influence international compensation strategy. While traditional forms of
international compensation still dominate international staff transfers, evidence
is emerging of global compensation strategies robust enough to allow for consis-
tency and for adaptation to different international environments.
The second major part of the chapter examined the performance manage-
ment of international staff. International compensation and performance
management are interdependent, as the objectives of compensation and the char-
acteristics of integrated performance management illustrate. At the strategic level,
performance management was defined and its dual purposes of evaluation and
development were outlined within the context of MNCs. At the functional level,
performance appraisal, the core human resource management activity of perfor-
mance management, was examined. Enduring issues concerning who conducts
performance appraisals, and what is appraised, remain. Accounting-based,
organizational-level performance criteria are often used to appraise the perfor-
mance of subsidiary managers in spite of the environmental constraints on their
validity and reliability. Performance criteria which recognize the international
context, that are therefore accurate and reliable measures of the international work
being performed, and which align with the mission and objectives of the MNC,
are essential for individuals and organizations. The challenge of developing and
maintaining effective international compensation and performance management
across the MNC will be further magnified by changes in international work such
as non-standard international assignments, for example virtual assignments.
6 DISCUSSION QUESTIONS
1 What variables influence the development of an international compensation
strategy?
2 How can consistency of international compensation across international loca-
tions be achieved when local environments differ?
3 What are the challenges to effective performance management, including per-
formance appraisal, in MNCs?
7 FURTHER READING
- • Bernthal, P.R. (1996) ‘Comparing performance management practices in the United
States and Pacific Rim’,Advances in International Comparative Management,11: 1–29.
328 International Human Resource Management