Effectiveness of Performance Appraisal in Multinational Companies

Abstract

A strategic HRM method called international performance appraisal (IPA) helps multinationalcorporations (MNCs) to regularly assess and enhance corporate, subsidiary, and individual performance inrelation to well-defined, predetermined goals. An incentive structure established by an effective IPA canguarantee that foreign workers and foreign subsidiaries are operating in the best interests of the parent firm.Information asymmetry and goal incongruence between the parent firm and its subsidiaries are theprimary causes of IPA's complexity. MNCs can select from a variety of IPA approaches, and theseapproaches are influenced by a host of firm-specific and host-contextual factors. Even though IPAs arewidely acknowledged to be important, most MNCs have not handled IPAs well.