When employees work in their home country, it is simple to determine who is responsible for the performance appraisal process. We discover that the process is not so clear-cut when dealing with expatriates.

Respondents were equally split as to which form to use.

One-third of respondents recommend companies use the same performance appraisal form, regardless of location. Companies favoring this approach tend to measure performance on the achievement of agreed upon goals and objectives rather than subjective criteria. Along the same line, some companies have a standardized rating system and similar criteria for what is rated while allowing countries to modify the form to conform to local conditions.

The rationale for using the local company’s form is best explained by a line manager with responsibility for a large local national staff and expats of six nationalities. “These [local forms] are understood locally and the person rating does not have to work out how to fill in someone else’s form with no immediate access to advice and training. If there is anything significant missing from the local forms, the home country could request the missing information.”

Expat-related items

The rest of the people interviewed suggest that companies create a special form for expatriates. An expat HR manager of a British product services company claims, “The expat form should include a section for the evaluation of how well the expat is doing with regard to “expat-related” items. For example, if the expat is doing the job because a local national is not yet capable of the task, they must also provide training to a local national. Therefore, some performance evaluation should take place as to how well the expat is teaching the skill(s) to locals.”

The manager adds, “Some “soft” factors should possibly be taken into account as well –- how well the expat “fits in” with the local culture, is adapting to the assignment, etc. After all, some of those soft factors can be more important to the success of the assignment than actual job performance. This becomes especially crucial when an expat is sent to gain “overseas experience” to enhance his or her career.”

A functional review is fairer

Everyone agrees that the evaluation process should be two-tier: completion of the performance appraisal form in the assignment location followed by review of the completed form by someone in the home country with functional oversight for people in a specific discipline.

According to a career expatriate, “The employee must have a separate communication path back to functional peers/managers as there could be major differences between the way the local company and the home country rate the performance. I have seen expats rated in glowing terms because the assignment location presumed they were experts in all things and I have seen expats marked down because the assignment location was disappointed to discover they were human.”

Everyone interviewed had war stories of expat performance that was misinterpreted until the functional review. For example, expats sent to resolve problems have been branded difficult because they said “no”, even though their negative response was appropriate to the situation. Without functional review, the expat’s performance could be rated too harshly, which might negatively affect his/her career progression.

Functional involvement provides someone to act as ombudsman for the expat. This person can add a memo to the appraisal explaining the circumstances, which would mitigate the negative effects of the appraisal and allow both sides to be heard. Functional review allows the home country to guarantee that all expats are treated fairly and are held to the same standard of performance.

Who Determines the Salary Increase?

Everyone agrees the home country should determine expat salary increases. They are charged with determining long-term fairness and parity since they will ultimately have to fit the expatriate back into their salary system.

In my experience as an international HR manager, promotional increases provided most differences of opinion between home and host countries. All too often the additional costs charged when an expat was promoted made the expat too expensive. At the same time, the expat’s expertise was still required. How to deal with this conundrum?

Several companies have developed creative solutions. One company has a separate budget in the home country to cover increased costs not borne by the assignment locations. Another company bears all expat costs in the home country and charges assignment locations a pro-rata basis for the number of expatriates assigned.

Conclusion

To ensure expat performance is understood and rated appropriately, companies and expats recommend having functional review in the home country in addition to having the appraisal completed in the assignment location. While measuring performance should be done at the assignment location, determining the amount of salary increase is clearly a process of the home country.

September 2003

Carrie Shearer spent 20 years in international HR, living and working in seven countries, as well as working at headquarters. Currently she runs a small international HR consulting practice and is a novelist who writes about expat living.