Define performance appraisal. Briefly describe the factors that make performance evaluations more complex in the international context and explain the use of incentives in the compensation of employees

What will be an ideal response?

Performance appraisal is a formal process for assessing how effectively employees perform their jobs. Appraisals help a manager identify problem areas where an employee needs to improve and where additional training is needed. Performance appraisals are typically conducted annually.
The following factors make performance evaluations more complex in the international context:
1. The problem of noncomparable outcomes arises because of differences in economic, political, legal, and cultural variables. For example, the firm should not punish a Mexican subsidiary manager because worker productivity is half that of home-country operations. Senior management must account for worker conditions, factory equipment, and other factors in Mexico that may cause lower productivity.
2. Incomplete information may result because headquarters is separated from foreign units by both time and distance. Headquarters staff often cannot directly observe employees working in foreign subsidiaries. To address this problem, subsidiary managers may be assessed by two evaluators-one from headquarters and one based abroad.
3. Performance outcomes may be affected by the maturity of foreign operations. Relatively new subsidiaries may not achieve the same level of results as older subsidiaries staffed with more experienced personnel.
To avoid inaccurate or biased assessments, management needs to consider the presence of unique circumstances when appraising the performance of foreign subsidiaries, affiliates, and employees.
Given the potential hardships of working abroad, many MNEs also provide incentives to expatriate employees. The incentive is like a bonus intended to motivate the employee to undertake extraordinary efforts to accomplish company goals abroad, particularly in new foreign markets. It is typically a onetime, lump-sum payment.