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Performance Management in MNC Subsidiaries in China: A Study of Host-country Managers and Professionals

Swedish School of Economics and Business Administration, Helsinki

Employees' attitudes towards the organization's performance management (PM) system are crucial for its effectiveness. However, little research has been conducted on (western) PM in multinational companies' (MNCs) subsidiaries operating in foreign cultures. This study examines host-country employees' attitudes towards several elements of PM in a European MNC's subsidiaries in China. A survey approach yielded 604 host-country employee responses from geographically dispersed subsidiaries in China. The results demonstrate that Chinese managerial and professional employees are satisfied with (western) PM. Moreover, the results reveal that Chinese employees are especially satisfied with PM oriented towards their short- and long-term development. In addition, Chinese employees prefer to participate in setting their performance objectives and to receive formal performance feedback. This article proposes that current characteristics of the labour market available to MNCs in China and a general converging trend towards more career-oriented individualistic values may explain Chinese employees' attitudes towards PM.

Key Words: performance management • host-country employee attitudes • HRM in China • convergence/ divergence

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