Customization Decisions Regarding Performance Management Systems of Multinational Companies

Abstract

Performance management (PM) is an important human resource (HR) process for the global organization. There is yet no theoretical framework for identifying the factors that affect customization decisions to standardize or localize PM systems of multinational companies (MNCs). Our purpose is to ascertain the extent of customization of PM systems in MNCs and identify factors that influence customization decisions. We hypothesized that customization of a PM system is a function of global integration, cultural distance and the upstream/downstream nature of PM activities moderated by contextual enterprise variables. A survey was conducted among senior HR practitioners working for the 100 largest companies (by number of employees) in Bulgaria and Romania. Results from a response sample of 97 Bulgarian and Romanian companies indicate that MNCs are already aware of the need for cultural localization of their PM systems and that global integration strategy and specific cultural dimensions — power distance and masculinity — matter more in customization decisions than does overall cultural distance.