chapter 13 evaluating and rewarding international employees

Chapter 13

Evaluating and Rewarding International Employees

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Overview

• Performance appraisals

• Compensation of international employees

• Compensating foreign country nationals


Performance Appraisal

• Usually disliked by both parties

• General reluctance to provide feedback about performance– Particularly when negative

• Process inherently difficult

• Cultural differences add additional complexity


Giving an Evaluation

1.Requires memory of performance over evaluation period

2.Evaluate performance evenly throughout period

3.Compare performance with other people

4.Provide feedback and explain rewards


International Dimensions of Evaluations

• Limited time with employee if in different location

• Limited understanding of the work environment

• Limited understanding of the larger cultural environment


Who Should Evaluate Performance?

• Supervisor– Host country supervisor– Home country supervisor

• Peers

• Subordinates

• Customers


Evaluations by Host/Local Managers

• Manager is familiar with local cultural values & behavior

• Ability to assess employee’s cultural skills

• Daily interactions with employee

• Manager’s use of his/her cultural biases

• Language barriers

• Different perception of appraisal process

• May not be connected to overall company goals


Evaluations by Home Office Management

• Familiarity with work over career

• Speaks the same language

• Same cultural values and beliefs

• Shared cultural identity

• Geographically and psychologically distant

• Limited contact with home office– Often during problem

periods

• Lack of understanding of environment


Best Approach

Use both home office and local

supervisor evaluations for best results


When Should Performance Be Evaluated?

• Typically at 6 mo. or 1 yr. in U.S.

• International assignments complex– Often takes time to adjust

• Compromise strategy– Use both informal feedback early and formal feedback at

year end

• Consider cultural perspective toward evaluation

• Best option may be the “right” time for a given situation


What Should Be Evaluated?

• Environment in which the job is done– Cultural constraints

• Task or tasks themselves– Level of interaction with host culture

• Personality of the expatriate– Predictors of adjustment


Using Financial Indicators to Measures Performance

• Not always easy to interpret due to– Currency fluctuation

– Conversion issues

– Differences in accounting methods


Guidelines for Expatriate Evaluation

• Rate the assignment by determining difficulty level & weight evaluation

• Combine & weigh assessments by home- and host-country managers

• Involve people with expatriate experience

• Review evaluation with home office prior to offering feedback to employee


Determining Assignment Difficulty

• Extent of language adjustment

• Degree of cultural toughness

• Economic and political stability


Evaluating Foreign-Born Employees

• In addition to other considerations, managers must decide how to deliver feedback– Subjective or objective

– Formal or informal

– Focus on tasks or interpersonal relations

– Group vs. individual format

– Praise vs. criticism


Differences in Performance Evaluation Systems Across Three Countries


Compensation

• More than just level of pay– Health care– Pension plans– Vacation– Personal time off– Recreation/health facilities

• Great variations within a culture and across cultures


Meaning of Compensation

• Exchange of effort and output for wages and benefits– Western individualist cultural perspective

• Achievement

• Protection or safety net

• Entitlement and obligation


Compensation (cont’d)

• Great variations across countries

• Many companies look for low-cost labor

• Labor not the only cost a company should consider

• Companies should consider tax issues for both the company and for the employee

• Perks part of total compensation


Oceans Apart: CEO Compensation In Several Countries


Paid Vacation Days in Various Countries


Basis for Compensation

• Equity principle

• Bonus system and net pay

• Loyalty and commitment

• Philosophy toward compensation is changing in many places

• Systems becoming more similar, yet still large differences


Predicted Compensation Practices across Cultures


Potential Sources of Costs Associated with Expatriation


Models for Expatriate Compensation

• Ad hoc approach– Individually negotiated

• Localization– Paying the same as local nationals

• Balance sheet method– Keep the expatriate “whole”– Same standard of living


The Balance Sheet Approach to Expatriate Compensation


Compensating Foreign Country Nationals

• Peg to U.S. standards

• Use prevailing country standards– Most common

• Companies must deal with discrepancies among expatriates, local, and third-country nationals– Three groups often working together

chapter 13 evaluating and rewarding international employees

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