Performance appraisals in MNCs : do they influence the psychological contract? A study of Australian subsidiaries

Abstract

Complications in executing performance appraisals have been commonly reported. In spite of this, little is known about the conduct of performance appraisals for host country managers. These managers are usually isolated from their manager and it could therefore be expected that they would experience difficulties in the conduct of their performance appraisal. This paper examines the extent, nature and limitations of performance appraisals and the subsequent impact that these issues may have on the psychological contract for host country managers in a sector of the healthcare industry in Australia. The study found that the performance appraisal process was influenced by the emphasis given to the bottom line and the relationship with the supervisor. Furthermore, the findings suggest that the host country manager’s experience of the appraisal often results in the manager perceiving a violation of their psychological contract with the company. The author argues that integrating the frames of performance appraisal and the psychological contract provides a more comprehensive understanding of the employee-employer relationship in an international setting.18 page(s