Richard Evans, managing director of Siam Chemicals Company (SCC) in Thailand, a division of Chimique Helvtique Ltd (CHL), a Swiss chemicals group headquartered in Basle,

Richard Evans, managing director of Siam Chemicals Company (SCC) in Thailand, a division of Chimique Helvétique Ltd (CHL), a Swiss chemicals group headquartered in Basle, had only been in his position for 18 months. But dealing with the evaluation of Mr. Somsak, one of his local mainstays, was about ready to drive him back to Switzerland or to England, from where he had originally come. This was Richard’s first assignment outside Europe, and he had not found it an easy adjustment. Between the long commutes from home to the plant, due to the terrible traffic, the lack of sidewalks for taking his young son out in his pram, and the incredibly strong attitude of deference the Thai employees exhibited toward him, most of his first 18 months had been spent trying to get used to the locale and the culture. It was his first time in Asia and the culture shock for himself and his family (wife and three young children) had been harsh.

To move from international schools and skiing in clean, dry air in Switzerland to hot, humid, dirty, and polluted Thailand, where they spoke not a word of the local language and had no idea of the local customs, was indeed quite a shock.

It was shortly after arrival that he had had his first encounter with Mr. Somsak, considered one of the senior and longer-established employees after only three years on the job. Somsak worked both for Mr. Evans and for James Brown, the regional marketing manager, in the firm’s regional offices in Singapore. Somsak had resigned right after a meeting that Richard had had with him to try to counsel him on how to function better within the matrix organizational structure of CHL. Somsak had explained to Mr. Evans that Thai people found the concept of two bosses impossible to reconcile with their strong sense of hierarchy. They preferred to know exactly who was their senior boss so they would know whose approval to seek. Richard had seized on the opportunity to counsel Somsak in a style that had always worked with his European managers. He had been stunned when Somsak had reacted with these words: “I realize from what you have said that I am not doing a good job. I am not suitable for my post and so the only thing I can do is to resign.” Only through the strenuous efforts of Somsak’s other boss, James Brown, to whom Somsak owed a strong sense of allegiance, had he been persuaded to stay.

But now, 18 months later, Richard was trying to figure out how to reconcile a major dilemma in how to complete the corporate evaluation form on Mr. Somsak. During the past 18 months, Mr. Somsak had maintained a very polite and correct but by no means warm attitude toward his managing director. For his part, Richard had come to appreciate that Somsak was a very hard-working and meticulous manager. He was willing to work every hour of the day, was highly intelligent, and spoke excellent English, since he had been dealing with European firms for many years. Richard had made every effort to convey his appreciation of Somsak’s efforts and had recently been heartened by signs of a more trusting, comfortable relationship. Now the evaluation problem threatened all the gains Richard felt he had so carefully made. Richard knew that corporate headquarters (both his own direct supervisor and the corporate HR director) wanted all subsidiaries to adopt a more consistent form. The annual evaluation process was imposed on all CHL’s subsidiaries and had been in use in Thailand ever since the company’s foundation seven years ago. The same format was used company-wide for all management grades. The basis of the form was a set of six to seven key objectives to be achieved by a certain point in time during the coming year. The actual process involved two one-on-one meetings between the supervisor and the subordinate managers. The first meeting was to go over that year’s performance and the second was to set objectives for the next year.

Richard realized that his local managers found the very idea of sitting down with their bosses to discuss their performance a threatening and alien concept. Even the most senior, who had a good command of English and had been with the company for some time, found it difficult both to meet with Richard for their own evaluations, and also to carry out the process with their own staffs. It was not for them to make any judgment about their performances, that was the job of the boss.

The most difficult part of the process involved the assigning of a letter grade. The chemical group used a standard A–E grading in which a normal distribution was to be applied, with an A grade being applied to the top 3–4 percent of really outstanding managers and the C category, into which 60–70 percent of managers usually fell, implying a good, standard performance with all requirements fulfilled. Looking through the records, Richard found that his predecessors had decided it was best not to disturb the relationships with local staff and had been awarding A grades to over 90 percent of the local managers.

Richard thought it was part of his obligation, as managing director and as representative of the parent company, to move the local evaluation system to reflect the international standards. In addition, the corporate HR director was championing the idea of developing an international cadre of managers who could help to staff the rapidly growing expansion of CHL’s global operations. He had indicated how important a role the performance evaluation system was in that effort to identify the best managers within the local subsidiaries to begin developing them for other assignments.

In terms of achievement of objectives for the regional office, Somsak had done an A job. But in terms of meeting other objectives that Richard had set for him, such as dealing with better integrating his team with the broader firm, Richard felt that he had not done what was expected. He had built up his team but had only succeeded in forming an isolated clique. The team acted like a family-centered on Somsak. In his own mind, Richard thought an overall C grade was totally appropriate. But the reality was that Somsak (and probably James Brown) would not understand and would again resign, and Richard would lose a very important contributor. And it was entirely possible in this culture that he would lose the whole team.

He had no idea how to proceed.

1. A brief summary of the case. What is happening?
2. What are the International Human Resource Management challenges facing the business?
3. What solutions are being considered?
4. What additional actions or recommendations would you have if you were the Head of Human Resources?