Performance Management in International Business Environments - Assignment Example

International HRM (Name) (Course) (University) Date of presentation: Lecturer: Performance Management in International Business Environments Introduction In the contemporary world of business, globalization of the world economy has become an essential requirement for companies to create sustainable businesses and operate effectively in a competitive environment. Accordingly, global expansion of businesses has become a major strategic development for companies. As for big companies such as Woodside, a series of market development strategies including spreading into new geographical regions and entering new markets are made to capture potential markets. This way, the company is able to pursue a leading role in market competition. With the rapid development of communications technologies, the process of economic globalization will further be accelerated. More multinational companies will continue to emerge as international competition becomes increasingly fierce (Sanderson, 2001). In the new era of globalization, competition for talent is gradually replacing the tradition of competitive products and technologies. How to source, train and develop talented employees and to enhance their performance has become the most daunting challenge that companies face (John & Carr, 2000). Undeniably, increased internationalization of business has created major challenges for companies to recruit culturally sensitive and technically competent managers and employees for managing overseas operations. Employees working in foreign countries find that culture shock can impair their abilities to perform well (Thomas, 2004). A failure in foreign missions will not only affect the employee’s performance record but will also cost the company’s resources. Hence, performance management has been identified as contributing to improved overseas ventures. The following paper highlights major issues of performance management that Woodside, an Australian firm should consider when managing foreign operations in either Brazil or Spain. Definition of Performance Management and its Importance in International Business Performance management refers to the systematic process by which organizations involve their employees, as individuals and groups, in improving organizational effectiveness through accomplishment of goals and mission. In the contemporary world of business, performance management is a core aspect of human resource management and involves planning for all work activities and setting expectations. It also involves continual monitoring of performance as well as development of the capacity to perform. In the international business environment, performance management helps set standards for product quality and service delivery. It encompasses important activities such as joint goal setting, frequent communication, continuous review of progress, coaching, rewarding achievements and implementation of employee development programs (Sanderson, 2001). According to the institutional theory of neoliberalism, countries should be concerned more with absolute gains from other nations. This theory implies that multinational organizations should be concerned more with the benefits that they give to the host countries and not merely what they gain (Robert & Lisa, 2005). For transnational organizations, performance management can be regarded as a vital process of not only managing employee performance but also for driving an entire organization towards attaining desired performance results. It is about striking a harmonious balance between organizational objectives at the headquarters and the subsidiary. The process utilizes such important tools as leadership development, job design, training and reward system to align performance expectations at the subsidiary and headquarters. In the international perspective, performance management is undertaken as an ongoing communication process between supervisors and employees. Walker and Sankey (2008) have noted that performance management is both a strategic and an integrated approach to successful result delivery in organizations. The process helps improve performance by developing the capabilities of teams and individuals. When undertaken appropriately, a performance management process sets the platform for rewarding excellence by aligning employee achievements with organizational goals and mission objectives. This way, employees are made to understand the importance of their roles in realizing outcomes. By establishing clear performance expectations that includes actions, behaviors and results, performance management helps employees understand what is expected out of their jobs. In addition, setting of standards helps eliminates those actions that are of no use. Through regular coaching and feedback, the process provides advantages of diagnosing problems early enough and taking corrective actions. In a majority of international contexts, the process of performance management involves the following activities: i. Developing and implementing clear job expectations as well as employee performance plans which include performance indicators and key result areas. ii. Selection of the right human resources by implementing appropriate selection and recruitment processes. iii. Negotiating performance standards and requirements for evaluating the overall productivity and outcome against defined benchmarks. iv. Providing consistent coaching and feedback during the period of performance delivery. v. Identifying the essential training and development needs by measuring achieve outcomes against set standards and implementing appropriate development and improvement programs. vi. Holding regular performance development discussions and evaluating all employees against acceptable performance standards. vii. Designing effective compensation and reward systems for appreciating those employees who excel in their performance. viii. Providing career development and promotional support and guidance to employees. A Comparison of the Political Economy of Australia and Spain Australia is a liberal democracy with a constitutional monarchy. The country has adopted a federal system, of government where the central government shares powers with state governments. Economically, Australia is very stable and has recorded impressive economic gains over the years. In the recent years, the Australian economy has continued to perform more strongly than those of other developed economies. The resource boom is back and is generating increasing growth in incomes. The mining industry contributes a great proportion of the country’s GDP and this has enabled the county to offset all public debts (Parham, 2002). Like Australia, Spain is also a liberal democracy with a constitutional monarchy. Like many western countries, Spain has had a stable political system over the past several decades. Since gaining ascension to the European Union in 1986, Spain opened its economy to foreign competition and embarked on a plan to improve infrastructure and modernize the industrial base (Khan, 2000). In doing so, Spain increased its domestic gross product significantly and reduced unemployment and inflation within a very short time. The main economic challenge remaining for Spain is the huge public debt that the county incurred recently as well as the need to lower inflation and arise per capita GDP (Tamen, 2009). Australia’s main economic challenge is to maximize long-term economic benefits from resource boom while minimizing inflation-related pressures. The ability to overcome this challenge will be determined by the willingness of the country’s leadership to implement disciplined, credible economic policy frameworks that integrate market forces in negotiating structural changes. Another important issue in Australia’s political economy is the rising interest rates which has been the case since the global economic crisis of 2008. As a result, the cost of borrowing has more than doubled, thereby causing many Australians to decrease spending. In addition, shifts in the value of Australian dollar against major global currencies have put pressures on the abilities of Australian businesses to import or exports products. This may make Australian products less competitive in the international market (Parham, 2002). In the recent years, Spain has sought to strengthen trade, economic and political relations with other countries especially the European Union. It has maintained its special political and economic identity with Latin American countries. Its policy emphasizes the concept of hispanidad which embraces a mixture of language, ethnic, religious, historical and cultural ties binding the Spanish speaking America to Spain. This way, Spain has nurtured and maintained technical and economic cooperation and exchange programs with Latin America (Tamen, 2009). Understanding Employment Relations in Australia and Brazil in the Context of Neocorporatism Theory Brazil has about 90 million people in the labour force. Three-fifths of these are employed in the service sector and 15% in the agricultural sector. The Brazilian government is party to the UN Convention on Rights and Child Labour and has made laws prohibiting child labour, discrimination in employment and forced labour. The labour code in Brazil is highly detailed and very favourable to workers. Employees working in the formal sector are guaranteed an annual leave of 30 days as well as an annual bonus equivalent to one month’s salary (Engerman & Sokoloff, 2003). The county has a system of labour courts which are responsible for resolving routine cases relating to unfair dismissal, salary disputes, working conditions and other grievances. The labour courts have the authority to impose agreements on workers and unions in case negotiations break down. Because of this, labour courts are routinely called upon to determine working conditions and wages in industries across the country (Furtado, 2008). Brazil has more than 16,000 active trade unions; one of the highest in the world. Trade unions in some sectors of the economy such as banking and metal working tend to be well organized and hence effective in defending working conditions and wages. Nevertheless, strikes are frequent especially among public sector unions. Although some trade unions operate independent of political parties bad the government, others tend to be closely associated with political parties (Furtado, 2008). Since gaining independence in 1901, Australia has been a federation with a central government and six regional governments. The federal government is constitutionally limited to making industrial relations laws pertaining to conciliation and arbitration of industrial disputes. All other laws are the jurisdiction of state governments. Nevertheless, judicial interpretation of the constitution over time has resulted in the federal government being increasingly able to make employment relations laws under corporations and external affairs powers. Over the last two last two decades, Australian employment relations system has undergone significant legislative as well as structural changes. These changes have resulted in a significant decline in the trade union density and power and also an increase in the non-standard forms of employment (Parham, 2002). Recent years have witnessed a shift away from the centralized employment relations system to a decentralized system focused on enterprise bargaining (McLean, 2003). This has resulted in radical changes in the structure of employment as evidenced by sharp decline in full-time employment and expansion of various forms of non-standard employment such as temporary jobs, outsourcing, causal work and use of labour market intermediaries. All in all, about half of the country’s 22 million people are in employment. Trade unions continue to play a significant role in the development of the country’s employment relations (Parham, 2002). Strategies for Effective Performance Management in International Business Environment Performance management is a very sensitive issue when it comes to international business operations. In the international business environment, performance management is concerned with not only setting of performance standards for employees but is also concerned with harmonization of performance expectations between the host and home country (Baker, 2006). In an attempt to effectively manage performance, Woodside must set minimum performance standards for managers and employees in Australia as well as Brazil and Spain. The company must set performance management goals so that work can be planned routinely. Progress towards these goals should be measured regularly and employees provided with feedback promptly. It is important to emphasize that high performance standards should be set so that the right skills are developed (Walker & Sankey, 2008). In order to develop a team of highly skilled and talented employees, Woodside should offer special rewards for its employees working in Brazil and Spain. Rewarding is a means of recognizing the efforts of employees as individuals and as groups. Employees should be recognized for their performance as a sign of acknowledging their contributions to the organization’s missions (Schmitter & Lehmbruch, 2003). In light of this, Woodside should develop a formal process for recognizing its employees without necessarily waiting for nominations for formal awards to be solicited. Most importantly, recognition should be taken as an on-going, routine part of the day to day experience. In addition, reward regulations should provide for a wide range of formal forms of rewards such as cash, time off and non-monetary items (Sanderson, 2001). Another important strategy is for the company to develop a standardized, formal process for appraising employee (Dale & Karolyn, 2008). Such a process can be helpful for comparing performance between foreign businesses and the home business and also among employees. This may require the company to rate evaluate employees against standards in the employee’s performance plans and also to assign a summary rating of record (Aubrey, 2006). The rating and evaluation should have a bearing on other personnel actions such as granting grade-pay increases and determining additional retention services. Carrying out the process of performance management ill provide opportunities for Woodside to identify developmental needs for its human resources in not only Australia but also Brazil or Spain. During job planning and monitoring, any deficiencies in performance may become evident and hence can be addressed. In addition, the need for improving performance will stand out and therefore appropriate actions can be taken to help employees improve their performance further (Salimen & Vitala, 2006). References Aubrey ,C. D., (2006) Performance Management: Changing Behavior That Drives Organizational Effectiveness. Performance Management Publications. Baker, D., (2006) The political economy of fascism: Myth or reality, or myth and reality?, New Political Economy, Volume 11, Issue 2 June 2006, pages 227-250. Dale, B. and Karolyn, S., (2008) Performance-based Instruction: Linking Training to Business Results. Pfeiffer; Har. Engerman, S.L. and Sokoloff, K.L. (2003), ‘Institutional and Non-Institutional Explanations of Economic Differences’, Working Paper 9989. National Bureau of Economic Research, Cambridge, MA. Furtado, C. (2008) The Economic Growth of Brazil: A Survey from Colonial to Modern Times. Berkeley, CA: University of California Press. John, A. and Carr. J. E., (2000) Handbook of Applied Behavior Analysis. New York: Context Press. Khan, B.Z. (2000) ‘Commerce and Cooperation: Litigation and Settlement of Civil Disputes on the Australian Frontier, 1860–1900’, Journal of Economic History, 60, 1088–1119. McLean, I.W. (2003) ‘Australia’, in Mokyr J. (ed), Oxford Encyclopaedia of Economic History, Vol. 1. Oxford University Press, New York; 177–82. Parham, D. (2002) "Microeconomic reforms and the revival in Australia’s growth in productivity and living standards". Assistant Commissioner – Productivity Commission, Canberra Conference of Economists Adelaide, 1 October. Robert O. K. and Lisa L. M. (2005) “The Promise of Institutionalist Theory,” International Security 20, no. 1, 47 Salimen, M. and Vitala M. J. (2006) Handbook on Performance Management. Helsinki: Ministry of Finance. Sanderson, I. (2001) ‘Performance Management, Evaluation and Learning in ‘Modern’ Local government’. Public Administration .79(2) 297-313. Schmitter, P. C. and Lehmbruch, G. (2003) Trends toward Corporatist Intermediation. London. Tamen, H. (2009) The Spanish Inquisition: A Historical Revision. London: Yale University Press. Thomas, F. G., (2004) Human Competence: Engineering Worthy Performance, Boston: Pfeiffer. Walker, B. and Sankey S. (2008) International Review of Effective Governance Arrangements for Employment-Related Initiatives Research Report No 543. Norwich, HMSO. Read More