider the objective
of the performance management system for the MNC and its subsidiaries. The Director also
needs to understand the purpose of the type of staffing approach selected for each of the
subsidiary across the world. For example, a Japanese employee selected to work in the
Japanese subsidiary of an American firm does not have to make any cultural appropriations
with respect to Japanese culture but he/she may take time adapting to the American way of
working. In such a scenario, it would be unfair to evaluate the Japanese employees solely

based on his/her technical competence. A global standardized system of performance
measurement does not take into account cultural adjustments. For example, the American
way of meeting between a supervisor and his/her junior may be informal or casual since the
country has a low power distance score. However, a meeting between the boss and junior in
an Indian organization would be characterized by formalization and reverence owing to high
power distance and patriarchal culture of the country. Also, the subsidiary in the US may put
more importance on individual performance rather than team scores owing to an individualist
national culture while that in Japan who rank high on collectivism would prefer higher team
incentives (Ferner & Almond, 2013). The Director can keep some of the parameters common
between all the subsidiaries such as those that measure the employees’ congruence with the
goals and values of the organization. These would form the core of the organizational culture
and hence need to be common throughout. The performance measures can be adjusted to the
specific subsidiary based on contextual variables such as national culture, legal framework,
and political requirements as well as situational variables such as adaptability quotient, cross
cultural sensitivity, competence of staff, need for expatriation, and adversity faced by the
expatriates as well as host country employees.
Conclusion
The life of an expatriate is definitely tough rife with pressures of settling into a foreign
environment and bundled up with the constant struggle of family life and pressures to
perform from the parent company. Most of the expatriates get a culture shock when they
move to a foreign land, unprepared for what is in store for them. The job demands of expats
are quite rigorous and intense and need them to juggle multiple resource requirements such as
their skills, time, and cultural adaptability. The diverse context and unique interactional
patterns of expatriate managers require HR practices designed for their well-being. (Baruch,
Altman, & Tung, 2016). Organizations wanting to make their international assignments a
success and a factor for talent attraction need to work on their expat management policies and
systems to create a congenial atmosphere for their employees abroad. A majority of the
developing economies are seeing an onslaught of foreign direct investment in a multitude of
their businesses and thus expatriation management has become of the key focus areas for
strategic human resource management professionals in emerging economies as well as
developed countries.

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