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International Differences in Subjective Performance Evaluation, Compensation and Career Dynamics in a Global Company

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In this paper, we use confidential personnel records from a large multinational
firm to study the differences in subjective performance evaluation and
their consequences across countries. We focus our analysis on three different
sets of countries: Europe (where the headquarter is established), U.S. and
Asia (Japan and China). We try to understand why performance evaluation
is distributed differently across countries, and how these differences affect
wage growth, the size of the bonus and promotion decisions. We find that
evaluations tend to be better on average at the headquarter, but also that
wages, bonuses and promotion decisions are less sensitive to performance,
therefore diminishing the strength of the incentive mechanism behind performance evaluation. We document how learning about managerial ability
occurs through repeated observations. We then discuss the long run implications
of these differences on career dynamics and the policy implications for
the firm if it wants to implement a consistent human resource policy across
countries.
Original languageEnglish
Place of publicationAarhus
PublisherDepartment of Economics and Business, Business and Social Sciences, Aarhus University
Number of pages31
ISBN (Print)9788778825902
ISBN (Electronic)9788778825919
Publication statusPublished - 2011

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