3th HR Day June 7 2006

Performance Management in multinational companies: How to deal with cultural differences ?

dr. Koen Dewettinck HRM Centre Vlerick Leuven Gent Management School

dr. Koen Dewettinck

Central question ?

Performance Management systems:

Quest for alignment between corporate and unit or company level

- What about country / culture specifics that need to be taken into account (or not) ?

dr. Koen Dewettinck

PM assumptions

Goal setting theory

The higher/harder the goal, the better the result But: - goals need to be specific ( do your best-goals) - resources need to be provided for the individual, who need to be competent - Feedback and knowledge of results - Goal commitment participation in goal setting
(Locke & Latham, 1980)

dr. Koen Dewettinck

Goal setting in different cultures ?

Business practice has shown that we need to be careful in implementing Western-type performance management systems across cultures.

Goal commitment and participation Impact of feedback on employee and team level Feedback seeking behavior

dr. Koen Dewettinck

Different cultures ?

Hofstede (1980):
Power distance Individualistic collectivistic Uncertainty avoidance Masculinity Femininity

Bonds (1989) extra dimension: Long term short term orientation Schwartz (1994): 10 motivational value types (e.g. power, hedonism, conformity,
security, universalism, stimulation, etc.)

Most relevant for PM: Power distance and Individualism Collectivism

dr. Koen Dewettinck

Different cultures ?
Triandis (1995): focus on Individualism Collectivism / Horizontal - Vertical

Collectivism
Individual as part of a group

Horizontal Collectivism
Japan

Vertical Collectivism
China

Individualism
The autonomous individual

Horizontal Individualism
Scandinavia Horizontal
Equality Small power distance

Vertical Individualism
France

Vertical
Inequality High power distance
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dr. Koen Dewettinck

Goal commitment and participation

Horizontal cultures: impact of authority figures on goal commitment weaker Horizontal cultures: non-participative goal setting not effective Anagram experiment (Iyengar & Lepper, 1997)

- European Americans (Individualistic): less intrinsic motivation when choices were made for them by others (authority figures or peers) - Asian-Americans (Collectivistic): most intrinsically motivated when choices were made for them by trusted authority figures or peers

dr. Koen Dewettinck

Feedback - performance
Frogpond effect = feeling better about oneself when performing highly relative to an unsuccessful peer group rather than performing poorly in a successful group

more pronounced in highly individualistic cultures low in collectivistic cultures

Feedback on group performance: impact on individuals confidence in own abilities ? Yes for collectivistic cultures, not for individualistic cultures.

In collectivistic cultures: both group based and individual feedback is important

dr. Koen Dewettinck

Feedback seeking behavior

Americans (Individualistic): more likely to desire success feedback (ego-protection motive)

Japanese (Collectivistic): inappropriate to seek for success feedback, prefer feedback on failures (impression management motive)

dr. Koen Dewettinck

Conclusion

PM system design seems transferrable across cultures

But: Stronger focus on group level in collectivistic cultures

Role of the supervisor in the PM process should be adapted to cultural specifics

dr. Koen Dewettinck

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Supervisor guidelines
Individualistic Collectivistic - Feedback should consider the individuals role in his/her group - Feedback should consider group harmony and relationships Vertical - Focus mainly on top-down communication and control - Avoid perceptions of managerial weakness by encouraging too much participation High cultural context

Level of achievement

- Provide direct feedback to improve individual performance and self-identity

Horizontal

Feedback approach

- Provide opportunity for individuals to participate in the performance evaluation

Low cultural context

Communication style

- Communication should be direct and explicit - Follow up verbal feedback with written summary of evaluation

- Consider the surrounding context of the feedback - Pay close attention to the body language of the individual - Be indirect in conveying feedback (read between the lines)

Source: Milliman, Taylor & Czaplewski, 2002

dr. Koen Dewettinck

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