Effective International Performance Appraisals: Easily Said,Hard to Do

Abstract

International performance appraisal (IPA) is a strategic HRM process that enables the multinational corporation (MNC) to evaluate and improve continuously individual, subsidiary unit, and corporate performance against clearly defined, preset objectives. Effective IPA creates an incentive system that can ensure international employees and overseas subsidiaries are acting in accordance with the home company’s interests. IPA is complex mainly due to “information asymmetry” and “goal incongruence” between the parent company and its subsidiaries. There are many approaches to IPAs for MNCs to choose from, and these approaches are affected by many host-contextual and firm-specific factors. Although there is wide recognition of the importance of IPAs, most MNCs have not effectively managed IPAs. This article overviews various issues of IPA, including methods, criteria, and difficulties in the IPA process and the implementation of IPA in some MNCs. The implications for practitioners in MNCs are also discussed.