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

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.