Performance Management in MNEs PDF

Chapter 6: Performance Management in MNEs Key Points: Definition: Performance management enables MNEs to evaluate and continuously improve performance at the individual, subsidiary, and corporate levels toward goals and targets. Challenges: o Complexities...

Chapter 6: Performance Management in MNEs Key Points: Definition: Performance management enables MNEs to evaluate and continuously improve performance at the individual, subsidiary, and corporate levels toward goals and targets. Challenges: o Complexities in managing globally distributed facilities due to: ▪ Cultural diversity. ▪ Varied production modes and operational standards. ▪ Legal and economic constraints. o Explanation: "Globally distributed facilities" means managing different branches in various countries, each with its own set of rules, norms, and practices. o Subsidiary data can be unreliable or difficult to interpret. o Physical distance and underdeveloped communication systems can impede results. Appraisal Types: o Hard Goals: Objective measures (e.g., profit, sales). o Soft Goals: Traits like leadership or teamwork. o Contextual Goals: Situational factors (e.g., exchange rates, tariffs). Conflict Areas: o Role conflict when expectations differ across countries. o Differences in HQ vs. subsidiary appraisal standards. o Explanation: Role conflict happens when employees in different locations have varying job expectations or duties, causing confusion. o Cultural applicability of appraisal feedback. Chapter 7: Cross-Cultural Training (CCT) and Expatriate Management Key Points: 1. Selection: o Mostly based on technical ability, but cultural awareness training (CCT) is critical. o Include PCNs, HCNs, and TCNs in training and management plans. 2. Training: o Pre-Assignment Support: Lifelong training, language courses, and sensitivity training. o Host country cultural immersion (4–6 days). o Incorporate family in CCT to improve adjustment and performance. 3. Expatriate Challenges: o Safety risks: Terrorism, hijacking, natural disasters, pandemics. o Adjustment issues for both expatriates and families. o Reverse culture shock upon repatriation. 4. Repatriation Issues: o High turnover (25% within the first year). o Lack of structured plans for career progression post-repatriation. o Explanation: "Repatriation" refers to the process of returning expatriates to their home country after an international assignment. o Solutions include career planning and promotions. Chapter 8: Compensation in International Assignments Key Points:  1. Compensation Elements: o Allowances: ▪ Cost of Living (COLA): To compensate for expense differences. ▪ Housing: Maintain home-country standards. ▪ Relocation: Cover moving, storage, and temporary housing costs. ▪ Education: For expatriates' children, including tuition and extracurriculars. o Taxation: ▪ MNEs may withhold home-country tax and pay host-country taxes. o Benefits: ▪ Healthcare, pensions, and life insurance. ▪ Spouse assistance to offset income loss. 2. Approaches: o Balance Sheet Approach: Keeps expatriates "whole" financially. o Market Rate Approach: Based on host-country salary benchmarks. 3. Issues: o Compensation gaps between PCNs, HCNs, and TCNs can cause resentment. o Tax deductions may not always apply in the host country. Chapter 9: International Industrial Relations Key Points: 1. Industrial Relations in MNEs: o Factors Influencing Trade Unions: ▪ Mode of technology and industrial organization.  ▪ Government regulations (e.g., Malaysia’s Industrial Relations Act 1967). ▪ Religious and ideological influences. o Key Issues: ▪ Subsidiary autonomy vs. HQ control. ▪ Degree of inter-subsidiary production integration. ▪ MNEs' prior experience with industrial relations. 2. Trade Union Responses: o Use of International Trade Secretariats (ITSs) to connect national unions. o Lobbying for restrictive national legislation. o Collaboration with NGOs to pressure MNEs. 3. Regional Integration (EU): o Emphasis on eliminating barriers like labor mobility restrictions. o Addressing issues like social "dumping." 4. Codes of Conduct: o Draw up and review international HRM codes of conduct. o Address issues like child labor and unsafe working conditions. Chapter 10: Ethics, Security, and Risk Key Points: 1. Ethics in MNEs: o Ethical dilemmas arise in countries with differing norms (e.g., bribery, child labor). o Should MNEs apply universal values or adapt to local practices? o Cultural relativism vs. universal morality.  o Examples: ▪ Japan: Gift-giving is cultural. ▪ Slavery in the US: Accepted 200 years ago but unethical today. o Environmental NGOs (e.g., Greenpeace) influence ethics. 2. Security and Risk Management: o Threats: ▪ Cybersecurity: Hacking, sabotage, and information theft. ▪ Physical security: Terrorism, bomb threats, and workplace violence. o Explanation: "Perimeter security" refers to security measures designed to protect the outer boundaries of a company’s facilities (e.g., fences, guards). o Travel Policies: ▪ Prohibit senior managers from traveling together. ▪ Recommend avoiding stays above the 7th floor. o Preparedness: ▪ Emergency protocols for evacuations, natural disasters, and pandemics. Themes Across Chapters HRM Approaches: o Ethnocentric: HQ controls policies and practices. o Polycentric: Autonomy for local subsidiaries. o Geocentric: Focus on global competence, not nationality. Offshoring HRM: o India: High turnover and stress. o China: Issues in recruitment, retention, and employee motivation. Managing Diversity:  o Cross-cultural awareness is essential for integration. o MNEs need structured career planning to retain talent. Simple Explanations of Key Terms: PCN: Parent Country National (an employee from the headquarters country). HCN: Host Country National (an employee from the host country). TCN: Third Country National (an employee from a third country, not the HQ or host country). Repatriation: The process of returning an expatriate to their home country after their assignment ends.