Developing Global Performance Review
The ultimate goal of any organization is to build on high´-performance culture with effective operational and commercial functions. To achieve these objectives organizations develop various mechanisms and control systems, which involve operational processes and resources as well as aim at enacting effective Human Resource Management (HRM) policies. The evolution of the business world has brought significant changes in the way human resources are managed. The reality shows that HRM function have grown dramatically and transformed itself from support function to strategic organizational element, which plays a paramount role in the development of competitive advantage. As many definitions as there are for HRM, the fact is that HRM is about interpersonal skills, human interaction and the development of the employment relationships in more formal way. HRM have taken on significant responsibility for the past decades, which involves people management, motivation and satisfaction, compensation and reward, retention, and recruitment and selection functions (Armstrong, 2002). The variety of responsibilities, which contemporary HRM comprises today, outlines its strategic role and importance for the companies. While companies are experiencing more pressure from external environment with regards to flexibility, cost-efficiency and market responsiveness, management of human performance and the ability to correctly direct the efforts and use employee´s talents to its full capacity gains spin and weight in the organizational agendas. One of the most recent developments in the HRM world is the company-wide performance management system, which allows companies address the strategic aims through delegating these high-level goals to lower organizational levels and building on milestones with smart goals, where specificity, measurability, attainability, realism and timeliness play critical role. Such approach to viewing organizational performance is widely discussed, finding its passionate supporters, as well as opponents of this approach (Sadler, 2003).
One of the difficult questions, which surround performance management schemes, is the role of the manager in this process. Understanding of the manager´s role in performance review process is especially important, as the usage of teams in the contemporary companies is increasing over the past decades. Creating challenges to modern HRM. As many researchers point out individual and group intensive schemes have very different effect on the individuals. That said, individual incentives make employees focus on personal achievement, raising performance level and helping organization direct the behaviors to expected outcomes. But this, at the same time, takes out focus from team goals and can potentially build on the competitiveness between the team members. Team goals, on the other hand, allow minimizing group distinctions and promote cooperation and collaboration within the teams, as it is seen in interdependence theory (Barnes., Hollenbeck, Jundt, Derue, Harmon, 2010). Taking into consideration the scope of performance management review and the need to distinguish and separate group and personal goals, the role of management in this process is very specific – to achieve high-performance culture among his direct reports and build on individual satisfaction and motivation (Dooren, Bouckaert and Halligan, 2010).
It is evident that the attitude, perception and reaction to specific performance management systems depend highly on the cultural background and the location of the company. With that in mind, it is possible to argue that the level of flexibility that the managers in different countries should be given to define the performance criteria also depends on the situation, culture and specific characteristics of the company and its employees´ profile. There are many reasons for this differentiated approach to performance management structure. First of all, national cultures are different and their level of uncertainty avoidance and power distance, as well as masculinity as opposed to femininity index, vary significantly (Hofstede, 2001). Moreover, each team is different and the way these teams should be managed to a great extend depends on the individuals that comprise the team and their experiences. As such, Nemiro (2004) recognizes three major approaches to group leadership, including wheel, modular and iterative approach, which outline the level of manager´s or leader´s intervention into group work and the style of leadership. Similarly, the freedom of the manager to outline the performance indicators and set the goals should be linked to this group profile as well as the ability and skills of the manager in linking strategic and tactical organizational goals. Many examples of modern companies, illustrates that performance management system should be able to help managers develop more personal relationships and customized approach to people management, where each individual is managed in a way that allows individuals develop personally and professionally. This means also that managers should also be subject to performance review and should be “managed” by their employees (Gabarro and Kotter, 2005).
Performance management review is a twofold process, where employees and managers should participate and contribute to the process. The majority of performance management systems are built upon very specific and measurable targets, such as financial and commercial performance, where strategic goals of the company directly translated into specific objectives for departments and employees. These targets are easy to measure and difficult to change the manner in which employees and even managers on junior and middle levels contribute to the process. Another part of the performance management review, which is seen in the majority of the systems is a personal development and growth, where managers and employees have much wider room for participation and contribution. The objective of any performance management system is to develop individuals, as opposed to the old-fashioned view that performance management should punish low-performance. That said, the core purpose of the performance system is to build on and incorporate a mechanism that allow personal and professional growth of individuals. This is only possible once managers and employees take a personalized approach to setting the goals, identifying the areas for improvement and focus and developing personal development and training plan that will empower employees and address their individual needs. This participation in performance appraisal building process is critical as it allows managers as well as employees reach high-performance, comprehend the process of performance review and create stronger bonds with the company as a whole. It worth mentioning that any system, developed for this purpose will only be effective, once the relationships between the individuals at all levels of this process are based on open and effective communication channel, and this can be done through building regular and timely feedback sessions between employees and the managers, where the performance of both, manager and employee are the subject to assessment and feedback process (Cardy and Leonard, 2011). There are many ways to provide employees with the opportunity to respond to manager’s comments, but one of the most effective ways is to create a dialogue, based on the prior preparation for the review session, where each employee makes his self-assessment and further compares and discusses it with the evaluation given by the manager.
Cross-cultural management is an integral element of contemporary organization. Increasing complexity of the business environment, as well as growing competition and competitive pressures on the market, demand flexibility and creativity from the companies. Globalization, international mobility, economic and political pressures make organizations think about diversity and create more cross-cultural working environment. As such, cross-cultural management is an increasingly important issue for international and global companies, which aim to enact effective company-wide policies and, at the same time, effectively manage diversity. When it comes to performance appraisal system, language and culture differences can play an important role and the lack of focus on these elements can undermine the effectiveness of the system (Cardy and Leonard, 2011). It is important to recognize that people will always feel more comfortable evaluating and discussing their job and performance in native language, but at times, it becomes impossible due to international mobility and cross-cultural teams. With that in mind, the company should be able to standardize the evaluation process and ensure that it is handled in the company´s corporate language. This will demand certain knowledge and skills from employees, but will ensure that all the performance reviews, done locally, follow global company´s policies and standards. It is possible to note that, while corporate language should become the language of performance appraisal process and review, local guidance and regulations, as well as training process for performance management in the company can and should be done in local language of the company. This will allow employees take out the eventual doubts and comprehend the process better.
Following the above discussion, performance appraisal system is a way to develop the relationships between individuals and set expectations, outline behaviors and personality traits that are important for the company and that are desirable for the individuals themselves. With the above in mind, performance management process is, undoubtedly, subject to cultural, language and even individual differences. As much as this process can be standardized, each manager and employee will conduct it differently in a way that corresponds their reading of the process and their view on the system. In order to minimize the cultural misinterpretations it is important that the management of the company on the global level ensures that all the employees with people management responsibilities receive appropriate training and that they work and study in virtual or actual groups in cross-cultural environment to discuss and evaluate the performance management process. This cross-cultural working and learning environment can dilute and minimize the cultural interventions into the process and can help making performance review more standardized across the countries and cultures (Sadler, 2003).
When it comes to the structure of the performance review process it is important to recognize that when the process is aimed at personal development and growth, it should involve formal and informal sections, which allow normative measurable as well as emotional element in the process. The performance management system should enable space for informal feedback sessions as well as development of personal development plan, involving emotional and cognitive skills, which are not directly linked to job descriptions. These skills may include emotional management, conflict and time management and other aspects, which demand attention from individual, who is being assessed. The reality shows that this element of performance appraisal is, probably, the most difficult to measure and follow up. Being subjective, the judgment about employee´s performance on the above should be very accurate and should be done in partnership with the employee during face-to-face feedback sessions.
Although, the aim of performance management is to develop employees and bring forward the role of intrinsic motivators, compensation should be linked to performance, as it continues being one of the strongest mechanisms of performance control and employee motivation. The standards and range of compensation should be established on a global level and should depend upon the results of performance appraisal. Leaving the range for each fo the jobs in the company will allow differentiation of high and low performance and, at the same time, will enable a system, which can link performance tools across cultures and countries.
References
Armstrong M. and Baron A. (2002) Strategic HRM. The Key to Improved Business Performance. London: Chartered Inst. of Personnel and Development. Print.
Barnes C.M., Hollenbeck J.R., Jundt D.K. Derue S.Harmon, S.J. (2010). Mixing Individual Incentives and Group Incentives: Best of Both Worlds or Social Dilemma? Journal of Management, Issue 37.
Cardy R. and Leonard B. (2011). Performance Management. Concepts, Skills and Exercises. 2rd Edition. London, UK: M.E.Sharpe. Print.
Gabarro J.J. and Kotter J.P. (2005). Managing Your Boss. Harvard Business Review. Retrieved 14 October 2014, http://hbr.org/2005/01/managing-your-boss/ar/1
Hofstede G. (2001). Culture's Consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations. Thousand Oaks: Sage Publications. Print.
Nemiro J. (2004). Creativity in Virtual Teams: Key Components for Success. Chapter 1. Mapping Out the Creative Process and Work Design Approach. John Willey & Sons Publishing. Print.
Sadler Ph (2003). Strategic Management. 2nd Edition. London: Kogan Page Limited
Van Dooren W., Bouckaert G. and Halligan J. (2010). Performance Management. London, UK: Routledge Publishing. Print.
