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An examination of the transferability of traditional performance appraisal principles across cultural boundaries.

Introduction

The prospects of economic development and new business growth in countries within the Pacific Rim appear to be positive, with the focal point of global business shifting from the Atlantic to the Pacific (Adler, Doktor, and Redding, 1986). Today, the Asia-Pacific region is our largest trading partner, with more than 300 billion (U.S.) dollars a year in two-way trans-pacific trade. This trade is nearly one-third larger than that across the Atlantic. U.S. firms have invested more than 61 billion dollars in the Asia-Pacific region according to Secretary of State, James Baker (Xinhua General Overseas News Service, 11/11/91). Although Japan and Korea are the Asia-Pacific region's economic leaders, business development forecasts are also bright for other Pacific Rim countries, including Indonesia, Malaysia, and Thailand (Sitnik, 1988; Kingston, 1989; Covey, 1988; Worthy, 1989).

Key to success of international firms which locate in Pacific Rim host countries will be their ability to manage, train and develop their host country national work force at all levels. The design and implementation of performance appraisal systems will be very important in accomplishing this objective. There has been little research conducted on international dimensions of performance appraisal, and, as a result, most expatriate managers have received very little training in this area. The appraisal process may be misinterpreted as a signal of distrust or even an insult in some countries (Dowling and Schuler, 1990). In fact, many Asian countries reject the principles upon which the American performance appraisal is based (Gellerman, 1967). Are the traditional performance appraisal principles effective in other countries?

Most organizations have a formal set of human resource management policies, practices, and procedures that reflects their own unique corporate culture (Jain, 1990; Pascale and Athos, 1981). These policies, practices and procedures, based on managers' assumptions, beliefs, and values on how to manage their employees, may vary from organization to organization. Research has shown that managers from different national cultures also have different assumptions as to the nature of management and organization. Laurent (1986) found that nationality was the most powerful determinant of their assumptions. He concluded that deep-seated managerial assumptions are strongly shaped by national cultures rather than organizational cultures. If we accept this view, human resource practives, including the performance appraisal process, will have to be designed specifically for each national culture since the same human resource practice may have a different meaning for each culture.

The objective of this study is to examine cultural differences related to predominant management style among United States, Indonesia, Malaysia, and Thailand, and to assess the universal applicability of general principles for the design and implementation of performance appraisal systems.

Traditional Performance Appraisal Principles

Traditional performance appraisal principles date back to the early 1900s, and were designed to support a top-down, control-oriented style of management. These principles include a set of formal appraisal procedures that enables an organization to retain control over their employees, to develop the employee as an individual as well as a team member, to involve the employee in setting goals, to reward the employee intrinsically and extrinsically, and to improve performance through frequent communication/feedback. Each of these general principles will now be reviewed in more detail.

Formality of Structures and Controls

The performance appraisal is a control system that is used by almost all organizations to specify the behavior that employees must perform in accordance with organizational objectives. Necessary control is achieved through a clear system of rules and procedures to direct and standardize employee behavior, resulting in predictability and accuracy of performance (Lawler, 1983). Information, such as job descriptions and performance feedback, should be formalized, documented in writing, and clearly communicated to employees to ensure that performance expectations are well understood, as well as to protect the organization in case decisions regarding employees are challenged on legal grounds (Butler, Ferris and Napier, 1991; Ledvinka and Scarpello, 1991).

Individual vs. Team Development

Notwithstanding increasing recognition of the potential contribution of high involvement work groups and self-managing work teams (Lawler, 1986), emphasis is still placed upon individual employee responsibility for assigned work performance (Hofstede, 1980 a; Hofstede, 1984). The predominant exchange of performance feedback is between the direct supervisor and individual subordinate in a one-on-one, private context, and covering primarily individual performance criteria (Bernardin and Beatty, 1984). The individualized performance evaluation facilitates early identification of managerial potential.

Employee Involvement In the Appraisal Process

According to this principle, most employees have a deep psychological need to take responsibility for their own lives and be self-directing (Odiorne, 1984; McGregor, 1961). When they find themselves in situations where they feel others are making decisions for them, including formal performance evaluation situations, they may experience resentment and resistance to that situation and to the closed, one-way control of the autocratic manager. When these employees have greater involvement and personal responsibility in the appraisal process, their work performance may improve and be maintained to a greater degree (Locke, 1982; Beer, 1987; Lawler, Mohrman and Resnick, 1984; Latham, Mitchell and Dossett, 1978).

Intrinsic vs. Extrinsic Rewards

This appraisal principle parallels the management literature which recommends the use of intrinsically motivating aspects of work leading to optimal performance and job satisfaction (Hackman, 1977). Performance feedback which emphasizes praise and recognition provides more powerful and enduring intrinsic motivation for the employee (Kirkpatrick, 1982; Fournies, 1978; Robbins, 1989).

Frequency of Feedback

In general, where possible an employee should be given frequent and timely work performance feedback (Bernardin and Beatty, 1984; Beer, 1987; Matsui, Okada and Inoshita, 1983). The feedback is frequent enough to allow for immediate information to help confirm the appropriateness of, or if inappropriate, correct one's specific work performance (Fournies, 1978; Deegan, 1984).

Management Style and Appraisal System Design

The predominant management style within a country can be defined as the overall set or pattern of behavioral characteristics that distinguish the country's general approach to management (Pascale and Athos, 1981). These behavioral characteristics are based upon the collective cultural values, expectations, norms, beliefs, and life assumptions predominantly held by the people in the organization, and more generally, the host country (Adler et al., 1986; Hofstede, 1980 b). Cherrington (1991) concludes, when writing on the subject of management style, "Virtually every personnel function, including staffing, training, compensation, and employee relations, is significantly influenced by the management philosophy and leadership style within an organization" (p. 27). The performance appraisal function, therefore, as the management of individual work performance within an organization, is but one of a multitude of managerial contexts in which the behavioral characteristics of a particular management style are manifested.

According to exchange theory (Blau, 1964), management style influences individual and organizational behavior, and is in turn influenced and supported by the values, beliefs, and expectations of the people being managed. We assume that a particular predominant management style also dictates how the management activities of performance appraisal should be carried out, which are in turn generally supported and reinforced by the expectations, values, and beliefs of the individual employees being appraised. If the previously presented traditional principles guiding performance appraisal system design and implementation were as universally applicable to our U.S. and three Pacific Rim countries as their profile in the general management literature might suggest, these countries' management style behavioral characteristics related to performance appraisal management would therefore be expected to be generally consistent with those traditional principles. On the other hand, we also assume that significant divergence in management style across countries would lead to different employee needs and expectations for the effective design and management of the appraisal process, a diversity that would tend to be inconsistent with the traditional principles.

Method

The performance appraisal principles for this study were measured by means of a questionnaire designed to measure the predominant perception of management style within a given country. The questionnaire (using a seven-point, bi-polar rating scale) was given to 707 managers engaged in several different types of organizations within each of the following countries: United States, Indonesia, Malaysia, and Thailand (156, 177, 192, and 182 managers respectively; 68 % overall response rate). Eight of the twenty-eight questionnaire items were related to the generally accepted performance appraisal principles of (a) formality of structures and controls; (b) individual vs. team development; (c) employee involvement in the appraisal process; (d) intrinsic vs. extrinsic rewards; and (e) frequency of performance feedback.

If the six traditional performance appraisal principles are appropriate for the countries in our sample, the mean responses across the four countries on each item would be expected to be close to the end of the rating scale representing the traditional or "ideal" performance appraisal principle.

The questionnaire items that were measured are listed in Figure 1.

Results

As indicated in the following Tables 1- 5, an analysis of variance found significant differences, all at p |is less than~ 0.001, among the four country mean responses for each of the eight survey questions related a priori to the traditional appraisal principles. A pair-wise comparison procedure was then used to determine significant differences (p |is less than~ 0.05) between country mean responses within each of the eight items. In Table 1 for the two survey questions related to the principle of formality of structure and controls, pair-wise comparisons revealed several significant differences among countries. On Item 1 related to control by formal vs. informal measures. Thai managers represented a relatively high level of formal control, whereas Indonesian managers represented the low end from our four country sample. On Item 2, Indonesian managers expressed the highest perceptions of informal communication.
Table 1. Formality of Structures and Controls: Items 1 & 2
Univariate F-Values and Individual Country Mean Responses for
Items Related to Performance Appraisals Process
U.S.A. Indonesia Malaysia Thailand
N = 156 N = 177 N = 192 N = 182 F-value N = 707
4.30 4.02a 4.21a 5.08 13.86(*)
4.22 4.80 3.92a 3.41b 15.06(*)
Means sharing a common subsript within a question are not
significantly different from another at the 0.05 level as
indicated by the T-test contrasts. Univariate F-value; * p |is
less than~ 0.001.


In Item 3 of Table 2, related to focus on individual versus group and company performance, the only significant difference was with Thai managers who perceived the strongest focus on individual performance.
Table 2. Individual vs. Team Development: Item 3 Univariate
F-Values and Individual Country Mean responses for Items
Related to Performance Appraisal Process
U.S.A. Indonesia Malaysia Thailand
N = 156 N = 177 N = 192 N = 182 F-value N = 707
3.67a 3.39a 3.72a 4.64 9.58(*)
Means sharing a common subsript within a question are not
significantly different from one another at the 0.05 level as
indicated by the T-test contrasts.
Univariate F-value; * p |is less than~ 0.001.


Indicated in Table 3, which examines the two survey questions related to employee involvement in the appraisal process, significant differences in mean scores were also found. On Item 4, Thai managers reflected to highest levels of employee involvement in decisions related to their work, followed by Indonesian managers. On Item 5, related to soliciting input from subordinates, all groups of managers differed significantly, with again Thai managers registering highest in soliciting ideas, suggestions, and feedback from subordinates, followed by Indonesian managers.
Table 3. Employee Involvement in the Appraisal Process: Items 4
& 5 Univariate F-Values and Individual Country Mean Responses
for Items Related to Performance Appraisal Process
U.S.A. Indonesia Malaysia Thailand
N = 156 N = 177 N = 192 N = 182 F-value N = 707
4.03 4.26 3.87a 4.86 9.04(*)
4.49 4.88 3.92 5.36 25.63(*)
Means sharing a common subscript within a question are not
significantly different from one another at the 0.05 level as
indicated by the T-test contrasts.
Univariate F-value; * p |is less than~ 0.001.


As shown in Table 4, several differences were also noted in pair-wise comparisons of mean responses between the countries on the two items related to use of intrinsically motivating rewards. On Item 6, U.S., Indonesian, and Thai managers all registered a significantly higher level of use of recognition and praise than Malaysian managers. On Item 7, related to intrinsic versus extrinsic nature of rewards, Thai managers were significantly highest in terms of use of extrinsic rewards, and American managers were lowest in use of extrinsic rewards.
Table 4. Intrinsic vs. Extrinsic Rewards: Items 6 & 7
Univariate F-Values and Individual Country Mean Responses for
Items Related to Performance Appraisal Process
U.S.A. Indonesia Malaysia Thailand
N = 156 N = 177 N = 192 N = 182 F-value N = 707
4.48 4.88a 3.98 4.95a 10.19(*)
3.92 3.97a 4.14a 5.00 27.92(*)
Means sharing a common subscript within a question are not
significantly different from one another at the 0.05 level as
indicated by the T-test contrasts.
Univariate F-value; * p|is less than~0.001.


In Table 5 featuring Item 8, related to perceptions on frequency for giving performance feedback, Thai managers were represented by significantly higher means than were the other groups of managers.
Table 5. Frequency of Feedback: Items 8 Univariate F-Values and
Individual Country Mean Responses for Items Related to
Performance Appraisal Process
U.S.A. Indonesia Malaysia Thailand
N = 156 N = 177 N = 192 N = 182 F-value N = 707
4.08 3.97a 4.20a 5.53 18.38(*)
Means sharing a common subscript within a question are not
significantly different from one another at the 0.05 level as
indicated by the T-test contrasts.
Univariate F-value; * p|is less than~O.001.


Discussion

The results of this study reveal significant differences in the perceived predominant management styles among the U.S. and three Pacific Rim countries in our sample. We therefore conclude that the appropriate performance appraisal system design needs of these managers are, in theory, also not the same, and may not be satisfied by traditional Western guiding principles. These results are particularly important for U.S. and other Western home-based multinational corporations whose executives may falsely assume (1) undue homogeneity among Pacific Rim countries, and (2) that principles guiding the design and management of performance appraisal systems in the Western parent country would also be transferable to other countries such as those of the Pacific Rim.

We will now examine possible cultural forces within each of the Pacific Rim countries in our study to gain a greater understanding of these significant differences among the countries in measures related to performance appraisal design and implementation. This enhanced understanding will help us begin to develop prescriptions for the design of performance appraisal systems within Thailand, Indonesia and Malaysia. Future research should be conducted within each country to help refine and validate these prescriptive guidelines.

Thailand

Out of the eight survey questions, Thai managers rated the highest or closest to the traditional or ideal position on seven questions. These high ratings may be partially attributed to our sample. Forty-six percent (46%) of the Thai respondents have college degrees. Out of this 46%, 21% were educated in the U.S. and only 47% were educated in Thailand. Eighty-five percent (85%) of the respondents were over 40 years of age. Forty-two percent (42%) have been with their company less than ten years and 50% have worked in other nations. The sample reflects an older work force that is well-traveled, and that has had an extremely high degree of exposure to Western management concepts.

Our statistics reveal that Thai managers prefer a high degree of formal structure and control by measurable company standards as evidenced by a mean of 5.08 on Item 1. This analysis is supported by Geert Hofstede's (1980a) cultural dimensions study in which he rated Thailand as "strong" on uncertainty avoidance and "high" or "large" on power distance. He found that strong uncertainty avoidance societies try to avoid uncertainty by providing greater career stability and establishing more formal rules, and that people in high power distance societies accept a hierarchical order. Also, Thai managers prefer formal written communication; hence the 3.41 mean on Item 2.

The mean of 4.64 on Item 3, related to individual vs. team development, indicates a shift towards a more individualistic attitude. This is contrary to most cross-cultural research which indicates the focus to be team-oriented rather than on the individual. Two reasons for this shift may be Thailand's primary religion and the lessening of family bonds. Theravada Buddhism, practiced by more than 80% of the Thai people, stresses tolerance and individual initiative (Runglertkrengkrai and Engkaninan, 1987). It appears that the newer generations are not as family-oriented as their elders. This trend is evidenced by a change in the care and respect for the elderly. Many of the elderly are now living in senior citizen centers instead of remaining with their immediate or extended family (Mortimer, 1989).

Means of 4.86 and 5.36 on Items 4 and 5, respectively, indicate a high degree of involvement of the employees in the decision making and appraisal processes, including solicitation of ideas, suggestions or feedback from subordinates. This finding is supported by our research which indicates that while subordinates appreciate strong leadership, they expect their superiors to consult them before making changes that will directly affect their work (Thompson, 1988).

Social justice, industrial harmony, and extrinsic rewards are very important to the motivation of employees as evidenced by means of 4.95 and 5.00 on Items 6 and 7, respectively. Their desire for extrinsic rewards may be attributed to their belief that the accumulation of merits will lead to a better life.

The above results suggest that the performance appraisal in Thailand should be designed to reflect a high degree of formal control by measurable company standards, individual responsibility and appraisal of individual performance, high employee involvement in the appraisal process, extrinsic rewards, and frequent feedback.

Indonesia

Our sample data show that 77% of the Indonesian respondents are college educated, of which 84% were educated in Indonesia and 8% were educated in the U.S. Fifty-four percent (54%) of the respondents are under 40 years of age. Eighty-five percent (85%) have never worked in other nations. The sample data reflect a very young and unstable work force. In fact, the entire population of Indonesia is young, with 70% under 30 years of age (Harris and Moran, 1987). Our sample also indicates that newer generations are not as employment security-oriented as the older generations since 43% of the respondents have worked for their present company for less than five years.

Indonesian managers' means of 4.02 and 4.80 on Items 1 and 2, respectively, indicate that while Indonesia appears to be changing, control is still based on group norms and individual values. An example of Indonesia's collectivist or group orientation is best supported by the following statement made by Clifford Geertz (1967) "This combination of an almost ant-like attack on the performance of important social activities with a tendency to direct any one group to a single end rather than employing the same group for multiple purposes leads to what one might call, paradoxically, a pluralistic collectivism" (p. 382). Another example of group orientation is the practice of Pancasila, a set of five principles -- belief in God, civilized humanity, unity, consultation for reaching a consensus, and social justice (Sharma and Jain, 1989). Also, a mean of 3.39 on Item 3 indicates that Indonesian managers focus control on group and company performance rather than on individual performance.

The mean of 4.26 on Item 4 indicates a preference for employee involvement in the decision making and appraisal processes. These means are consistent with research findings that committees, work councils, and worker cooperatives are popular (Sharma and Jain, 1989).

The reward system should be group-oriented. Jeffrey R. Bucher, Manager of Human Resources for ARCO Oil and Gas Company, telling of his experience in Indonesia, said "Indonesians manage their culture by a group process, and everybody is linked together as a team. Distributing money differently amongst the team did not go over all that well; hence, we've come to the conclusion that pay for performance is not suitable in Indonesia" (1990). Our results, with means of 4.88 and 3.97 on Items 6 and 7, respectively, show that recognition and praise are more important than monetary rewards for motivation purposes. While the Indonesian managers frequently solicit ideas, suggestions or feedback from their subordinates, they, in return, provide very little performance feedback as evidenced by means of 4.88 and 3.97 on Items 5 and 8, respectively. Indonesians emphasize maintaining good relationships, fine manners ("halus") and appropriate etiquette, and frequent performance appraisals might be considered "improper" or "impolite". According to Laurent (1986), "For the Indonesian affiliate company, the inclusion of negative feedback in performance appraisal interviews may mean an unhealthy pollution of harmonious hierarchical relationships".

The above results suggest that the performance appraisal in Indonesia should be designed to measure the appropriate principles on a "group" basis. A panel process might be appropriate.

Malaysia

Our data show that 54% of the Malaysian respondents are college educated, of which 42% were educated in Malaysia, 31% in the United Kingdom, and 5% in the U.S. Eighty-eight percent (88%) of the Malaysian respondents are under 40 years of age. Sixty-seven percent (67%) of the respondents have been with their present company for under five years and 30% have worked in other nations. The sample reflects a very young and mobile work force.

Malaysia is made up of Malays (56%), Chinese (33%), and other small nationality groups. Government restructuring of the corporate sector to increase Bumiputra's (Malays) ownership and management of organizations has reduced Chinese influence at the professional and technical levels, but the Chinese still occupy a majority of the middle level managerial positions (Smith, 1984). This Chinese influence may have contributed to the means of 4.21 and 3.92 for Items 1 and 2, respectively, which indicate a preference for formal control by measurable company standards. There is evidence that public service organizations do use a formal or panel process for conducting performance appraisals (Seddon, 1987).

A mean of 3.72 on Item 3 indicates a low to moderate degree of individualism. It appears that the Chinese philosophy, Confucianism, which is based on the family rather than the individual, is still present. Also, the Malaysian culture stresses courtesy and respect ("budi"), etiquette, gentleness, and good manners (Harris and Moran, 1987), which leads us to believe that Malaysian managers focus control on group and company performance.

Means of 3.87 and 3.92 on Items 4 and 5, respectively, show a low to moderate amount of employee involvement in the decision making and appraisal processes, and that Malaysian managers seldom request or solicit feedback from their subordinates. Jain's (1990) study of quality circles reveals that the superior's ability to make independent decisions is more important than his ability to work as a team member. The decision making process appears to be up to management.

Means of 3.98 and 4.14 on Items 6 and 7, respectively, indicate that Malaysian managers reward both intrinsically and extrinsically. However, Jain's (1990) study found that the workers expected extrinsic or cash awards for their quality circle efforts. A mean of 4.20 on Item 8 indicates that Malaysian managers provide fairly frequent performance feedback.

Results suggest that in Malaysia the performance appraisal design should reflect formal control by measurable company standards (perhaps a panel process), measurement of performance efforts on a group basis, little involvement of employees in the decision making and appraisal processes, extrinsic rewards, and fairly frequent performance appraisals.

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Shirley R. McClaine, Senior Paralegal, ARCO, Los Angeles, CA, U.S.A.

Charles M. Vance, Associate Professor of Management, Loyola Marymount University, Los Angeles, CA, U.S.A.

David M. Boje, Associate Professor of Management, Loyola Marymount University, Los Angeles, CA, U.S.A.

H. Daniel Stage, Professor of Management and Associate Dean, MBA Program, Loyola Marymount University, Los Angeles, CA, U.S.A.
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Author:Vance, Charles M.; McClaine, Shirley R.; Boje, David M.; Stage, H. Daniel
Publication:Management International Review
Date:Oct 1, 1992
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