Remembering the diversity: performance management for organizations that span the globe

I’m not going to lie to you: rebooting your performance management to effectively drive organizational performance, develop people, and reward equitably requires a good deal of serious thought. Managing performance at a global level, however, warrants serious thought on steroids. You must have a solid understanding of the legislative and regulatory issues and demographic trends and labor laws from every jurisdiction in which you’ve got people. Hard enough. But the most critical global consideration for rebooting your performance management is to understand the cultural differences in your workforce. 

If we were to take a peek at what organizations have historically done to recognize these differences, we’d see that the tactics range dramatically from barely a nod (bad) to localized approaches custom-designed for each unique culture (excellent). Sadly, ‘barely a nod’ tends to prevail. And so many global organizations continue to struggle to optimize their talent management processes in the ever-expanding global market.

What is the right approach for implementing a performance management program for a global workforce? Well, I’ve said it before and I’ll say it again: there is no one-size-fits-all solution. But if you agree with me that culture is the most important factor, then you’ll be sure to put a respectable amount of effort into understanding those cultural differences and how they will weigh into your solution design. And you’ll make sure your leadership is aligned on how you plan to manage various global employee groups differently from one another.

If you want to gain an appreciation for what will and won’t work here, I recommend turning to the extensive research conducted by Geert Hofsted on cultures in the workforce . In his research, Hofsted found five fundamental value dimensions that can be used to explain cultural diversity in the world. The “5 Dimensional Model”1 is one of the only models out there that’s based on rigorous cultural research, rather than opinion (which is why I like it). The five dimensions are:

  1. Power Distance (PDI): The degree to which people accept that power is distributed unevenly within a group or society.
  2. Individualism (IDV): The degree to which taking responsibility for oneself is more valued than belonging to a group that will look after its people in exchange for loyalty.
  3. Masculinity (MAS): The degree to which people value performance and the status that derives from it, rather than quality of life and caring for others.
  4. Uncertainty Avoidance (UAI): The degree to which people develop mechanisms to avoid uncertainty.
  5. Long-Term Orientation (LTO): The degree to which people value long-term goals and have a pragmatic approach, rather than being normative and short-term oriented.

What does this all mean for designing performance management systems? Well, let’s take a look at the traditional review process. The annual review is a widely accepted practice in countries like the US and the UK. In the US (and other countries with similar cultures) we score low on power distance (the degree to which people accept that power is distributed unevenly within a group or society) and high in individualism (the degree to which taking responsibility for yourself is valued more highly than belonging to a group that will look after its people in exchange for loyalty). With those defining cultural factors, we find it easy to accept the idea that very direct feedback is “the right way” to improve performance. This notion falls flat in high power distance countries, such as Japan. In fact, very direct feedback in these cultures is likely to be seen as dishonorable and disrespectful. This means that we have to take a different approach that fits these cultural norms and expectations.

Another interesting dimension to consider is how your planning horizon may vary from culture to culture. When I was at Hitachi Consulting I learned to appreciate the very real impact of working within an organization heavily influenced by Japanese leadership. One of the most notable differences was the manner in which the Japanese leaders thought about the short and the long view. In the US we had a much shorter planning horizon in contrast to our Japanese peers. This difference in focus radically influenced how each group defined what ‘good’ looked like in both the short and long terms. At times this created conflict and stress when setting targets and measuring success.

When putting together your team to build your new global performance management solution, remember to include individuals who can help you understand cultural differences.

Rewarding equitably can be another tricky area as you navigate from culture to culture. The cash-is-king individual performance bonuses that we default to in countries like the US and UK are not a good fit in cultures that focus on greater responsibility, larger spans of control, and wider territories, as preferred rewards. Again, this showed up in my experience at Hitachi; the Japanese executives were quite surprised by our vice president’s bonus model, while the US leaders were struck by their Japanese counterparts’ lavish spending allowances. As they say, different strokes for different folks (or in this case, different cultures, different expectations). In some cultures cash rewards may even be perceived as petty. The headline? Tread carefully in this arena. If you’re planning a bonus program, be sure to consider which cultures value and expect bonuses, how you should measure them if you use them, and whether team or individual incentives would work best.

Beginning to feel a bit overwhelmed? Let me reinforce a few ideas that may help keep you grounded. First, when putting together your team to build your new solution, remember to include individuals who can help you understand these cultural differences. They can be a voice for what will work and what is likely to fall flat. Get comfortable with allowing for differences across cultures. Your goal will be to find the best balance between meeting your desire for consistency and creating great experiences for your global team. Also, before you roll out your solution, test it in different geographies and cultures — not just the solution itself, but also the supporting content, since some degree of localization is likely to be needed on that as well.

In the end, keep humanity at the forefront of your design, and never forget that this is about your people, not the process!

Happy Rebooting,

These are concepts from my book, How Performance Management is Killing Performance – and What To Do About It. Check out the book (you can order it from Barnes and Noble or Amazon) for the “full meal deal” – MTC

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1 Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations (London, UK: Sage Publications, 2003).