Why Do We Need To Consider Cultural Values When Managing Performance?

One of the crucial factors that determine the success of multinational organizations is the extent to which they can implement their human resource (HR) practices globally. For example, managers of multinational organizations must decide whether a common performance appraisal system for evaluating individual job performance is globally effective. Given the strong impact of cultural values on cognitive and behavioral processes and functioning (Hofstede, Reference Hofstede2001), we should not assume that HR practices work the same way across cultures (Hofstede, Reference Hofstede1983). Brewster (Reference Brewster1995) argued that the HR management system in the United States may not be applicable in Europe due to high legal/regulatory pressures in Europe. As a result, the application of U.S. notions to European practice has become a growing research area (Lazarova, Morley, & Tyson, Reference Lazarova, Morley and Tyson2008). Likewise, Asian scholars and HR managers have attempted to investigate the transferability of HR theories and strategies developed in Western cultures (e.g., Tsui, Reference Tsui2006). Thus, in order to broaden our understanding of performance appraisal systems within the context of multiple national cultures, we need research documenting similarities and differences across cultures.

As Adler et al. noted, researchers have documented that contextual factors have a significant influence on performance ratings. Fundamentally, employee evaluation and management are interpersonal processes that are likely to be influenced by relationship-oriented values, skills, attitudes, and beliefs. These processes are shaped by the context in which they are conducted, suggesting that national and organizational cultures are likely to play a role in performance evaluation and management.

Cultural Values Influence Performance Management

One of the most widely used frameworks for examining cultural differences is the five-dimension typology developed by Hofstede (Reference Hofstede1980, Reference Hofstede, Pucik, Tichy and Barnett1992): individualism, power distance, masculinity–femininity, uncertainty avoidance, and long- versus short-term orientation. Among them, individualism and power distance have been used the most to explain the cross-cultural differences that have emerged in this research literature, particularly with regard to performance appraisal attitudes, purposes, and practices.

First, national culture is likely to influence the extent to which performance appraisal is even done within a given organization in the first place. Peretz and Fried (Reference Peretz and Fried2012) examined the influence of societal (national) culture on performance appraisal practices (e.g., who evaluates, who is evaluated, and the purpose of the evaluation). Results based on multiple countries over two time periods confirmed that national cultural practices were related to organizational performance appraisal practices. Congruence between national cultures and performance appraisal characteristics tended to reduce absenteeism and/or turnover, whereas incongruence tended to increase absenteeism and turnover.

Second, national culture is likely to influence the purpose of performance appraisal and corresponding practices. Using a sample from the banking industry in seven countries across Europe, Asia, and North America, Chiang and Birtch (Reference Chiang and Birtch2010) found that performance appraisal for communication-development purposes was more prevalent in Finland and Sweden (low assertive and power distance and high uncertainty avoidance cultures) than elsewhere, reflecting the emphasis put on egalitarianism and the collective reward allocation inherent in Nordic countries (Gupta & Hanges, Reference Gupta, Hanges, House, Hanges, Javidan, Dorfman and Gupta2004). Performance appraisal in high assertive, low collectivist, and uncertainty avoidance cultures (e.g., United Kingdom, United States, Canada) focuses on feedback in order to encourage employees to express their opinion during performance reviews. However, performance appraisal feedback was not prevalent in Hong Kong and Singapore where feedback sessions were characterized as less frequent, predominantly top-down, and somewhat limited in terms of employee participation. These naturally occurring differences in performance rating purpose may lend themselves to quasi-experimental comparisons of the effect of rating purpose on employee reactions and organizational effectiveness.

Third, national culture is likely to influence how feedback is viewed (e.g., criticism is avoided in some Asian cultures). As Adler et al. noted, a particular hindrance to performance appraisal is the lack of evidence that employees actually accept and act on feedback. Operationally, the multisource rating process has been recognized for its value because of its inherent ability to reinforce learning and create actionable knowledge (Shipper, Hoffman, & Rotondo, Reference Shipper, Hoffman and Rotondo2007). The effectiveness of a multisource rating depends largely on the way feedback is perceived and processed and on the willingness of the recipient to engage in self-reflection (Toegel & Conger, Reference Toegel and Conger2003). Shipper et al. (Reference Shipper, Hoffman and Rotondo2007) examined the effectiveness of 360-degree feedback process interventions across five countries and found that 360-degree feedback was perceived as most effective in cultures low on power distance with individualistic values.

Fourth, culturally related values contribute to rater discrepancies. One reason Adler et al. identify for abolishing performance ratings is low levels of interrater agreement between raters on the same performance. There are numerous combinations of raters to consider (e.g., supervisor–peer, supervisor–self, peer–peer, etc.). We discuss how different rating sources are likely to be influenced by culture.

Self-Ratings

A substantial number of studies have documented self–other rating discrepancies that occur in a multisource rating context and the prevalent assumption is that the discrepancies are due to the tendency for individuals to overrate their own performance (leniency in self-ratings; Harris & Schaubroeck, Reference Harris and Schaubroeck1988; Heidemeier & Moser, Reference Heidemeier and Moser2009). However, a close reading of this literature indicates that most research supporting leniency bias has been conducted in Western cultures. Lenient ratings might not always occur in other cultures. Some researchers have even found the opposite of leniency in self-ratings. For instance, Farh, Dobbins, and Cheng (Reference Farh, Dobbins and Cheng1991) reported that self-raters in the Republic of China tended to rate their own performance lower than did their bosses, peers, and subordinates (i.e., modesty bias), suggesting that there might be a fundamental difference in employees’ self-perception across cultures. In fact, modesty bias in self-ratings is frequently attributed to collectivism (Farh et al., Reference Farh, Dobbins and Cheng1991). Unlike individualistic cultures that emphasize individual uniqueness, collectivistic cultures deemphasize individual achievement and sometimes require suppression of individual interests for the sake of interpersonal harmony and group cohesion (Hofstede, Reference Hofstede2001). This would lead to collectivists rating themselves lower compared with others. This notion was also corroborated by another empirical study in which Japanese and Korean managers rated themselves lower than others rated those managers (Barron & Sackett, Reference Barron and Sackett2008). Moreover, meta-analytic research indicates that the mean level of self-ratings was higher in individualistic societies (Heidemeier & Moser, Reference Heidemeier and Moser2009). These findings have suggested that leniency in self-ratings is not universal and modesty bias in self-ratings in some cultures may result in different patterns of rating discrepancy.

Supervisor Ratings

Although it would be preferable that all supervisors evaluate employees on the same behaviors, cultural values appear to influence the level of importance placed on different aspects of job performance. For instance, Zhou and Martocchio (Reference Zhou and Martocchio2001) reported that managers in collectivistic cultures tend to focus more on relational aspects of performance (e.g., maintaining relationships with others) when making bonus decisions, as compared with American managers. Likewise, Hu, Hsu, Lee, and Chu (Reference Hu, Hsu, Lee and Chu2007) found that Taiwanese managers (a collectivistic culture) allocated more rewards to subordinates with a closer affective relationship, whereas U.S. managers allocated more rewards to subordinates contributing to task performance. It may be that the decision-making behavior of Eastern managers is more likely to reflect the collectivist cultural value emphasizing the importance of maintaining harmonious relationships at work. Furthermore, supervisors’ interpersonal affect or liking has been found to influence performance ratings. For instance, Varma, Pichler, and Srinivas (Reference Varma, Pichler and Srinivas2005) found that U.S. supervisors were able to separate their liking for a subordinate from actual performance when assigning performance ratings, whereas Indian counterparts were shown to inflate performance ratings of low performers due to liking. The notion of supervisors’ different emphasis on job performance dimensions across cultures is corroborated in a study of the cross-cultural equivalence of job performance ratings (Ployhart, Wiechmann, Schmitt, Sacco, & Rogg, Reference Ployhart, Wiechmann, Schmitt, Sacco and Rogg2003). Specifically, Ployhart et al. (Reference Ployhart, Wiechmann, Schmitt, Sacco and Rogg2003) examined whether job performance ratings, including customer service, proficiency, and teamwork, developed in the United States are equally invariant across cultures. Results suggest that supervisors across three cultures (Canada, South Korea, and Spain) may use and interpret the performance rating dimensions and scales similarly (e.g., a 4 on a 5-point scale is interpreted the same way across countries), but perceptions of performance dimensions may differ (e.g., supervisors in South Korea may perceive subordinates’ effectiveness for interacting with customers differently than supervisors in Canada and Spain). This research highlights the influence of cultural values on supervisor rating behavior, a key component of performance evaluation in almost every organization.

Peer and Subordinate Ratings

Cultural values can also influence peer and subordinate ratings. Huo and Von Glinow (Reference Huo and Von Glinow1995) proposed that Chinese workers may be reluctant to assess their peers due to fear of jeopardizing their interpersonal relationships with coworkers; as such, they are likely to focus on positive aspects of performance, which will lead to high ratings for all ratees. Individual-level cultural values also matter in a multirating feedback context. For instance, Ng, Koh, Ang, Kennedy, and Chan (Reference Ng, Koh, Ang, Kennedy and Chan2011) found that rating biases can be amplified when raters hold certain cultural beliefs. Specifically, subordinates with high power distance generated more lenient ratings of their supervisor because they were more likely to perceive that upward feedback violates the subordinate–superior status hierarchy. Also, collectivists are likely to show leniency in peer and subordinate ratings to avoid the negative social consequences of candid feedback, raising concerns about the utility of these ratings in such cultures. Moreover, Mishra and Roch (Reference Mishra and Roch2013) found that raters high in interdependent self-views (collectivism) tend to give higher overall ratings to ratees high in interdependent self-views. In contrast, raters with a high level of independent self-views (individualism) did not show such this tendency, demonstrating individual-level cultural values also influence the rating process.

Future Research Directions

Given the evidence that national culture influences performance management, it is important to identify the conditions under which the effectiveness of performance appraisal and practices is maximized. We propose that the challenges and concerns that Adler et al. raised in the focal article need to be tested in other national cultures and multicultural organizations. For instance, we need to examine the extent to which conflicting purposes for performance management arise in other countries and whether solutions have arisen. Likewise, are interventions like rater training as equally disappointing across national cultures, and/or have others found ways to strengthen the relationship between performance of rates and the ratings received?

It is also important to broaden our understanding of why self–other rating discrepancies occur and what contributes to these discrepancies through a cultural lens. For instance, a lack of self–other rating agreement in Eastern cultures may be due to a modesty (rather than leniency) bias in self-ratings. In addition, supervisors are likely to have different rater goals (Murphy, Cleveland, Skattebo, & Kinney, Reference Murphy, Cleveland, Skattebo and Kinney2004), and these may also vary across cultures. Moreover, peers with high power distance who are conscious of status differences in a hierarchical organization may negatively evaluate peers with low power distance who are less concerned about power status and value equality.

In addition, it should be noted that cultural values can also manifest themselves and influence ratings at the individual level. There has been considerable research supporting the notion that there is variability in cultural values even within one culture (Brewer & Chen, Reference Brewer and Chen2007). That is, there is no guarantee that employees within one country hold the same values (e.g., Suh, Diener, & Updegraff, Reference Suh, Diener and Updegraff2008), and within-culture differences may play an important role in performance appraisal attitudes and effectiveness. Thus, further research should focus on the effect of cultural values on performance appraisal and system at the individual level as well as at the national level.

Furthermore, as the majority of these studies have examined cultural differences within the framework of individualism, power distance, and/or uncertainty avoidance, other conceptualizations of cultural values (e.g., masculinity–femininity and long- versus short-term orientation) should be considered to enhance our understanding of the influence of cultural differences on performance management. More important, an examination of cross-cultural replicability of performance ratings and dimensions should be conducted prior to establishing a basis for theoretical and empirical comparisons. As Ployhart et al. (Reference Ployhart, Wiechmann, Schmitt, Sacco and Rogg2003) noted, if performance ratings are not equivalent across cultures, it is not only less meaningful to make comparisons between cultures but also inappropriate to use these measures interchangeably across cultures.