Page 206 - DMGT548_GLOBAL_HRM

Unit 11: Multinational Performance Management

Notes
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Caution It is of two types:
1. Off-line performance planning: this is done on the basis of certain predictions with
regards to the business goals and activities.
2. Online performance planning: this is done in terms of clear business strategy and
allocated funds.

Self Assessment

State whether the following statements are true or false:
1. Performance Management only manages the results of the performance.
2. Competitive assessment is a form of Performance management where employees are
rigorously compared against each other.
3. An individual’s performance is evaluated according to expectations of appropriate outcomes
and behaviour.

4. Performance management is the central process of the human resource cycle but does not
influence any other HR function.

11.2 Challenges in Multinational Performance Management

The multinational has specific expectations for each of its foreign affiliates in terms of market
performance and contribution to total profits and competitiveness. When evaluating subsidiary
performance against these expectations, it is important to recognise various constraints that
may affect goal attainment. They are:
1. Whole versus Part: A multinational is a single entity that faces an international
environment. Integration and control imperatives place the multinational in the position
where it decides that the good of the whole is more important than one subsidiary’s short-
term profitability.
A multinational establishes an operation in a particular market where its main global
competitor has a dominant position. The objective of entering the market is to challenge
the competitor’s cash flow with aggressive pricing policies. He explained that the balance
sheet of this particular subsidiary might be continually in the red but this strategy may
allow substantially higher returns in another market.
In another situation the multinational establishes a joint venture in a particular market in
order to have a presence there, even though it has low expectations in the short-term, and
may provide minimum resources to the venture.
So, the consequences of such global decisions for subsidiary management must be taken
into consideration for performance evaluation.
2. Non-comparable Data: Many a time, the data obtained from subsidiaries is not
interpretable. As illustrated:
(a) Sales in Brazil may be skyrocketing but there are reports that the Brazilian
government may impose tough new exchange controls within a year, thus making
it impossible for the multinational to repatriate profits. Is the subsidiary performing
effectively?

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