Performance Appraisal of International Employees

1. Performance Appraisal of International Employees Presented by: Tat on Lo Caroline Wong Ki Ming Chan Victor Le Byron Maldonado

2. Today’s Content Tat On -- Introduce the topic and explain the importance of the topic to IHRM. Caroline -- Present the theoretical framework and existing HRM and IHRM concepts and systems. Ki Ming -- Present a full profile of the target country and show how different the cultures are between U.S. and China. Victor -- Present on the practical issues and IHRM questions dealing with China and U.S. Byron -- Present the research findings and results of data analysis and explain how it is linked to what we have studied through the course and conclude our presentation and provide suggestions for the class.

3. What is Performance Appraisal • A communication tool to measure each individual's contribution • To evaluate talent and achievement with sensible consistency and accuracy • To help distinguish barriers to top performance

4. Why Appraise Performance • Periodic evaluation helps mangers to have a better understanding of each employee's skills with the goal to facilitate, train and develop abilities and power to their employees • A chase to assess job development, encourage interest and enhance job performance by pointing out the development and recognizing productive work • A feedback system that might otherwise be overlooked

5. Importance of IHRM • Increased focus on international companies and on the human resource issues, functions, policies and practices that result from the strategic activities of these

6. HRM in China • HRM not considered strategically important in their globalization process. • Globalization increasing more attention given towards subject. • Shortage of experienced HR Managers in China or HRM materials in Chinese.

7. Performance Appraisal • “performance appraisal, if it is to succeed, required listening, giving and receiving feedback, and counseling and dealing with emotions. Ironically, although smooth interpersonal relations are emphasized in the Chinese culture …they tend to be reluctant to pursue two-way communications or provide counseling.” (International Journal of Manpower)

8. Cultural Issues • Hofstede – Power Distance • Harmony • Saving Face

9. Comparison • Reward system • USA: A wide variety of rewards are used in the incentive system. • PRC Range of wage and salary is narrow; bonus is not based on individual performance; pay is more motivating than in the USA. • Performance appraisal • USA: Two-way communication and counseling are widely used in the performance appraisal process. • PRC: Superiors have absolute authority to evaluate subordinates; standards of performance are vague and generic.

10. Participative management • USA: Participative management is welcome and encouraged, even if it is not prevalent yet. • PRC: Collective leadership is widely used but the participation of workers in major decisions is superficial and symbolic. (International Journal of Manpower)

11. Employee Characteristicsin China

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

13. Overview of Chinese Labor • About 800 million Labor Force (2004) • Agriculture 50% • Industry 22% • Services 28% • Unemployment rate: 12% (2004) • Average working hours • 10-12 hours/day • 6 days/week

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

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

16. Example of “Internalized motivation” • Political Campaigning • “emulation campaigns” in communist China • labor heroes: Tiananmen Square • Japanese Companies in China • Chinese employees: send to Japan • learn and expose a foreign culture. • Build on a sense of belongingness & loyalty

17. Practical Issues In IHRM

18. East Meets West • Different does not equal wrong • Must adapt to culture change • Flag-planting does not always work

19. U.S. Management • Individualism • Low power distance • Self-actualization needs • Short-term view

20. Chinese Management • Collectivism • Silent Achievers • Need for Affiliation • Need for Status • High power distance • Long-term view

21. Example • Less motivated when Individual performance and short-term goal is emphasized. • Would actually purposely slide back into the group where he/she feels comfortable

22. Chinese Motivation Hierarchy • Social acceptance • Work ethics and life goal priority • Safety within group harmony and family support • Social awareness • Self actualization to the service of collectivity • Social altruism • Leader fitness for multi-dimensional development

23. Future Outlook South China Morning Post (Hong Kong) • And the survey says: The long term outlook for China’s HR problem is bright but the short term is pessimistic. “I have come the the conclusion that you can become rapidly obsolete as a China expert”. - Rick A. Swaak Senior Consultant Frank E. Allen & Associates

24. Problems • State owned industries took in losses of 43.6% • USD$6.4 billion • Multinational unrest • Intellectual property rights have been an ongoing struggle between China and U.S. • Chinese leadership is concentrated in the hands of a few aging Communist Party men. • Corruption and bribery is on the rise

25. Guanxi • Relationships • Chinese practice of developing and nurturing intricate networks of personal relationships, sometimes giving them priority over bottom-line performance. • Makes hiring of Chinese nationals difficult • Struggle with Western Practices • Instead of an emphasis on process and integration across the business, for example, they are more accustomed to compartmentalization and diligent adherence to taking orders from above

26. Steps Toward a Solution “Whilst the local manager is more cost effective than an expatriate, the western manager is perceived to be a more sophisticated and efficient businessman with solid proven international business know-how”. Fiducia Management Consulting Beijing, Shanghai, Hong Kong

27. Steps Toward a Solution • China adopts IPMA-HR certification program • IPMA-HR: International Public Managers Association for Human Recourses. • Chinese Training Center • SAFEA: State Administration of Foreign Expert Affairs

28. Motorola In the early 1980’s Motorola was asked • “Will you provide us with a place to live?” • Apartments were built and loans offered • Free multi-course lunches • Free transportation to work • Special training for new hires • 37% of Chinese students earn engineering degrees compared to 6% in the U.S. • Lack of emphasis on Management • Motorola University in Beijing

29. Motorola When I was there(in the late 1990’s) I hired a guy from a Chinese university and I tripled the pay he was getting…now that made him very happy.” Greg Wang- former Human Recourses Manager, Associate Director of the Workforce Development Campus, James Madison University