EXPATRIATE PERFORMANCE MANAGEMENT: THE CASEOF NOKIA TELECOMMUNICATIONS Human Resource Management, Summer/Fall 2000, Vol. 39, Nos. 2 & 3, Pp. 267–275© 2000 John Wiley & Sons, Inc. Marja Tahvanainen Today’s world-class companies such as Nokia employ effective employee performance manage-ment (PM) practices. They have realized that seeking sustaining competitive advantage from theeffective management of human resources is of utmost importance. Until today, however, therehas existed little understanding about how these companies manage the performance of theircritical personnel group, the expatriate employees. A key finding of the case study of NokiaTelecommunications is that the performance of different types of expatriates in varying situationsis, and should be, managed dissimilarly. Reflecting this finding, it is suggested that companiesshould develop alternative PM tools. © 2000 John Wiley & Sons, Inc.IntroductionToday’s companies no longer succeed by fre-quent introduction of new products or use offirst-class technology alone. Companies haverealized that they must also seek sustainingcompetitive advantage from the effective man-agement of human resources. Unlike new pro-duction technology, for example, the successthat comes from managing people effectivelyis often transparent with regard to its source(Pucik, 1992; Gratton, 1997; Beer, 1997).Traditionally, performance appraisal hasbeen used as a guide for employee perfor-mance. Lately, it has been supplanted in moreand more companies with performance man-agement (PM), a more comprehensive humanresource management process. Through goalsetting, performance appraisal and feedback,continuous training and development efforts,and performance-related pay, PM can helpcompanies incorporate strategy into individualemployee efforts and turn employees’ poten-tial into the desired results (Delery & Doty,1996; Sparrow & Hiltrop 1994). Other ben-efits of PM are that it can assist in motivatingemployees for good performance and canstrengthen their commitment to the organi-zation. Furthermore, it can assist in other or-ganizational processes that are important to acompany’s long-term success, such as organi-zational learning, knowledge management,change management, and succession manage-ment. Thus, good performance managementprovides a company with the basis for manag-ing its business today and preparing for itsfuture through the performance of its people(Williams, 1991).Effective performance management be-comes particularly relevant to expatriate em-ployees who are critical to multinationalcorporations (MNCs) strategy formulation and Companies haverealized that theymust also seeksustainingcompetitiveadvantage fromthe effectivemanagement ofhumanresources.
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268 • HUMAN RESOURCE MANAGEMENT, Summer/Fall 2000 implementation (Black, Gregersen,Mendenhall, & Stroh, 1998; Dowling, Welch,& Schuler, 1999). For example, expatriates canestablish a company or a company functionin a foreign location and can provide a for-eign unit with the knowledge that the parentcompany considers necessary for the foreignunit to function effectively. Other rationalesfor sending expatriates are to serve as key con-tacts for coordination and to act in a controlfunction between the parent company andsubsidiaries (Edström & Galbraith, 1977;Torbiörn, 1982; Ondrack, 1985; Borg, 1987;Black et al., 1998).Since expatriates can play a central role inthe global success of companies and their useis expensive (Harvey, 1996), it seems critical tomanage expatriate PM effectively; yet the re-search literature in this area is scarce. For do-mestic employees, studies are availableregarding all elements of a PM system, namelygoal setting, performance appraisal, trainingand development, and performance-related pay.For expatriates, similar studies are practicallynonexistent. For example, it is not well knownwhether performance goals should be set bythe sending company unit or the receiving unitfor an engineer leaving from France to work inthe United States. How should the engineer’straining and development matters be dealt withwhile s/he is on assignment? What if the re-ceiving unit uses a different performance man-agement system than the sending unit? Whosesystem should then be used to manage theengineer’s performance? Essentially, the re-search completed to date in an internationalsetting is limited to one segment of PM, namelyperformance appraisal (Mendenhall & Oddou,1991; Schuler & Florkowski, 1994; Gregersen,Hite, & Black, 1996). Yet, expatriate goal set-ting, training and development, and perfor-mance-related pay, for example, are areas inneed of much more research.In response to this need, I present severalkey findings from a case study on performancemanagement practices at Nokia Telecommu-nications (NTC). The study addresses previ-ously neglected areas of expatriate PM in anattempt to increase our understanding of thisincreasingly key international HRM topic. Toaccomplish this objective, I explore several as-pects of the following research question: Howis the performance of expatriates managed indifferent types of international assignments?Research ApproachDue to the process nature of PM as well asthe lack of rigorous theoretical models, a quali-tative case study approach was deemed anappropriate method for exploring expatriatePM (Yin, 1994; Eisenhardt, 1989). For thatpurpose, Nokia Telecommunications, a Finn-ish-based MNC operating in the telecommu-nications industry, was selected as the casecompany. In the Finnish context, Nokia hasextensive experience sending and receivingpeople on foreign assignments (15 years), andit has more expatriates on assignment (about1,200) than any other company based in Fin-land. It could, therefore, be expected that NTCwould have numerous established practices formanaging expatriate performance.Primarily, I collected data through 81semistructured interviews. The intervieweesconsisted of company expatriates (mainlyFinnish) who worked in different positions anddifferent situations, line managers who hadexperience of sending expatriates on foreignassignments, local employees working outsideFinland, and human resource personnel. Theaim in collecting data from different types ofemployees who understood expatriate PM wasto get a holistic understanding of the process.The interviews were conducted in NTC unitsin Finland, Thailand, China, the United King-dom, and the United States. To cross-checkand complement the interview data, I also as-sessed an extensive amount of internal com-pany documents on expatriate PM.This data were analyzed at severalstages: (1) after the interviews in Finland,(2) after each data collection trip abroad,and, finally, (3) when all the data neces-sary for reaching a saturation point werecollected. These analyses produced fivegroups of expatriates. While PM practicesfor members in a particular group weresimilar, clear differences in PM existedbetween groups. My search to explain thedifferences among these groups produced,in turn, several contingency factors for ex-patriate PM. These factors were identifiedby noticing variations in expatriate PM and
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Expatriate Performance Management • 269 then asking why such differences occurred.To answer the why question, potential con-tingency factors emerged. The relevance ofthe factors thus identified was then com-pared to other expatriate situations at NTC.This process continued until convergenceoccurred for the major contingency factorsfor expatriate PM.Results of the ResearchExpatriate Performance Management Prac-tices at NTCAlthough Nokia Telecommunications hasa global, standardized PM system in place,meaning that all employees’ performanceis managed (to a great extent) similarly, myanalysis revealed a reality that strayed fromthis unity—especially given that five groupsof expatriates emerged at NTC. Thesegroups were defined primarily by the na-ture of their job and included the follow-ing categories:1. Top managers2. Middle managers3. Business establishers4. Customer project employees5. R&D project personnelFor each of these expatriate groups, it wascommon PM practice that all expatriates knewwhat was expected of them, how well they wereperforming, and that they received the oppor-tunity to develop new competencies in orderto meet the requirements of present and fu-ture job assignments.Some differences in the PM among the ex-patriate groups were also clear. These differ-ences revolved around: (1) whether and howperformance goals were set, who set them, andwhat type of goals they were; (2) how expatri-ates’ performance was evaluated and who con-ducted the evaluation; (3) whether training anddevelopment plans were agreed upon with ex-patriates; (4) whether expatriates had the op-portunity to attend training while on assignment;and (5) what type and how clear the linkagewas between expatriate performance and pay.The following section reviews the typical PMcharacteristics of each expatriate group.Top Manager ExpatriatesTop manager expatriates occupied highly in-dependent senior positions overseas, and theirperformance was managed distantly; they com-monly formulated their own performancegoals. One interviewee explained, “My bossand I agreed on key result areas that wereimportant, then it was my task to set morespecific goals and milestones.” Because of thewide scope of their jobs, these interviewees’performance management goals were fairlybroad. For instance, one goal that was derivedfrom a Finnish expatriate’s key result area,Project Management Improvement, was “man-aging future projects more in line with eachproject management handbook”.Most of the top managers’ performancegoals were concrete—defined in their incen-tive scheme. To illustrate, a goal such as“profitability” was specified in the incentivescheme by assigning a target level of operat-ing profit. Linkages between performancegoals and incentive objectives were very clearfor the expatriates in this group. In fact, expa-triates in this
ชาวต่างชาติจัดการประสิทธิภาพ: การ CASEOF โนเกียโทรคมนาคมบริหารทรัพยากรบุคคล ฤดูร้อน/ฤดูใบไม้ร่วง 2000 ปี 39 ชุด 2 และ 3 นำ 267 – 275 © 2000 จอห์น Wiley & Sons, Inc. Marja Tahvanainen วันนี้ของบริษัทระดับโลกเช่นโนเกียว่าจ้างพนักงานที่มีประสิทธิภาพประสิทธิภาพจัดการติดขัด (PM) ในทางปฏิบัติ พวกเขาได้รับกำลังเสริมเปรียบจาก theeffective บริหารทรัพยากรมนุษย์ที่สำคัญสูงสุด วันนี้ แต่ therehas อยู่เข้าใจเล็กน้อยเกี่ยวกับวิธีเหล่านี้บริษัทจัดการประสิทธิภาพการทำงานของบุคลากรในกลุ่ม theircritical พนักงานชาวต่างชาติ ค้นหาคีย์ของกรณีศึกษาของ NokiaTelecommunications และว่าประสิทธิภาพของชนิดต่าง ๆ ของชาวต่างชาติใน situationsis ที่แตกต่างกัน ควร dissimilarly จัดการ สะท้อนให้เห็นถึงการค้นหานี้ มันจะแนะนำ companiesshould ที่พัฒนาเครื่องมือทาง PM © 2000 จอห์น Wiley & Sons, Inc.IntroductionToday ของบริษัทอีกต่อไปการประสบความสำเร็จ โดย quent ฟรีแนะนำผลิตภัณฑ์ใหม่ หรือใช้เทคโนโลยี offirst ชั้นเดียว Haverealized บริษัทที่พวกเขายังต้องแสวงประโยชน์ sustainingcompetitive คน-agement ประสิทธิภาพของทรัพยากรบุคคล ซึ่งแตกต่างจากเทคโนโลยี pro duction ใหม่ ตัวอย่าง successthat มาจากการจัดการโปร่งใสมักจะตามแหล่ง (Pucik, 1992; effectivelyis คน Gratton, 1997 เบียร์ 1997) ประเพณี ประเมินประสิทธิภาพการทำงานใช้เป็นคู่มือสำหรับพนักงาน perfor-mance เมื่อเร็ว ๆ นี้ มันมีถูก supplanted ใน moreand เพิ่มเติมบริษัท มีประสิทธิภาพคน-agement (PM), กระบวนการจัดการ humanresource ที่ครอบคลุมมากขึ้น Goalsetting ประเมินประสิทธิภาพ และผลป้อนกลับ ฝึกอบรมอย่างต่อเนื่อง และความพยายามพัฒนา และค่าจ้างเกี่ยวกับประสิทธิภาพ helpcompanies สามารถ PM รวมกลยุทธ์เป็นความพยายามของ individualemployee และเปิดพนักงาน poten tial เป็นผลลัพธ์ที่ต้อง (Delery & Doty, 1996 สแปร์โรว์และ Hiltrop 1994) เบน-efits อื่น ๆ ของ PM ว่า มันสามารถช่วยในการ motivatingemployees สำหรับประสิทธิภาพที่ดีและ canstrengthen เสน่ห์ของพวกเขาความ organi นอกจากนี้ มันสามารถช่วยในกระบวนการ หรือ-ganizational อื่น ๆ ที่มีความสำคัญต่อความสำเร็จระยะยาวของ acompany เช่นเปลี่ยน organi-zational เรียนรู้ การจัดการความรู้ การจัดการ และบัลลังก์จัดการติดขัด ดังนั้น ประสิทธิภาพดี managementprovides บริษัทที่ มีพื้นฐานของ manag ing ธุรกิจวันนี้ และเตรียมสำหรับ itsfuture ผ่านประสิทธิภาพการทำงานของคน (วิลเลียมส์ 1991) จัดการประสิทธิภาพจะมาโดยเฉพาะอย่างยิ่งที่เกี่ยวข้องกับชาวต่างชาติที่ theymust เอ็ม ployees ที่มีความสำคัญต่อการกำหนดกลยุทธ์ multinationalcorporations (MNCs) และบริษัท haverealized ยัง seeksustainingcompetitiveadvantage จาก effectivemanagement ofhumanresourcesPage 2268 • HUMAN RESOURCE MANAGEMENT, Summer/Fall 2000 implementation (Black, Gregersen,Mendenhall, & Stroh, 1998; Dowling, Welch,& Schuler, 1999). For example, expatriates canestablish a company or a company functionin a foreign location and can provide a for-eign unit with the knowledge that the parentcompany considers necessary for the foreignunit to function effectively. Other rationalesfor sending expatriates are to serve as key con-tacts for coordination and to act in a controlfunction between the parent company andsubsidiaries (Edström & Galbraith, 1977;Torbiörn, 1982; Ondrack, 1985; Borg, 1987;Black et al., 1998).Since expatriates can play a central role inthe global success of companies and their useis expensive (Harvey, 1996), it seems critical tomanage expatriate PM effectively; yet the re-search literature in this area is scarce. For do-mestic employees, studies are availableregarding all elements of a PM system, namelygoal setting, performance appraisal, trainingand development, and performance-related pay.For expatriates, similar studies are practicallynonexistent. For example, it is not well knownwhether performance goals should be set bythe sending company unit or the receiving unitfor an engineer leaving from France to work inthe United States. How should the engineer’straining and development matters be dealt withwhile s/he is on assignment? What if the re-ceiving unit uses a different performance man-agement system than the sending unit? Whosesystem should then be used to manage theengineer’s performance? Essentially, the re-search completed to date in an internationalsetting is limited to one segment of PM, namelyperformance appraisal (Mendenhall & Oddou,1991; Schuler & Florkowski, 1994; Gregersen,Hite, & Black, 1996). Yet, expatriate goal set-ting, training and development, and perfor-mance-related pay, for example, are areas inneed of much more research.In response to this need, I present severalkey findings from a case study on performancemanagement practices at Nokia Telecommu-nications (NTC). The study addresses previ-ously neglected areas of expatriate PM in anattempt to increase our understanding of thisincreasingly key international HRM topic. Toaccomplish this objective, I explore several as-pects of the following research question: Howis the performance of expatriates managed indifferent types of international assignments?Research ApproachDue to the process nature of PM as well asthe lack of rigorous theoretical models, a quali-tative case study approach was deemed anappropriate method for exploring expatriatePM (Yin, 1994; Eisenhardt, 1989). For thatpurpose, Nokia Telecommunications, a Finn-ish-based MNC operating in the telecommu-nications industry, was selected as the casecompany. In the Finnish context, Nokia hasextensive experience sending and receivingpeople on foreign assignments (15 years), andit has more expatriates on assignment (about1,200) than any other company based in Fin-land. It could, therefore, be expected that NTCwould have numerous established practices formanaging expatriate performance.Primarily, I collected data through 81semistructured interviews. The intervieweesconsisted of company expatriates (mainlyFinnish) who worked in different positions anddifferent situations, line managers who hadexperience of sending expatriates on foreignassignments, local employees working outsideFinland, and human resource personnel. Theaim in collecting data from different types ofemployees who understood expatriate PM wasto get a holistic understanding of the process.The interviews were conducted in NTC unitsin Finland, Thailand, China, the United King-dom, and the United States. To cross-checkand complement the interview data, I also as-sessed an extensive amount of internal com-pany documents on expatriate PM.This data were analyzed at severalstages: (1) after the interviews in Finland,(2) after each data collection trip abroad,and, finally, (3) when all the data neces-sary for reaching a saturation point werecollected. These analyses produced fivegroups of expatriates. While PM practicesfor members in a particular group weresimilar, clear differences in PM existedbetween groups. My search to explain thedifferences among these groups produced,in turn, several contingency factors for ex-patriate PM. These factors were identifiedby noticing variations in expatriate PM andPage 3
Expatriate Performance Management • 269 then asking why such differences occurred.To answer the why question, potential con-tingency factors emerged. The relevance ofthe factors thus identified was then com-pared to other expatriate situations at NTC.This process continued until convergenceoccurred for the major contingency factorsfor expatriate PM.Results of the ResearchExpatriate Performance Management Prac-tices at NTCAlthough Nokia Telecommunications hasa global, standardized PM system in place,meaning that all employees’ performanceis managed (to a great extent) similarly, myanalysis revealed a reality that strayed fromthis unity—especially given that five groupsof expatriates emerged at NTC. Thesegroups were defined primarily by the na-ture of their job and included the follow-ing categories:1. Top managers2. Middle managers3. Business establishers4. Customer project employees5. R&D project personnelFor each of these expatriate groups, it wascommon PM practice that all expatriates knewwhat was expected of them, how well they wereperforming, and that they received the oppor-tunity to develop new competencies in orderto meet the requirements of present and fu-ture job assignments.Some differences in the PM among the ex-patriate groups were also clear. These differ-ences revolved around: (1) whether and howperformance goals were set, who set them, andwhat type of goals they were; (2) how expatri-ates’ performance was evaluated and who con-ducted the evaluation; (3) whether training anddevelopment plans were agreed upon with ex-patriates; (4) whether expatriates had the op-portunity to attend training while on assignment;and (5) what type and how clear the linkagewas between expatriate performance and pay.The following section reviews the typical PMcharacteristics of each expatriate group.Top Manager ExpatriatesTop manager expatriates occupied highly in-dependent senior positions overseas, and theirperformance was managed distantly; they com-monly formulated their own performancegoals. One interviewee explained, “My bossand I agreed on key result areas that wereimportant, then it was my task to set morespecific goals and milestones.” Because of thewide scope of their jobs, these interviewees’performance management goals were fairlybroad. For instance, one goal that was derivedfrom a Finnish expatriate’s key result area,Project Management Improvement, was “man-aging future projects more in line with eachproject management handbook”.Most of the top managers’ performancegoals were concrete—defined in their incen-tive scheme. To illustrate, a goal such as“profitability” was specified in the incentivescheme by assigning a target level of operat-ing profit. Linkages between performancegoals and incentive objectives were very clearfor the expatriates in this group. In fact, expa-triates in this
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