 Hi, students. In this topic and the subsequent ones, we are going to discuss a very important aspect of human resource management, which is performance management. And since we are talking about international human resource management, therefore, the aspect of international performance management is going to be discussed in these topics. You know that performance management is a very important aspect of human resource activities. Why is it important? It is important because unless you do not manage or you do not evaluate performance, you will not be able to analyze whether you are going according to your objectives, you are going according to the standards and you are meeting the required criteria or not. So performance management is actually making sure that your organizational members as well as the organizational units, they are performing according to the set criteria. So when you set the objectives, in order to meet the objectives, you must perform, you must manage performance. So before we can discuss more about performance management, that's first of all, define performance management. What is performance management? It is a process that enables the multinational enterprise to evaluate and continuously improve individual subsidiary unit and corporate performance against clearly defined preset goals and targets. So you can see that in this definition, there are three important elements. Number one, it is to evaluate and continuously improve. So the objective is to evaluate and number two, to continuously improve. You just don't want performance to be stagnant at one level. You want the performance to continuously improve. You want the organization to rise. You want individual members of the organization to work better, to meet higher standards and to raise their performance levels and then therefore grow in the organization. So evaluate and continuously improve. Then the second aspect is whose performance, individual performance, as well as the subsidiary unit performance and the corporate performance. So that means that performance management is not just about the individual, it is about the entire organization. But at three levels, one is that you are managing evaluating performance at the individual level. Secondly, you are evaluating it at the subsidiary unit level. And thirdly, you are evaluating the entire corporate performance of the multinational organization. Now this is where the difference comes between domestic performance and international performance. Domestic performance is at two levels. It is at the individual level and at the corporate level. But when you go international performance management, it adds another tier in these levels and that is individual, subsidiary and then corporate performance. And this adds to the complexity and the complicatedness of the process through which performance can be evaluated. The complexity, what issues are raised in this process, we are going to discuss that in the next topics. So this is the second element of this definition. So whose performance, individual, subsidiary and corporate performance. And then how will you measure the performance? That is going to be against clearly set, predefined criteria, goals and targets. So unless you do not have very much clearly defined, you do not have preset goals and targets, what are you going to measure the performance against? The measurement of performance, the evaluation of performance is going to be useless unless you do not have already set standards that okay, the organization is going to increase 10% sales. It is going to increase 20% market share. It is and on the individual level, the person is going to achieve these particular targets, get these many clients, increase this much portfolio of the organization. So you need to first of all set predefined criteria, and then you are going to measure the performance against those clearly defined. And this is very important, clearly defined. Unless the criteria is vague, it is not clearly defined, it will not be able for you as HR managers to evaluate performance, you will not be clear what are you going to, what are you going to evaluate. So these are the three important elements of the performance management process. And they are essentially in this process. Now international performance management has a number of dimensions which add to the complexity of this process. What are these dimensions? Number one, diversity in cultures, production and operations, geographical dispersal and variety of modes of operations. So all of these things we have already discussed many times that these are the elements that affect international human resource management, international management, and therefore they also affect international performance management. And then the challenge is to simultaneously locally be locally relevant and globally comparable. So the performance criteria, they have to be developed in a way that they are locally relevant, they are relevant to the culture, they are relevant to the work practices, they are relevant to the customs of the culture of that particular country, of that particular area, but yet they are performance criteria which are globally comparable. So you can compare the performance of people working in Pakistan, Iran, UK, USA, anywhere if your multinational is operating in all these countries, your performance criteria should be created in a way that they can incorporate both these dimensions, they need to be locally relevant and they need to be globally comparable. And this is the major challenge for human resource management practitioners that how do we create and develop such criteria which can be locally relevant and globally comparable. So you can see in this diagram that these are the various dimensions and the process, the perspectives, the issues, the actions and consequences in multinational enterprise performance. So from the left side, you start from the pattern of priorities, global or local emphasis and the pattern of priorities that is guided by number one global corporate strategies, roles, processes and practices and then local strategies, roles, processes and practices. So your pattern of priority is going to be set both by the global strategies and by the local strategies and that is something which is complicated. So that is going to lead to performance management process for individual employees which is going to be then guided by number one remote appraisal sources and inputs and then number two local appraisal sources and inputs. So the performance is going to be measured by criteria which is developed by the remote appraisal sources which are in the headquarters and the parent company and local appraisal sources which are in the subsidiary unit level. And then that leads to how you develop the critical issues which are number one the criteria, some criteria are implicit, some criteria are explicit. Then the criteria that takes into account the person, then what are the activities, then what are the outcomes of the performance management and then the critical issues in performance management is what is the purpose of performance management. Number one is developmental. You want to improve the performance of persons who are evaluating and then you need to set the pay because performance is directly related with compensation and bonuses. And then the third is how the tasks and roles they are going to be defined and then what type of timings. So that is then again going to lead to additional subsequent assessment purposes and which is then going to lead to individual outcomes which is a performance management outcome. Individual outcomes may be that the individual needs training or further development. Then career applications that is the person performing well enough to get promoted in the career and then financial consequences that whether they are going to get pay raises or bonuses or not. And then there are organizational outcomes and organizational outcomes of performance is how much control you have. That is one of the major outcomes of performance management that you are able to control the actions, behaviors, roles and all types of attitudes of your employees and you make sure that they perform according to your standards. Then your reputation, if your performance management criteria and process is effective then your reputation in the environment is good. And then third is the legal compliance that according to the legal laws and frameworks you are managing you are evaluating the performance of your organizational members and then you are rewarding them accordingly. So these are the organizational outcomes. So this is a holistic and comprehensive model of how performance management process is initiated, what guides the performance management process and then what are the outcomes of the performance management process.