MANAGING FOR PERFORMANCE William Chen William Chen is president of Global Bio-Technology Corporation's Asia-Pacific operations and today is his 'big day. He is resigning his position with Global to join XYZ, as executive vice-president, strategic planning. XYZ is one of Global's major competitors. Headquartered in Chicago, the US Global is a large agricultural biotechnology a corporation, which has been operating for 50 years. It has extensive global coverage, with subsidiaries in 35 countries, five of them being in the Asia-Pacific region (Thailand, Indonesia, Vietnam, Korea and Australia). Global currently employs 15 000 employees worldwide. In 2005, corporate headquarters' staff numbers were drastically reduced, as Global underwent major restructuring when it established regional headquarters in South America, Eastern Europe, Africa and the Asia- Pacific. Global's Asia-Pacific regional headquarters were established in Sydney, Australia, to oversee and manage all Asia-Pacific activities, while playing an insider role in local markets and strengthening competitiveness. A leadership development centre has been established in Sydney and managers are brought from throughout the region for training at this centre. Global's management now features decentralised decision making. Within the decentralised management structure, each region is able to concentrate its resources on business areas and technologies that will help Global develop worldwide. Emphasis is placed on innovation through research and development. Communication within and between regional operations is encouraged through project teams, particularly a worldwide research network, to maximise knowledge sharing across Global's worldwide operations. However, not all functions are decentralised. Key financial managers around the world are US expatriates. Although regional headquarters have considerable input, major financial decisions are made at corporate headquarters. Hence, a unified core management guides Global worldwide, allowing a unified set of values and shared corporate identity to be preserved. Global faces several challenges in the Asia-Pacific. In May 2010, William Chen received a report of a regional survey of customers. This survey highlighted major problems. Global has been unable to gain market share targets in Singapore, Japan and Thailand. Common customer perceptions in those countries are that the salespeople lack product knowledge and lack respect for customers. The product range also needs to be broadened to address the diversity of customer preferences across the region. This report was conducted as part of a worldwide investigation into recent poor financial results. The global financial crisis of 2008-09 was causing some of these problems but could not be 'blamed for all problems. Global's strategic plan is to develop into an MNE that combines the power and resources of a worldwide company with the flexibility and responsiveness of a small firm. William Chen doubts that this 'dream' is possible. His personal experiences at Global have led him to be cynical. He joined Global in 2000, when he was 33. He has a bachelor's degree in biological sciences from the Chinese University of Hong Kong, his hometown. Before joining Global, he had worked for a pharmaceutical company on projects in Hong Kong, China and Thailand. Ever since William Chen joined Global, he has received superior performance ratings. Every year, Global evaluates the performance of all employees; all managers are placed in a rank ordering, reflecting their performance effectiveness. The top 20 per cent are given substantial merit pay increases and are positioned for subsequent promotion into even more responsible and rewarding jobs. The middle 60 per cent are given average pay increases. The bottom 20 per cent receive no pay increase and are often encouraged to leave the firm. William Chen was always in the top 20 per cent. William Chen progressed rapidly up the company's hierarchy. He was initially a sales representative in a Hong Kong-based group. He was appointed head of the 'genetically modified products' marketing group in Hong Kong within 2 years, and 2 years later he was put in charge of 'genetically modified products' sales for Asia-Pacific. Three years later he moved to Global headquarters in Chicago. In 2009, he was promoted to a senior marketing position for the 'genetically modified products' group. By 2012, William had spent 3 years in Chicago. Company continued MANAGING FOR PERFORMANCE policy required that after 3 years he return to the Asia-Pacific region. The main reason given for this is that expatriates from regions such as Asia-Pacific are seen as more valuable to the company if they return to their home region, where their assets, including linguistic and cultural affinities, can be put to maximum use. During his 3 years in Chicago, William was treated like a Global US manager in terms of pay scale and benefits. In addition, as an expatriate manager, he was given extra compensation to cover schooling costs for his children, travel during an extended annual home leave, and so on. William Chen feels, however, that he has been treated unfairly by Global. Other executives from this region have confided that they too feel that Global has treated them unfairly, since their career paths have been essentially confined to the Asia-Pacific region. Other factors also annoy them. For example, Global prefers to use cash compensation as much as possible. It is felt that this is a strong performance motivator. Many view Global's retirement bonus as the ultimate cash reward. Key employees receive a cash bonus equal to 3 years' salary when they retire. This could amount to several hundred thousand US dollars, in addition to regular retirement program benefits. However, an Asian executive in an Asian country does not receive the special 3-year salary bonus upon retiring. In March 2012, William Chen was offered a position at Global Indonesia. He turned it down, claiming hardship on his family if he were to relocate there. A month later, he requested advancement into the Global US organisation. His reasons for this included the fact that his wife enjoyed her work in Chicago and they did not want their children's education to be disrupted by relocation. His request was denied. Shortly thereafter, William was offered, and accepted, the president's position at Global's Asia-Pacific regional headquarters in Sydney. Within 3 months, he and his family had relocated to Sydney. William arrived in Sydney determined to recover from what he felt was a financial loss and an ethnocentric insult caused by Global's failure to recognise him on an equal basis with parent country nationals. He was approached by an executive search firm and invited to apply for the position at XYZ. He and his family will now move to San Francisco so William can take up his position at XYZ headquarters. CRITICAL THINKING QUESTIONS 1 Identify the major characteristics of IHRM at Global Bio-Technology Corporation. Examine the advantages and disadvantages of these identified characteristics with particular reference to performance management. 2 Consider emerging issues for Global and suggest possible strategies for the organisation. MANAGING FOR PERFORMANCE William Chen William Chen is president of Global Bio-Technology Corporation's Asia-Pacific operations and today is his 'big day. He is resigning his position with Global to join XYZ, as executive vice-president, strategic planning. XYZ is one of Global's major competitors. Headquartered in Chicago, the US Global is a large agricultural biotechnology a corporation, which has been operating for 50 years. It has extensive global coverage, with subsidiaries in 35 countries, five of them being in the Asia-Pacific region (Thailand, Indonesia, Vietnam, Korea and Australia). Global currently employs 15 000 employees worldwide. In 2005, corporate headquarters' staff numbers were drastically reduced, as Global underwent major restructuring when it established regional headquarters in South America, Eastern Europe, Africa and the Asia- Pacific. Global's Asia-Pacific regional headquarters were established in Sydney, Australia, to oversee and manage all Asia-Pacific activities, while playing an insider role in local markets and strengthening competitiveness. A leadership development centre has been established in Sydney and managers are brought from throughout the region for training at this centre. Global's management now features decentralised decision making. Within the decentralised management structure, each region is able to concentrate its resources on business areas and technologies that will help Global develop worldwide. Emphasis is placed on innovation through research and development. Communication within and between regional operations is encouraged through project teams, particularly a worldwide research network, to maximise knowledge sharing across Global's worldwide operations. However, not all functions are decentralised. Key financial managers around the world are US expatriates. Although regional headquarters have considerable input, major financial decisions are made at corporate headquarters. Hence, a unified core management guides Global worldwide, allowing a unified set of values and shared corporate identity to be preserved. Global faces several challenges in the Asia-Pacific. In May 2010, William Chen received a report of a regional survey of customers. This survey highlighted major problems. Global has been unable to gain market share targets in Singapore, Japan and Thailand. Common customer perceptions in those countries are that the salespeople lack product knowledge and lack respect for customers. The product range also needs to be broadened to address the diversity of customer preferences across the region. This report was conducted as part of a worldwide investigation into recent poor financial results. The global financial crisis of 2008-09 was causing some of these problems but could not be 'blamed for all problems. Global's strategic plan is to develop into an MNE that combines the power and resources of a worldwide company with the flexibility and responsiveness of a small firm. William Chen doubts that this 'dream' is possible. His personal experiences at Global have led him to be cynical. He joined Global in 2000, when he was 33. He has a bachelor's degree in biological sciences from the Chinese University of Hong Kong, his hometown. Before joining Global, he had worked for a pharmaceutical company on projects in Hong Kong, China and Thailand. Ever since William Chen joined Global, he has received superior performance ratings. Every year, Global evaluates the performance of all employees; all managers are placed in a rank ordering, reflecting their performance effectiveness. The top 20 per cent are given substantial merit pay increases and are positioned for subsequent promotion into even more responsible and rewarding jobs. The middle 60 per cent are given average pay increases. The bottom 20 per cent receive no pay increase and are often encouraged to leave the firm. William Chen was always in the top 20 per cent. William Chen progressed rapidly up the company's hierarchy. He was initially a sales representative in a Hong Kong-based group. He was appointed head of the 'genetically modified products' marketing group in Hong Kong within 2 years, and 2 years later he was put in charge of 'genetically modified products' sales for Asia-Pacific. Three years later he moved to Global headquarters in Chicago. In 2009, he was promoted to a senior marketing position for the 'genetically modified products' group. By 2012, William had spent 3 years in Chicago. Company continued MANAGING FOR PERFORMANCE policy required that after 3 years he return to the Asia-Pacific region. The main reason given for this is that expatriates from regions such as Asia-Pacific are seen as more valuable to the company if they return to their home region, where their assets, including linguistic and cultural affinities, can be put to maximum use. During his 3 years in Chicago, William was treated like a Global US manager in terms of pay scale and benefits. In addition, as an expatriate manager, he was given extra compensation to cover schooling costs for his children, travel during an extended annual home leave, and so on. William Chen feels, however, that he has been treated unfairly by Global. Other executives from this region have confided that they too feel that Global has treated them unfairly, since their career paths have been essentially confined to the Asia-Pacific region. Other factors also annoy them. For example, Global prefers to use cash compensation as much as possible. It is felt that this is a strong performance motivator. Many view Global's retirement bonus as the ultimate cash reward. Key employees receive a cash bonus equal to 3 years' salary when they retire. This could amount to several hundred thousand US dollars, in addition to regular retirement program benefits. However, an Asian executive in an Asian country does not receive the special 3-year salary bonus upon retiring. In March 2012, William Chen was offered a position at Global Indonesia. He turned it down, claiming hardship on his family if he were to relocate there. A month later, he requested advancement into the Global US organisation. His reasons for this included the fact that his wife enjoyed her work in Chicago and they did not want their children's education to be disrupted by relocation. His request was denied. Shortly thereafter, William was offered, and accepted, the president's position at Global's Asia-Pacific regional headquarters in Sydney. Within 3 months, he and his family had relocated to Sydney. William arrived in Sydney determined to recover from what he felt was a financial loss and an ethnocentric insult caused by Global's failure to recognise him on an equal basis with parent country nationals. He was approached by an executive search firm and invited to apply for the position at XYZ. He and his family will now move to San Francisco so William can take up his position at XYZ headquarters. CRITICAL THINKING QUESTIONS 1 Identify the major characteristics of IHRM at Global Bio-Technology Corporation. Examine the advantages and disadvantages of these identified characteristics with particular reference to performance management. 2 Consider emerging issues for Global and suggest possible strategies for the organisation