Performance incentives in multinational companies can be a conflict issue. Employees and management can have different views of fair and just pay and rewards on performance. Furthermore, there are cultural influences on the employees’ and the management’s understanding of good performance. These cultural influences can differ from country to country and complicate the standardization of performance management policies in multinational companies.
Right here, the WZB-research project comes in. Based on case studies of multinational companies, the project explores cultural understandings of performance and their relationship with performance management policies.
The project deals with two main questions. First, it analyses how cultural factors influence the understanding of good performance and of fair rewards for performance. Cultural factors refer among others also to traditions of industrial relations and to trade unions’ views on performance and incentives. Second, the project examines the fit between the employees’ understanding of performance and fair rewards and the actual performance management policies in multinational companies. The main interest lies on affinities between cultures and the usage of individual, team based, monetary or career-based incentives. The study includes in addition factors which can influence the acceptance of performance management policies such as the inclusion of employee representatives in the design of performance management policies.
Performance management system is necessary in the modern-day business as it is helpful in monitoring the performance of the employees and at the same time it is helpful in improving the skills on the basis of the pre-defined measures. It is critical that at the global levels MNCs implement performance management practices that improve the overall performance of each of the subsidiaries of the organization. There must be use of best practice approach at the global levels in performance management.
At the global levels when the MNC is planning to implement a common set of performance management practices throughout its global subsidiaries then they need to make sure that they are taking care of different cultures in different nations. This is necessary for ensuring that no cultural aspect of any people gets hurt while the performance management system is implemented at the global levels.
For example, in the countries like United Kingdom and Vietnam, there is difference in culture and if the company implements the common performance management system, then they need to ensure that all the aspects of the cultures in both nations has been taken care effectively.
For instance, the working culture in both the nation is different i.e. in United Kingdom people like to have more leaves when compared with Vietnam and hence if the performance practice includes the numbers of days, they are present then it will not motivate the people that are in United Kingdom.
On the other hand, if the performance management practices include reviewing number of extra hours a worker is working then United Kingdom’s employees will be more disappointed. However, this evaluation totally depends on the compensation that is given in two nations.
If the performance management practices include higher use of technology, then a company always need to make sure that what is the condition of the market in terms of technology i.e. technologically advanced nations such as United Kingdom will have more employees that will be highly sound in the use of technology and hence utilising technology in the performance management practices will be easier. This is true in terms of the fact that how the employees are using technology in the workplace and at the same time how the HR managers can use technology for monitoring the performance of the employees. This can also be understood in terms of the fact that if the employees were able to use technology in a better manner, then it is also easier for the HR managers to monitor the performance of the employees as well.
For instance, in the sales department if the employees were able to do sales through the help of technology mediums, then there is a better chance that companies are able to have account of the performance.
In Vietnam where the employees at lower levels are not so good in technology, it is always difficult to measure their performance. In this kind of difference, it is essential that when the company is implementing common performance management practices then a bit leverage needs to be given to the workers in Vietnam so that they also fill in the criteria for effective performance. It is critical that employees of Vietnam are trained in a better manner so that they equal the technological skills of people in United Kingdom. This will make it easier for the managers to implement the common set of practices related to technology at the global levels.
On the other hand, practices such as regular audits can be implemented in both nations at the global levels. However, the people that will be included in the performance audit and the way in which performance also needs to change according to the country. For instance, in United Kingdom people are more concerned about their rights hence they ask for getting indulged in the performance management systems. Increasing employee’s engagement in the deciding the criteria for performance management will have impact on the motivation of people. It is necessary that in the performance management practices the concerns of people in both nations needs to be addressed. Company needs to ensure that they engage people from different organisational levels in deciding the criteria for performance management so that there is no chance of conflict in any country.
It is also to be understood that performance management practices such as productivity evaluation can be done in any country, but a fact needs to be taken into account that people in both these nations have different levels of knowledge as they have graduated from different standards of college and hence expecting exactly same performance from people of these nations will be appropriate. It is critical that while decision about the common performance management practices is made, it is taken care that knowledge levels of the people in these two nations are different and hence the comparison between the performance of people in these two nations must be done from the people of the same nation rather than from each other. Productivity standards need to be set at the minimal levels so that employees from both the nations qualify in the performance evaluation criteria.