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Switzerland is one of the richest and most developed Western countries worldwide (Palomino Murcia & Whitley, 2007).
German speaking Switzerland ranks low in power distance: control is not appreciated, hierarchy exists for convenience, supervisors are accessible, and management empowers employees implying a low level of supervision and a high level of trust (Palomino Murcia & Whitley, 2007); French speaking Switzerland scores higher in power distance and therefore accepts hierarchy with employees expecting to be given tasks by their supervisors (Hofstede Insights, 2017).
Swiss companies present individualistic work patterns (Hofstede, 1994): the focus is on the individual inspiring a meritocratic system. Additionally, swiss firms encourage individual initiative and innovation (Palomino Murcia & Whitley, 2007), to a higher extent in the German speaking part.
Top managers within Swiss companies perform at a strategic level therefore avoiding a multi-layered management style (Palomino Murcia & Whitley, 2007); this implies that the incorporation of systems and processes such as performance or reward management, fits with the organization’s strategy.
Performance and reward system factors to consider: SwissRe
The development of an efficient performance and reward system needs to be based on Switzerland’s cultural characteristics described above. It is fundamental to define the purpose of performance management as most employees do not know the reason for which they are being assessed (Chiang & Birtch, 2010). Kramar & Bartram (cited in Syed & Kramer, 2017) state that performance criteria need to be valid, reliable, acceptable, specific and aligned with a company’s strategy. Also, a firm needs to take an ethical approach towards performance appraisal to be acceptable (Syed & Kramar, 2017); regular communication between supervisors and subordinates is another key to acceptability (Milliman et al., 2002).
Swiss Re’s performance management system aims at a high-performance culture where employee goals and behaviours are aligned with the firm’s business strategy. The company’s focus is not only on what employees achieve, but also on how they achieve their goals. The inclusion of behaviour into performance appraisal leads to conversations on future development and a transparent pay-for-performance. Swiss Re provides non-financial benefits (i.e. pension plan) and a competitive reward system which is linked to individual and firm performance to attract and retain its talent. Moreover, the company takes a continuous performance management approach emphasizing on qualitative evaluation criteria and regular feedback. (Swiss Re, 2020).
Considering Switzerland’s characteristic of low power distance, the key purpose of performance management within a swiss firm should not be control, but rather bottom-line profit and career development. Low power distance allows for a facilitated communication between management and employees resulting in increased relationship building and transparency (Shen, 2004).
Based on Switzerland’s individualistic nature, swiss firms will naturally focus on attaining objectives and identifying the best performing employees. Goal setting, especially MBOs, should be considered as it offers “good validity, reliability, strong specificity in results, high acceptability, and a very good opportunity for strategic congruence” (Syed & Kramar, 2017: 195); additionally, emphasis should be put on regular feedback and employee expression (Milliman et al. 2002).
Promotions and financial rewards need to be based on merit, therefore implying that individuals need to be measured against each other, for example through ranking.
Cultural differences between the German and French speaking Switzerland should be considered when elaborating firm practices and processes.
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