The five variables to address in an expatriate performance management system
For McDonald’s as an international corporation, the following expatriate performance management system variables are important:
- Expatriate goal setting;
- Expatriate performance appraisal;
- Expatriate training and development;
- Expatriate performance-based pay;
- Expatriate feedback.
The elements within each of the five variables
In each of the variables, there are elements that must be addressed within the expatriate performance management system:
- The goal-setting variable includes setting goals based on both the hard and soft sides of the expatriate. Varma et al. (2020) emphasize that “the soft side of an expatriate assignment can be much more critical in determining potential success on the assignment than the hard side” (p. 5). Thus, it is important to pay special attention to the soft goals setting, such as leadership and communication. This is especially true for McDonald’s, whose structure involves strictly defined tasks for each level of management.
- McDonald’s actively uses a polycentric staffing policy, which involves filling vacancies with local workers. For successful expatriate performance management, it is important to adopt an ethnocentric approach, with a focus on social control (Bader et al., 2021). This policy allows for more centralized decision-making, which is crucial for expatriate management. Both local and international supervisors should be involved in the annual appraisals (DeNisi et al., 2021).
- Expatriate performance management requires pre-departure and cross-cultural training. Additionally, the appointment of mentors, both local and international, is critical (Bader et al., 2021; DeNisi et al., 2021).
- Expatriates are paid through a bonus system based on the achievement of certain performance indicators. These indicators should be set based on the goal setting and monitored through the appraisal process.
- The host country manager should provide ongoing feedback on the expatriate’s performance with a focus on soft skills and goals. In turn, feedback should be constantly provided to the expatriate for the possibility of improving competencies.
The challenges with conducting performance evaluations for expatriates that differ from a traditional performance management system
Expatriate performance management differs from traditional systems, which presents a number of challenges:
- Although McDonald’s is an international corporation, it relies more on local employees. This aspect identifies the need to analyze cultural aspects that potentially have an impact on performance assessment. This factor requires management to interact with local managers, as well as evaluate factors.
- When working with the local market, it is also important to take into account the traditional performance management systems. In particular, local managers may adopt different practices and need to be trained in corporate management approaches. This factor requires both additional time and new competencies from international management.
- As an international corporation, McDonald’s has a standardized performance evaluation system. In this regard, the company needs to take into account the cultural aspects relevant to the local market, as well as the international experience of the expatriate. These factors together lead to the need to develop a separate rating system for this type of managers.
- As part of performance evaluation, it is also important for McDonald’s to pay special attention to social control. In particular, it is necessary to collect feedback on the manager’s performance in leadership and building social capital. Especially important in this regard is the long-term development of talents in which the manager is involved.
When evaluating performance, it is also necessary to take into account local environmental factors. The expatriate must not only be trained to assess these aspects but also communicate them to the international management. Later, these elements need to be considered as part of the formation of the evaluation system.
Bader, A. K., Bader, B., Froese, F. J., & Sekiguchi, T. (2021). One way or another? An international comparison of expatriate performance management in multinational companies. Human Resource Management, 60(5), 737-752. Web.
DeNisi, A., Murphy, K., Varma, A., & Budhwar, P. (2021). Performance management systems and multinational enterprises: Where we are and where we should go. Human Resource Management, 60(5), 707-713. Web.
Varma, A., Wang, C. H., & Budhwar, P. S. (2020). Performance management for expatriates. In J. Bonache, C, Brewster, & F. J. Froese (eds.), Global mobility and the management of expatriates (pp.80-99). Cambridge University Press. Web.