co-workers and the extent to which their first language is the same, are of
considerable importance in the development of relevant performance criteria.
One popular framework for linking strategic organizational objectives to
individual performance, the ‘balanced scorecard’, exemplifies attempts to
address the problems of determining appropriate measures of effective perfor-
mance. Originally a framework of organizational performance measures, the
balanced scorecard has been extended to HRM and the performance manage-
ment of individuals (McKenzie and Shilling, 1998). This approach identifies
four critical perspectives on organizational performance that might form the
basis for effective performance criteria: the financial perspective, the internal
business perspective, the innovation and learning perspective and the cus-
tomer perspective (Kaplan and Norton, 1992).
Performance appraisalPerformance appraisal involves two distinct processes: observation and judge-
ment (Cascio, 1991). It serves two purposes: evaluation of performance and
development of it. In the context of international performance management,
performance appraisal is the means by which training and development needs
are identified, and compensation decisions made. The latter is particularly per-
tinent given the current trend towards larger proportions of variable pay and
away from fixed components mentioned earlier in this chapter.
One of the challenges for performance management as part of the MNC’s
international HRM portfolio is to balance the simultaneous needs for global
consistency and for fit with local conditions and preferences. Thus, the
dilemma is often to what extent the performance appraisal process at home is
transferable to international locations. With regard to the core activity of per-
formance management, performance appraisal, it seems that even when the
appraisal process is the same world-wide, local variations in practice are evi-
dent. For example, in Australian organizations, including MNCs, a combi-
nation of performance appraisal methods has most commonly been used, with
Management by Objectives and competency-based appraisal the most popular
of these (Nankervis and Leece, 1997).
As discussed earlier in this chapter, caution should be exercised when
claiming national cultural differences as the sole or major explanatory
factor for local differences in international HRM preferences, policies and
practices. However, evidence has emerged that suggests performance appraisal
practices probably require adaptation across cultures. For instance, although
performance management and performance appraisal appear to be etic, or cul-
ture-free concepts, and therefore present across cultures, different preferences
between western cultures and Asian cultures have been noted. These have
included the extent to which extrinsic rewards, group performance, specific and
formal appraisal methods, employee involvement and off-the-jobbehaviours
are favoured (Bernthal, 1996; Vance et al., 1992).
324 International Human Resource Management