IMPLEMENTING A GLOBAL PERFORMANCE MANAGEMENT SYSTEM Case: Outotec

Abstract

Because of globalization and intensifying competition multinational companies (MNCs) need to pay attention to their management systems in order to enhance their organizational performance. This study examines a HRM system that is said to have a significant effect on organizational performance, i.e. performance management (PM) systems including elements such as goal setting, evaluation, and training and development. There is not much literature to be found concerning the effects of PM especially in global context. Thus, this study takes a global perspective to view PM systems in MNCs. Because having a global system in a MNC inevitably requires some level or form of global integration, issues related to that are also included in this study.

More precisely, the study aims at, first, explaining the drivers behind implementing a global PM system. Secondly, the study provides an example of how global PM can be conducted in a MNC through describing the case company's global PM design and implementation process in detail. Third purpose of the study is to analyze how implementing a global PM system affects the MNC. This is a qualitative single case study conducted in a Finland-based MNC in the mining and metals industry, Outotec, and the main research method was interviewing. For this study, Outotec’s units from Finland, Australia, Germany and Chile were chosen.

The most emphasized drivers behind implementing the global PM system were strategy implementation, development orientation and the need for global integration of PM. All interviewees regarded PM as beneficial in general. However, some challenges, such as inadequate skills of the supervisor, affect the gaining of those benefits. The results of this study suggest that PM with emphasis on development will e.g. increase employees' commitment to the company. Communication is a crucial part of PM and thus, aspects related to personal qualities, characters, contacts and relationships are emphasized. Also consistency of the PM dialogues was found to be important. This study suggests that global integration of PM can be achieved through taking a balancing act between standardization and differentiation between the units by including both compulsory and non-compulsory elements in the PM system.