Customisation Decision Essay

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Liverpool John Moores University – 5004BUSHR International HRM/HRD

Assignment 3.1

Customisation Decision (Claus and Hand, 2009)

This is a summary of the article “Customisation Decisions Regarding Performance Management Systems of Multinational Companies” by Lisbeth Claus and Michael L. Hand from Willamette University, USA.

In this article, Claus and Hand talks about the importance of performance management (P.M) process in HR for global organisation. And that there's no theoretical framework to determine how customisation decisions can influence to localize the performance management systems of multinational companies. Therefore, the purpose behind writing the article is to broaden the customisation of performance management systems in multinational companies, and highlighting the factors that can affect the customisation decisions.

Additionally, results of a survey conducted among senior HR practitioners working for the 100 largest companies in Bulgaria and Romania reveal that the majority of these companies are familiar with the need of cultural localization of their performance management systems.

Authors stressed the importance of performance management as an essential human resources process that encourages the smooth operation of the global organisation.
One aspect of the performance management widely used in these MNCs considered in the study is the performance appraisals (PA) of the individuals. This process consists of, but not limited to, the setting of the annual employees expectations, regularly monitoring the employee performance, conducting periodic face to face meetings to evaluated progress thus giving the employee the chance to provide input. According to the results of this process the employees will be provided with opportunities of development and training to tackle the shortcomings of their future performance.
The authors have reviewed some of the relevant literature and research related, and despite the limitation of the research-based knowledge, however, the interest in performance management is growing from an international perspective. As well as a recent literature review from a special issue of the European Journal of International Management (Claus and Briscoe, 2008a) which revealed that 64 empirical, research- based and conceptual articles published in English language, peer-reviewed journals over the period 1985 to 2005 focused on one or another aspect of employee PM or PA across borders.

A trend in the literature available on the topic focused on the importance of the cultural and social influences on the PM process. A collection of 12 articles considered in the literature review providing frameworks of the PM were proposed, in which four of these suggested certain hypotheses that none of were tested.

The authors defined an initial model for the customization of PM systems in MNCs. This model was developed with the aim of answering the question of whether a PM practice extracted from a well-established western company can be transferred to other context while preserving its purpose. The model considered several factors which are the internationalization strategy of the enterprise, cultural distance between the headquarters and the subsidiary, and the upstream and downstream aspect of the PM process.

Considering the internationalization strategies of various enterprises it is worth noticing that a global integrated enterprise adopts a centralized management structure compared to the locally responsive ones favours decentralized management structure.
Nonetheless, when contemplating the cultural distances which rises from the geographical closeness of the MNCs, it indicates increase in difficulties facing management practices proportionally.
Additionally, Porter (1986) pointed out that upstream business processes are more likely to be global while downstream processes are generally more localized.
However, several authors considered several other settings
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