Module -3 IHRM Policies and Practices - Part B 7 hours

Global Performance Management

Introduction, Key components of PMSs Factors affecting PMSs Culture and PMSs, PMSs in
six leading economies: China, India, Japan, South Korea, UK and USA, PMS for expatriates
Total Rewards in the International Context
Recap: differentiating between PCNs, TCNs and HCNs Introduction: the current state of
total rewards Complexities faced by IHR managers, International total rewards objectives
for the MNC Newer forms of international assignments, Key components of global total
rewards programs. Approaches to international compensation Repatriation issues,
International trends in global total rewards.
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Module -3 IHRM Policies and Practices

Global Performance Management

Introduction

Multinational enterprises (MNEs) play a crucial role in today’s globalized economy, and
“These large, global firms dominate the world business setting because they have the capacity
to do business across a wide variety of settings” (DeNisi, Varma, & Budhwar, 2008, p. 225).
Moreover, MNEs employ large parts of the global workforce and therefore face challenges as
a result of transferring human resource management (HRM) systems (Budhwar & Sparrow,
2002; Festing, Dowling, Weber, & Engle, 2011). “One of the key HRM issues facing
contemporary organizations” (Boselie, Farndale, & Paauwe, 2012, p. 369) is performance
management (PM). Described as “an extension of performance appraisal” (Lindholm, 2000,
p. 45), PM links individual objectives to the corporate strategy by defining standards and
goals and by applying certain consequences (e.g. rewards, development, etc.) to the
evaluation of work (Cascio, 2012a; Fletcher, 2001). Consequently, PM is highly relevant for
both the organization and the individual, in that the organization needs PM to ensure the
realization of its business strategy, while for employees it determines the distribution of
organizational resources and career developments (Alimo-Metcalfe, 1993; Evans, Pucik, &
Björkman, 2011). While the expression ‘PM’ names the management practice itself, the term
‘global performance management’ (GPM) covers this practice in the international context of
MNEs and their required decision about standardization and adaptation of the practice
(Engle, Dowling, & Festing, 2008; Vance, 2006). As being part of international HRM the
targets of GPM research correspond to those in international HRM. These are the
identification of country-specific peculiarities, the comparison and explanation of them in the
context of respective cultural and institutional influences, and implications for internationally
operating organizations (see e.g. Festing et al., 2011). Due to the complexity of different
national contexts, global competition, and the broad diversity of the global workforce, GPM
is a highly relevant but challenging research field, and Cascio (2012a) emphasizes that “there
is much to learn in this evolving area, and it promises to challenge researchers for years to
come” (2012a, p. 2). However, in 2008, Varma, Budhwar and De Nisi observed “the absence
of reliable literature” (p. 3) concerning GPM. In recent years, though still in its infancy, the
terrain of GPM has been charted by several scholars (e.g. Bailey & Fletcher, 2002; Björkman,

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Barner-Rasmussen, Ehrnrooth, & Mäkelä, 2009; Cascio, 2012a; Claus & Briscoe, 2008;
Claus & Hand, 2009; Engle et al., 2008; McKenna, Richardson, & Manroop, 2011).
However, empirical investigations based on a systematic conceptualization are still scarce,
and the body of literature covering GPM has a patchwork character, referring to different
concepts and delivering diverse country-specific data concerning single PM elements
(Cascio, 2012a; Engle et al., 2008).

As McKenna et al. (2011) add, most contributions to PM research focus on the managerial
and functionalist paradigm and neglect employees’ perspectives, though the workforce’s
dissatisfaction with PM and the gap between applied practices and employees’ preferences
have been reported previously (e.g. Pulakos, 2009; Von Glinow, Drost, & Teagarden, 2002).
The consideration of employees’ preferences is of particular importance in today’s diverse
organizations, where the neglect of various needs and values in PM risks discrimination
against minorities (Kamenou & Fearful, 2006). Strong support in identifying and
emphasizing the need for more research on the variety of perspectives and preferences comes
from authors investigating the discriminatory impact of PM practices on women
(AlimoMetcalfe, 1993; Hind & Baruch, 1997). Though women are still highly
underrepresented in senior management positions (OECD, 2008; Terjesen & Singh, 2008)
and PM systems influence their careers (Alimo-Metcalfe, 1993), research on the
discriminatory impact of PM on women is extremely understated. Targeting these research
gaps, the present thesis focuses on the challenges of balancing the standardized solutions and
diverse preferences of GPM in MNEs, not only on the country level but also on the level of
individual differences and preferences. In four manuscripts, which build the core of this
thesis, data on practices and preferences in PM from one MNE’s subsidiaries in China, the
USA, and Germany (as well as South Africa and France) are analyzed with respect to the
participants’ location and gender. It is important to note here that balancing GPM in the MNE
is the focus and starting point of this work, and consequently we have chosen an MNE to act
as our sample. However, we approach this topic by analyzing countryspecific characteristics,
global best practices, and employees’ preferences in PM. Hence, we use the term ‘GPM’
when the international context and the tension between standardization and adaptation is
emphasized, while we refer to the unspecified term ‘PM’ in all other cases.1 This thesis seeks
to enrich current debates in the international HRM literature by integrating dominant and
critical perspectives, cultural and institutional perspectives, and the concepts of divergence
and convergence. It contributes further to the growing body of literature on GPM in MNEs by
presenting an encompassing literature review on country-specific characteristics on the one
hand and a literature-based overview of so-called ‘best practices’ in PM on the other.
Furthermore, it delivers a conceptualization of GPM as well as a questionnaire to investigate
and compare practices and preferences in this area. This methodological tool allows for the
inclusion of employees’ voices in researching PM and designing or evaluating PM systems in
practice. Moreover, initial empirical findings on PM practices and preferences in China,
Germany, the USA (and South Africa) are provided, and gender-specific preferences in PM
across five countries (China, Germany, the USA, South Africa, and France) are presented. By
including South Africa and China on the one hand and Germany and the USA on the other,
we further aim to contribute to the very limited empirical knowledge on GPM in the leading
emerging economies, i.e. BRICS (Brazil, Russia, India, China, and South Africa) countries as

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compared to so-called developed countries (see e.g. Cassiolato & Martins Lastres, 2009). In
order to cover these goals and contributions, each of the four manuscripts follows a particular
research focus. While the first seeks a conceptualization of GPM and country-specific
profiles for China, Germany, and the USA, the second investigates these propositions
empirically. The third manuscript contrasts employees’ preferences from China, Germany,
South Africa, and the USA with literature-based PM ‘best practices’, and it also questions the
global applicability of the latter. The research question of the fourth paper targets the
discriminatory impact of PM and asks if there are gender-specific preferences in GPM. In the
next section an overview of the research traditions, paradigms, and central theses in GPM
research will be provided, followed by the differentiation and definition of the PM concept.
Next, the theoretical perspectives on GPM in MNEs, reflected by the four manuscripts, are
presented on a deeper level than the lengths of the respective papers allow. Based on this, an
overview of the four manuscripts will be given, summarizing the respective theoretical
perspectives, addressed questions, and contributions, together with their publication status.
The methodological approach and common research design underlying the three empirical
manuscripts will be explained thereafter. Again, the aspects mentioned here complete the
methodological sections of each manuscript by providing background information,
connective challenges, and arguments. After presenting the four manuscripts, the conclusion
will summarize the results and will seek to leave the reader with an idea of the encompassing
contribution of this thesis. In line with this summary, the limitations and implications of this
work, as well as perspectives for future research, will be discussed.

Key Components of Performance Management Systems

Any effective performance management system includes the following components:

1. Performance Planning: Performance planning is the first crucial component of any

performance management process which forms the basis of performance appraisals.
Performance planning is jointly done by the appraisee and also the reviewee in the
beginning of a performance session. During this period, the employees decide upon
the targets and the key performance areas which can be performed over a year within
the performance budget., which is finalized after a mutual agreement between the
reporting officer and the employee.
2. Performance Appraisal and Reviewing: The appraisals are normally performed
twice in a year in an organization in the form of mid reviews and annual reviews
which is held in the end of the financial year. In this process, the appraisee first offers
the self filled up ratings in the self appraisal form and also describes his/her
achievements over a period of time in quantifiable terms. After the self appraisal, the
final ratings are provided by the appraiser for the quantifiable and measurable
achievements of the employee being appraised. The entire process of review seeks an
active participation of both the employee and the appraiser for analyzing the causes of
loopholes in the performance and how it can be overcome. This has been discussed in
the performance feedback section.
3. Feedback on the Performance followed by personal counseling and performance
facilitation: Feedback and counseling is given a lot of importance in the performance
management process. This is the stage in which the employee acquires awareness

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 from the appraiser about the areas of improvements and also information on whether
the employee is contributing the expected levels of performance or not. The employee
receives an open and a very transparent feedback and along with this the training and
development needs of the employee is also identified. The appraiser adopts all the
possible steps to ensure that the employee meets the expected outcomes for an
organization through effective personal counseling and guidance, mentoring and
representing the employee in training programmes which develop the competencies
and improve the overall productivity.
4. Rewarding good performance: This is a very vital component as it will determine
the work motivation of an employee. During this stage, an employee is publicly
recognized for good performance and is rewarded. This stage is very sensitive for an
employee as this may have a direct influence on the self esteem and achievement
orientation. Any contributions duly recognized by an organization helps an employee
in coping up with the failures successfully and satisfies the need for affection.
5. Performance Improvement Plans: In this stage, fresh set of goals are established for
an employee and new deadline is provided for accomplishing those objectives. The
employee is clearly communicated about the areas in which the employee is expected
to improve and a stipulated deadline is also assigned within which the employee must
show this improvement. This plan is jointly developed by the appraisee and the
appraiser and is mutually approved.
6. Potential Appraisal: Potential appraisal forms a basis for both lateral and vertical
movement of employees. By implementing competency mapping and various
assessment techniques, potential appraisal is performed. Potential appraisal provides
crucial inputs for succession planning and job rotation.

ACTORS AFFECTING PERFORMANCE MANAGEMENT SYSTEMS:

For performance management system to be implemented, there are a number of conditions
that must exist prior to its execution. These factors include:

• Ability of manager to mobilize the organization.

• Effectively communicating the roles, duties and responsibilities of all such individuals
who are the participants in the process of bringing about change.
• Transparency and Simplicity
• Practicality and Participation

Culture and Performance Management System

Performance management is a collective process of setting objectives in line with

organizational mission and goals and monitoring individual performance in the achievements
of these objectives through constant communication and feedback. Inherent in the
communication and feedback are coaching and mentoring, information on performance
directions, rewards, and in some cases penalties. Organizational culture relates to
relationships and shared norms, beliefs, and values developed over time through both formal

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and informal arrangements in the organizational setting. National or ethnic culture, on the
other hand, emphasizes the indigenous or traditional dictates and practices that define the
identity, both individually and collectively, of those who constitute organizational
participants.

PMSs in six leading economies

Performance management in China

the human resource environment in China through a brief summary of the main
characteristics of human resources management (HRM) and employment profile in China.
Performance management (PM) is being promoted as a modern western HRM concept in
China. The adoption of the western approach in China is further hampered by the lack of
strategic orientation of many Chinese firms and the deficiency of HR skills to design and
implement an effective PM system. N. Lindholm’s survey of 604 Chinese managerial and
professional employees from multinational corporations in China found that they were
satisfied with the western-styled performance management system (PMS) adopted in their
company. A number of key factors influence the PMSs in China, mainly in the design of the
performance indicators and the process of conducting performance appraisal. The chapter
presents the historical development of performance management and appraisal systems in
China.

Performance Management in India

he science of performance management has come into focus in recent times, with many
Indian companies revisiting their approach towards performance measurement and
management. PwC’s recent study on Performance Management in India indicates that 52
percent of organizations are making or planning to make a change to their current
performance systems. While many of these changes are aimed towards making the process
more transparent and development focused, the approach adapted varies widely. At one end
we have organizations who are disbanding ratings altogether while others are looking at
rejigging the rating scales or relaxing bell curve based forced ranking.

What is driving this need for change? PwC’s research indicates that these changes are
attributable to a growing discontent with the current systems and processes – only 12 percent
of organizations state that they found their current performance management systems highly
effective in meeting set objectives. Key impediments faced by companies were –
expectations not being clearly defined and agreed upon, managers’ inability and
unwillingness to have difficult conversations and difficulty in assessing performance
objectively.

While change may be inevitable, it is interesting to reflect on how organizations can leverage
these changes to address immediate challenges and create long-term sustainability. Some key
learnings that the study revealed are:

1. Importance of managerial capability in driving change in approach: For organizations

to benefit from structural changes that they are making, they must ensure that their approach

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to performance management is in sync with their managerial capability and maturity. Most
organizations that are disbanding forced ranking, pushing down ratings, decisions and
decentralizing authority must ask themselves if they are simultaneously enabling managers to
drive the performance process effectively. This means evaluating the capability of their
managerial cadre, assessing their ability to demonstrate maturity in exercising judgement and
establishing a governance framework that can control the possible misuse of this power. India
has witnessed considerable job inflation in the last decade and this has resulted in the rise of a
pool of young and enthusiastic but often inexperienced managers. These individuals have
technical acumen but may not be equipped to deal with softer aspects of the job such as
navigating difficult conversations or employing managerial discretion. This adds a layer of
complexity to the responsibility that HR has in enabling these managers and establishing
sufficient process checks to protect employee interests. In the course of our research, we also
encountered organizations that have significantly reduced the scope for managerial discretion
by hardcoding ratings using a combination of role expectations, business goals and market
realities. While this has improved process transparency and employee satisfaction with the
system, how it impacts the credibility of the manager is still to be evaluated. Success of this
model could mean a paradigm shift for performance management in the future.

2. Balancing the achievement of business objectives while making employees an equal

stakeholder in the process: The primary focus of performance management in India
continues to be delivery of business goals. 93 percent organizations expect their PMS to drive
business objectives while less than 10 percent look at performance process to drive creativity
or recognize team contribution. This unidimensional approach to performance management
often leads to one of the major stakeholders, the employee, being overlooked. They are focal
point of the entire system and yet often have little say in the overall process outcomes. It is
increasingly being appreciated that a system which only focuses on business outcomes and
acts as a vehicle of distribution of rewards ends up disengaging employees. What employees
are looking for today is to be part of an ongoing performance experience rather than just a
mechanistic annual exercise. Similarly, recent research in neuro-leadership alludes to the fact
that rating systems that reduces a year’s worth of employee effort into a single number or
rating can often be dehumanizing and can negatively impact morale. While all this has led to
organizations making development agendas central to the performance management process,
one needs to be careful that the fine balance between business prerogatives and people
outcomes is not compromised.

3. Innovative models of rewarding performance: Our research indicates that outcomes of

performance evaluation have a closer linkage to immediate term decisions like annual bonus
payout rather than longer term decisions like career progression and long-term incentives.
While monetary incentivizing of performance continues to be the norm, there is a growing
appreciation of the negative impact of heavily linking performance management to rewards.
Interestingly, it is perceived that this linkage distorts decision-making on ratings (20 percent),
undermines morale (8 percent) and creates interpersonal issues within the teams (12 percent).
Success of new performance management models will hinge on the establishment of more
innovative modes of rewarding performance. The time has come for organizations to
seriously evaluate if financial reward is infact the best available motivational lever and

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whether hard-coding performance outcomes with financial rewards allows organizations to
consistently overachieve.

There is definitely no uniform approach to managing performance and each organization’s

approach must draw on its context. Organizations should explore the objectives they want to
achieve and evaluate managerial maturity, employee agenda, HR capability and relevance of
people's capability to succeed before investing in any changes to current systems. This
exploration, more than anything, will decide the ease, appeal and success of any new
performance management system implemented.

Performance Management system in Japan

the Japanese performance management system (PMS), whose strength lies in its ability
to support employee and organizational learning. It describes the traditional model and
its historical development. The chapter deals with a discussion of procedural justice in
the new system, an emerging issue in PM in Japan. This issue has become critical
because the modifications in the system of PM just described involve a shift in
psychological contract for employees from that based on the long-term relational nature
to that based on the transactional relationship between employees and employers. The
traditional Japanese PMS is often called "learning-centered," since, throughout the
system, employee learning and skill/knowledge acquisition processes are explicitly
encouraged. The origins of the Japanese human resource management practices go back
to the turn of the twentieth century when Japanese industrialization began to take off and
economic and technological advances generated pressure for more effective employment
arrangements.

Performance Management system in South Korea

This deals with the development, features and issues of Performance management
systems (PMS) and factors that are evaluated to influence its changing nature. PMS in
South Korea can be best understood in the context of the transformation companies have
gone through in the nature of their relationship with their human resources (HR) and HR
management as a whole within Korea's institutional and cultural context. PMS developed
within this context and Korean HRM, which was characterized as paternalistic and
collectivistic with a seniority-basis of lifetime employment and tenure-based pay.
Koreans' emphasis on affective relationships is often extended to contract-based
relationships, such as employment relationships. As far as the purposes of performance
appraisal (PA) systems implemented in Korea are concerned, an administrative purpose
is dominant, although these have been gradually extended to feedback and
developmental purposes. The main source of PA information is a superior's observation
and judgment. PA done by superiors is the dominant form in Korea.

Performance management is one of the most debated topics in all of talent management. This
is particularly true in the United Kingdom, where recent geo-political events have combined
with several other factors (i.e., the COVID-19 pandemic, the Great Resignation and unique

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British professional and social norms) to make it exceedingly difficult to implement effective
performance management processes.

As we are not fortune tellers, it’s pretty challenging to predict how talent management in the
UK will evolve over the next two to five years. However, we can suggest a number of
performance management best practices that will assist UK-based organizations as they look
to tackle Britain’s current obstacles when it comes to performance management. If there’s
anything we have learned in the last two years, it’s that tough times are nothing but an
opportunity to take a pause, have a think and turn adversity into a learning experience –
one that positions your organization for the better.

In this article, we will take a look at each and every one of the different factors that are
impeding performance management in the UK. Whether external or internal, we’ll provide
tips and guidance for organizations to tackle today’s most prominent challenges, implement
best practices and take their performance management to the next level.

Performance Management system in UK

Performance Management Challenges in The UK

Before we jump into the latest trends in performance management, we first need to fully
understand the current challenges that UK employers face in making their performance
review process an effective one. On the bright side, and as a sort of spoiler alert, we can
assure you none of them is impossible to overcome.

The Cultural Clash with Self-evaluations

Among many other things, performance management involves a process in which employees
and managers get together and review past objectives, discuss different ongoing projects and
set a bar for future reviews. This is the moment when employees need to provide superiors
with an honest evaluation of their performance, particularly when they have met or failed
to meet their quarterly or yearly goals. This brings us to the element of self-evaluations.

Self-evaluations require a strong determination from employees to accept

responsibility for both their achievements and shortfalls. And for a characteristically polite
and more reserved culture in the UK, this could be a problem. Where US-based employees
may not feel ashamed of highlighting their successes, Brits may feel like it’s blowing one’s
own trumpet.

As politically correct as it may sound to let others – especially managers or team leaders –
speak about an employee’s achievements, this is not the best approach for performance
reviews. A thorough self-assessment can help employees feel more engaged in the appraisal
process as they gain confidence and insights while setting goals for the future. This cultural
element dampens the performance management process in the UK, eliminating a crucial tool
for critical reflection and skill development.

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Post-Brexit Employment Regulations

Brexit has brought numerous changes in various senses to the UK, both professionally and
socially. And, when we narrow our scope to HR, the impact has been significant. Anyone
can check online to see how to comply with all current regulations. But, in short, UK
employers need to follow certain criteria as regards salaries, education, job level and visa
duration in the British territory when hiring non-UK employees.

Now, how do Brexit regulations affect performance management processes?

At first glance, there’s no reason why recruiting limitations should negatively impact a talent
management initiative. However, if we dig a little deeper, we’ll notice that they also trigger
a talent loss for organizations. In other words, foreign employees who don’t comply with
these regulations and/or can’t (or don’t want to) apply for permanent residency need to leave.

This talent exodus has exacerbated skills gaps that the current workforce needs to cover until
a local (or Brexit-compliant) fit is sourced, engaged and trained to fill the void. What can you
expect of a performance management process that evaluates employees doing their best to
cover a skills gap they were not properly trained for? Inaccurate feedback that negatively
impacts employee experience by generating a sense of frustration and, eventually, affecting
salaries.

Current Performance Management Techniques in the UK

In the words of Nietzche, the German philosopher, “the worst enemy you can meet will
always be yourself.” And this is certainly the case for many talent management teams in the
UK. One of the biggest challenges they need to address is their current performance
management techniques. More specifically, their traditionalist style.

One may then ask “what’s the problem with keeping a traditionalist style?”

This methodology tends to rely on annual appraisals that focus on past objectives that were
set a long time prior to the performance conversation and, more often than not, become less
important or even obsolete when the time to review arrives. According to pre-pandemic
research, over 70 percent of UK employers claimed to be using annual appraisals.

In comparison to modern approaches that champion regular performance conversations that

promote continuous development, traditionalist methodologies can leave employees feeling
dissatisfied with the entire performance management process.

With 49 percent of UK employees not having regular performance conversations with

their managers, organizations should rethink their methodologies in order to reap the benefits
of the modern approach to performance management.

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Performance Management Best Practices to Tackle UK Challenges

Performance management is in a constant state of evolution, not only with respect to its
techniques and methodologies but also towards its aim.

Performance reviews are shifting to an employee-centered model, with engagement and

productivity as core tenets. Now is the moment for organizations to prove how effective
performance management is in empowering employees. Thus, UK employers need to adapt
to an agile framework that improves the employee experience as a whole, where value and
professional development can take place.

Still, we’re not here to state what future performance management processes should be like,
but how UK organizations can achieve effectiveness in their reviews and fully address the
challenges stated above.

1. Peer Feedback: Compensate for Cultural Challenges towards Self-evaluation

One of the latest performance management trends is incorporating feedback from more
than one source.

By incorporating peer feedback, employers not only maximize their source of information as
regards employee performance but also open the door to unlocking hidden talent. Given the
previously discussed cultural uniqueness of the UK, valuable skills may remain in the dark
without employees providing useful and honest evaluations with respect to what it was like to
work with a colleague in a given project or how they contributed to achieving a goal.

While there are various ways to lead and implement this socially based performance
management best practice, all of them hold the same truth: it works. Remote work has
decreased the amount of manager-employee interactions, and solely relying on managerial
feedback is not viable. The digital era has increased the need for teamwork, and employers
nowadays relate more often with co-workers than superiors.

2. A Holistic Approach to Performance Management

Siloed talent management processes limit agility. In fact, they may even impact employee
experience negatively, turning talent retention into a bigger challenge. The current shift in
performance management models calls for coordination among various talent
management initiatives, where you can get valuable information from one and implement it
into another.

Let’s take, for example, the talent loss difficulties UK employers are facing due to Brexit.
Organizations need to cover open roles and responsibilities that require specific skill sets. In
a holistic framework, where talent management initiatives are connected to each
other, managers can find, propose and follow up on development plans during a
performance review, discovering hidden interests and developing new skills. This approach
works toward improving the employee experience and productivity, unlocking hidden

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talent and maximizing the effectiveness of all initiatives by finding relevant relations
between one another.

Moreover, unified talent management initiatives help avoid confusion or misinformation as

regards one crucial element in this increasing digital work environment – data, which plays a
major role when implementing a holistic approach.

The best way for organizations to leverage data is to activate all of their talent
management initiatives under the same platform. In this way, it becomes the stone that
kills both birds. On the one hand, HR professionals and managers get a better insight into the
information they collect from the different touchpoints of the employee journey and can
implement it to increase retention (one of the most important current goals). On the other,
they maximize the effectiveness of their performance management processes not only by
enhancing productivity but also by empowering their workforce to develop professionally
within the organization.

3. Continuous Performance Management

One of the most crucial best practices in modern performance management initiatives is
implementing continuous reviews. Once again, with the inevitable evolution of quarterly and
yearly goals, annual appraisals lose ground, impact and effectiveness. By implementing
ongoing feedback, employers give place to a shift in employee appraisal philosophy.

Continuous performance management doesn’t change the performance review basics.

However, small adjustments occur when regular check-ups take place. Managers are still
in charge of reviewing past objectives while also decreasing the risk of them becoming
obsolete by applying necessary changes in the shape of follow-ups. This approach broadens
the scope of an employee performance review by implementing a forward-looking
evaluation.

By adapting to a continuous performance management approach, managers improve the

awareness of the skill sets among their workforce. Through 1-on-1 talks, leaders can better
understand the desires and interests employees have, review past and future goal-setting
and implement feedback in a more consistent way, meeting both organizational and personal
objectives at the same time.

Performance Management System in USA

Performance Management (PM) is more than the end of year appraisal. It’s about translating
goals into results. Performance Management focuses not only on individual employees, but
also on teams, programs, processes and the organization as a whole. A well developed PM
program addresses individual and organizational performance matters necessary to properly
create and sustain a healthy and effective results-oriented culture. Public agencies have a
greater challenge to define and measure results than private sector organizations, whose
results are almost exclusively tied to financial goals. Public agencies are also required to
comply with complex regulations that govern their performance management programs.

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Effective PM will help your organization raise individual performance, foster ongoing
employee and supervisor development, and increase overall organizational effectiveness.

PMS for expatriates

In order for an employee to help the organization achieve strategic success through his or her
performance, he/she must work at optimal levels towards very clear and specific objectives.
In other words, the organization must design and implement a performance management
system (PMS) that empowers employees and allows them to work at optimal levels.
However, a review of the related research shows but when it comes to expatriates, most
organisations do not develop dedicated PMSs – instead, it seems that most organizations
evaluate and manage expatriates on an ad-hoc basis, often leading to dissatisfaction with the
outcomes and conduct of the PMS, and subsequent dip in performance levels and quality. In
this chapter, we briefly trace the history of PMSs, with particular emphasis to PMSs related
to expatriates, and discuss some recent PMS models. We further discuss additional contextual
variables that should be incorporated into effective PMSs, and conclude by offering
guidelines for designing an effective PMS for expatriates.

TOTAL REWARDS IN INTERNATIONAL CONTEXT

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Meaning and Definition of Reward

A Reward can be defined as any form of gratification that a employee gains from his or her
employee with an employer. Reward is a dynamic instrument. it not only creates
opportunities for the fulfilment of motivational seed, but also enhances he intensity of
motivation. this time employee motivation doubles every time he/she is suitably rewarded.
Enhanced motivation leads to higher performance, which in turn leads to higher
compensation.

According to White & Klein, " Reward can be defined as something perceived as beneficial
or advantageous to particular actors interests".

The Current State of Total Reward

Total reward is the term that has been adopted to describe a reward strategy that brings
additional components such as learning and developments, together with aspects of the
working environment into the benefits package. It goes beyond standard remuneration by
embracing the company culture, and is aimed at giving all employees a voice in the
operation, with the employer in return receiving an engaged employee performance. Total
Rewards is an approach to reward Management which emphasises the need consider all
aspects work experience of value to employees, not to few such as pay and employee
benefits. It aims to blend financial and nonfinancial elements of reward into a cohesive
whole. Remote work gives employees more freedom to select the employment opportunities
they like best. With more power shifting to the workforce, businesses need to be proactive in
developing total rewards policies that are not only equitable and competitive, but also
appealing.

To retain current talent and attract new employees, companies have to approach their total
rewards policy holistically. including both financial and non financial incentives. This is
especially important given cultural context and the discussion around equality. It is the
organisation responsibility to structure rewards in way that guarantees transparency and
fairness. In addition, employees respond strongly to whole person total rewards program that
include perks like mental health care, student loan repayment assistant learning and
development budgets, and similar non-traditional offerings.

Having an attractive, forward thinking total rewards policy will not only act as a great
motivator for employees to perform as their bet hut will take them feel appreciated.
Additionally, benefits like these will help employers to stand out from the competition, which
is key in an increasingly competitive talent marketplace.

Complexity faced by IHR manager

1) Mandatory Salary increases

2) Varying compensation law's in different countries.

3) Balancing Performance Metrics

Prof. Manjunatha S, MBA, SVIT Page 13

4) Increased use of outsourcing.

International Total reward objectives for MNC

1) Developing total rewards policies that maximize recruiting And retention efforts.

2) Developing cost- effective global total rewards policies.

3) Creating global total rewards policies that result in fair processes and outcomes.

New forms of international Assignment

1) Short term assignments are similar to expatriate assignment, but employees usually live in
the foreign country for only 6 to 12 months.

2) Expatriate experience are mainly project based assignments where employees travel to
multiple countries but for shorter periods of time (1 or 2 month's).

3) International business travel assignments involve employees travelling to one or more

countries for 1 to 3 weeks at a time.

Key components of global total rewards programs

1) Base salary

2) Incentives

3) Allowances

- Cost of living allowance

- Housing allowances

- Home leave allowance

- Educational allowance

- Relocation allowance

- Spouse Allowance.

4) Benefits- Entertainment, Festival, gifts, Club, hospitality etc.

Prof. Manjunatha S, MBA, SVIT Page 14

Approaches of Compensation in Global Assignment

Approaches of compensation in global assignments are as follows

1) Going rate approach.

2) Balance sheet approach and

3) Other approaches

1) Going Rate Approach

When the compensation packages of the expatriates are determined on the basis of the salary
structure prevailing in the host nation, it is called the going rate approach or market rate
approach. Typically, the salary in this method is decided on the has is of the survey
undertaken in the host country where the business is located However, international
companies usually grant additional pay and benefits to expatriates if they happen to work in
nations where their pay is low.

2) Balance sheet approach

It is also known as the build-up approach. The balance sheet approach. is arguably the
dominant compensation system used in multinational companies. The approach has been used
for more than 20 years, yet nearly two of every three companies still use a form of this
approach to compensation.

The basic objective of the balance sheet approach is to ensure that employees can maintain a
standard of living in the country of assignment similar to that which they enjoy in their home
country. This keeps the shock from changes in standard of living relatively small.

The basic premise of the balance sheet approach is that companies use a set of allowances or
differentials to maintain employees purchasing power while on international assignments.
Fundamentally, assignees should neither benefit nor be hurt economically as a result of
relocating.

3) Other Approaches

A) Region Based Approach

B) Hybrid Approach

C) Citizens Approach

D) Lump Sum Approach

Prof. Manjunatha S, MBA, SVIT Page 15

Repatriate Issues in Global Context

1) General Cultural Re-adjustment

2) Job Re adjustment

3) Financial and Psychological Shock

4) Lack of Career Development

International Trends in global total rewards

1) Diversification of work and multi polarization of compensation levels

2) Mixed compensation structure with real time payroll

3) From ladder shaped to pulse shaped's compensation Mechanism.

4) Digital Recognition and Incentives.

5) From External Incentives to self motivation

6) From regular feedback to instant Rewards .

7) From total rewards to full experience.

8) From internal equality to internal equity.

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