Working in a multinational company has its benefits. They offer advantages such as high salaries, career growth and an incredible organizational culture incorporating diversity, equity and inclusion (DEI). Regardless of the company’s location, you will always interact with employees from different cultures and languages in one team; it feels like traveling around the world and brings the excitement of meeting new people. The complexity of cross-cultural employees highlights the importance of using an effective performance management system (PMS). The viable advantage of any organization in this competitive technological and global economy depends primarily on how well they manage and develop their human resources. A PMS focuses on developing and shaping the future by learning from the past, not changing the past. However, most performance management implementations in multinational companies are challenged by process inconsistency and implementing a universal, one-size-fits-all PMS despite cultural differences. PMS Inconsistency and Universal Implementation A multinational organization’s PMS cycle combines three interconnected factors, creating two key challenges:
1) The PMS is based on their origin socio-cultural context, and they tend to use the exact PMS everywhere, making it very complicated in other socio-cultures contexts. They assert the perspective of a one-size-fits-all solution. Even though most developing countries are becoming more developed each day, and they tend to embed the developed and/or westernized culture in their systems, their cultural aspects are different and should be considered in the PMS.2) The PMS is analyzed on an annual or semi-annual review process in sync with employees’ performance reviews. The PMS cycle differs from one country to another, and even within the same organization. Multiple factors determine the organization’s capabilities in applying the performance management cycle annually or semi-annually, like market changes, the country’s encouragement of work-life balance and the availability of qualified managers to ensure a successful cycle. Most multinational companies in developed countries try applying a semi-annual PMS, while in developing countries, they mainly apply an annual PMS.
Almost all multinational companies integrate the role of coaches or mentors in their PMS to ensure a meaningful and successful process. A coach assists coachee in developing and growing from point A to B by explaining what to achieve, how and when. Coaches are usually managers, and managers have complex responsibilities in their day-to-day tasks. Coaches play a critical role in understanding the socio-cultural contexts to utilize the best methods to develop their coachees and adhere to the PMS cycle period.
The annual PMS cycle tends to develop a slacker mindset, manipulating coaches’ attitudes due to their busy schedules to give the slightest priority in coaching, which generally happens in branches in developing countries. Consequently, it results in a weak and less intentional performance evaluation that leads to treating performance management as a process that needs to get over with, encouraging biases in evaluating employees’ yearly performance. Solving PMS requires the organization’s full attention. Organizations should encourage semi-annual performance reviews regardless of the location and market challenges. As complicated as it gets, each organization should create an environment allowing coaches to take time out of their busy schedules to focus on developing and growing their coachees. Organizations should develop cross-cultural training for coaches to help them understand the various cultures they are dealing with. A semiannual review will encourage coaches to stay consistent, focused, and intentional in their relationship with their coachees and prioritize development and growth. Further, it will inspire coachees to work on their development areas with the support of their coaches, creating a more successful environment and boosting business growth.
A Customized Approach
Implementing a one-sized-fits-all PMS in multinational companies may sound logical to ensure organizational standards across countries. However, it hinders organizations from cultivating the advantages of various cultural differences and makes it complicated to reach those standards. All humans may share similar interests and aspirations for development and growth, but each culture has its own means in reaching those interests and aspirations. Multinational organizations must ensure that their PMS incorporates a cross-cultural foundation. Training coaches about cross-cultural differences is a critical dimension to integrating cross-cultural PMS. When the PMS integrates the different aspects of different cultures, the system will nurture various potentials and aspirations within the organization leading to substantial growth and creating imperative competitive advantage.
Ultimately, companies with solid and consistent PMS maintain a strong competitive advantage in today’s business environment, which is more fast-paced and culturally diverse than ever before.