Performance Appraisal of International Employees

1. Performance Appraisal of International Employees Presented by: Ka Wai Li Phillip Gong Ethan Hung Lawrence Huang Joanna Chan

2. Today’s Agenda • Background of performance appraisal • IHRM Vs HRM • Employee characteristics in the United Stated and China • Two types of motivation theories in the U.S • External Rewards and Internalized motivation in China • US performance appraisal system • Chinese views of performance • Research Findings • Recommendations and conclusion

3. What is Performance Appraisal • A communication instrument aimed to evaluate each individual's contribution • To determine ability and achievement with reasonable accuracy and consistency • To help identify obstacles to top performance

4. Why Appraise Performance • Episodic evaluation helps supervisors acquire a better understanding of each employee's skills with the goal to facilitate train and develop abilities and potency • A opportunity to assess job progress, encourage interest and improve job performance by pointing out areas of development and by recognizing productive work • A feedback system that might otherwise be overlooked

5. IHRM Vs HRM IHRM has three dimensions: • The broad human resource activities of procurement, allocation and utilization • The national or country categories involved in IHRM activities • The three categories of employees of an international firm

6. IHRM Vs HRM HRM has six activities: • Human resource planning • Staffing • Performance Management • Training and Development • Compensation and Benefits • Industrial Relations

7. Differences between domestic and IHRM More HR activities The need for a broader perspective More involvement in employees’ personal lives Changes in emphasis as the workforce mix of expatriates and locals varies Risk exposure Broader external influences

8. Employee Characteristics in United Stated and China

9. Geographic Location North America, bordering both North Atlantic Ocean and North Pacific Ocean, between Canada and Mexico

10. Overview of United Stated Labor • 146 million Labor Force (2003) • Agriculture: 1.4% • Industry: 26.2% • Services: 72.5% • Unemployment rate: 6% (2003) • Average working hours • 8 hours/day • 5 days/week

11. Two Type of Motivation Theories • Content Theories • Focus on “what,” identifying the factors that cause people to put effort into work • Process Theories • Concern on “how,” the steps an individual takes in putting forth effort

12. Example: • Culture with • low Uncertainty • Avoidance in the • United States • Working Styles • - Lesser rules • -Lesser formalities • -More flexible • -More acting on changes

13. US values Freedom Individual Not a great emphasis on history Equality US Working attitudes Freely give opinions Competition is encouraged Present-oriented culture Having the equal rights in the workplace How related?

14. Maslow’s Hierarchy of Needs • Physiological needs • Safety and Security needs • Affiliation needs • Esteem Needs • Self-actualization What do we need?

15. Common Benefits • Fair working conditions • private working area • clean and warm environment • Cafeteria Plan • Cash (taxable). E.g. dividends • Healthcare plan • Group term life insurance • Disability insurance and accidental death and dismemberment insurance • Elective contributions to 401K plan. • Elective paid vacation/sick leaves.

16. How to motivate employees more effectively? • Praising their works • Internal job promotion • Fulfilling their affiliation needs • Incentive Travel • Company Parties/Activities

17. Geographic Location Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam.

18. Overview of Chinese Labor • 778 million Labor Force (2003) • Agriculture 50% • Industry 22% • Services 28% • Unemployment rate: 10% (2003) • Average working hours • 10 hours/day • 6 days/week

19. Chinese workers Characteristics • Focus on moralistic • Maslow’s Hierarchy of Needs • External Rewards • Physiological Needs • Internalized Motivation • Self-actualization needs

20. Example of “External Rewards” • Material incentives use to stimulate performance • Money as a motivator for employees • Bonuses have exist in China since 1978 • Pay system is based on individual performance • Reflect a strongly collectivist culture • Pay differentials based in length of service • Wage structures based on subsidies, bonuses & allowances • Performance is short-term, loyalty & belongingness are long-term

21. Example of “Internalized motivation” • Political Campaigning • Emulation Campaign • Tiananmen Square in 1989 • Japanese Companies in China • Send Chinese employees to Japan to learn in order to expose a foreign culture. • Build on a sense of belongingness & loyalty

22. Difficulties for Managers • Definition of Performance varies in different culture • No cross-cultural studies concentrate on performance appraisal • How is performance defined • Why is performance evaluated • How is it measured

23. Perspectives on Performance Appraisal • Tool of organizational control • Cognitive aspects of managers’ evaluation of performance

24. US Performance Appraisal System • To build up employee performance plan • Discuss performance plan • Evaluating • Rewarding • Provide assistant • Repositioning or removing • Identifying

25. American Views of Performance • Objective: To help achieve organizational objectives • Productivity and Quality • Achievement • Individual, group or organizational objectives • “rate the performance, not the person” • Concentrate upon performance items

26. Chinese views of Performance • Objectives: Maintain family control of business • Performance appraisals favor workers that are loyal to the family • Emphasis upon “moral” characteristics

27. Characteristics that affect Chinese Performance appraisal • Fatalism • Adapting oneself to the world • Confucianism • Moral character is the most important • Face • Blame external factors to keep the face

28. Research Findings • Survey by HR consulting firm Development Dimensions International (DDI) • Participants • Local Chinese and foreign invested companies

29. Results • 95.8% use a company-sanctioned performance management system • 79.2% use the system for all employees and some of the organization • 12.6% use their performance management system for only 60% or fewer of their employees

30. Results (cont’) Areas that are effective: • Structuring specific performance plans • Reviewing performance with employees at least once a year • Linking performance to pay • Holding supervisors accountable

31. Results (cont’) Areas that need improvement: • Developing the skills of appraisers • Evaluating performance in a fair manner • Reviewing approaches to differentiate the performance of employees • Increasing employees’ involvement in the performance management process

32. Recommendations and conclusion • Continual feedback • Communication skills • Equity, fairness, transparency • Forward-looking approach • HR as overseer

33. Thank You!