True / False

1. KPIs and objectives are same (False)

2. Key Performance Indicator (KPI) is a quantifiable metric. (True)
3. A leading indicator is a metric that mainly refers to leading
developments. (False)
4. A lagging indicator is a metric that mainly refers to past
developments and effects/results (True)
5. KPIs are to gauge individual performance; company goals &
objective are independent. Individual KPIs & Company Goal are
not interlinked. (False)
6. It is advised t update KPIs at least quarterly. (False)
7. KPIs are to gauge individual employee working. (False)
8. Individual performance & organizational performance are directly
proportional to each other. (True)
9. Performance management purpose is to keep an eye over
employees. (False)
10.PM helps in Curbing or redirecting non-productive activities (True)
11. Performance management is the process of creating a work
environment or setting in which people are enabled to perform to
the best of their abilities to achieve organizational effectiveness &
best possible performance. (True)
12.Total Reward Statement is another name of Salary Slip which
reveals total salary / reward. (False)
13.In performance planning process, we plan hw we will guage
performance. (False)
14.Performance Coaching; where a manager intervenes to give
feedback and adjust performance (True)
15.Performance Management; where individual performance is
formally documented and feedback delivered. (False)
16.Performance and result is the end result whereas organization
provides means to the end. (False)
17.The ultimate focus of HPI is on performance and accomplishments
with secondary emphasis on behaviors. (True)
18.Changing goals and targets boost challenging behavior and
employees more easily adjust their working. (False)
19.Supervisors are advised to continuously check employee working
to avoid deviation from desired results (False)

20.High turnover always provide promotion opportunities to

employees staying in organization. Hence high turnover is
encouraging. (False)
21.Performance management is a broader term than performance
appraisal, and emphasizes the use of all of the management tools
to ensure achievement of performance. (True)
22.A rating of the employee=s past performance using a rating form
is an example of the evaluative objective of performance
appraisals. (True)
23.All performance deficiencies can be overcome through training
and development activities. (False)
24.
Every error is a rater error that might be discovered when
all of the ratings given to subordinates by a particular supervisor
are high or very favorable. (False)
25.Performance Management does not involve staff development.
(False)
26.Peer review lends itself to accusations of retaliation and bias.
(True)
27.Subjective measures of performance tend to be more narrowly
focused than objective measures, leading to subjective measures
being inadequately defined. (False)
28.Realistic, measurable, clearly understood performance standards
benefit both the organization and the employee. (True)
29.The purpose of developmental feedback is to compare individuals.
(False)
30.The most common method of performance appraisal involves
employees being evaluated by their immediate supervisors.
(True)
31.Management by objectives evaluates managers by the extent to
which they have achieved organisational objectives. (False)
32.The overall aim of an effective system is to distill performance
appraisal into a single number that can be used to support pay
raises. (False)
33.Performance appraisals programme can be used for many
purposes including salary recommendations and the retention and
termination of employees. (True)
34.Formal performal appraisal encourages teamwork because of the
interaction it creates with the supervisor. (False)
35.Developmental purposes for performance appraisal include
identifying strengths and weaknesses and improving
communication. (True)

36.Link between performance management and the organizations

strategies and goals is never neglected. (False)
37.Performance planning and evaluation systems specify a desired
level of performance at the beginning of the evaluation period.
(True)
38.The extent to which a performance management system seeks
performance consistent with organizational goals is referred to as
strategic congruence. (True)
39.Validity refers to the consistency of the performance measure.
(False)
40.Subjective measures of job performance tend to exhibit high
interrater reliability. (False)
41.Reliability refers to the extent which a performance measure
instructs employees about what is expected of them (False)
42.The consistency among the different individuals who evaluate the
employees performance is known as internal consistency
reliability (False)
43.The best use of self-ratings is for administrative purposes (False)
44.Supervisors are the most frequently used source of performance information.
(True)
45.A disadvantage of the results approach to performance
measurement is that individuals may focus only on aspects of
their performance that are measured. (True)
46.Annual feedback is the most effective strategy for employers as
well as employees. (False)
47.Performance Coaching is only benefitting to supervisors. (False)
48.Building and maintaining a respectful workplace means
understanding that disrespectful behavior or conflict can impact
on performance. (True)
49.Performance management consolidates goal setting, performance
appraisal, and development into a single, common system. (True)
50.The aim of performance management is to evaluate and reward
the employee's efforts. (False)
51.The concept that the employee's effort should be goal directed is
at the heart of performance management. (True)
52.Setting easily achievable goals for employees defeats the purpose
of performance management. (False)
53.Employees perform on a higher level when they participate with
supervisors in setting goals. (False)
54.Human Resource is responsible for monitoring the appraisal
system and preparing detailed forms and procedures. (True)

55.The simplest and most popular performance appraisal technique

is the forced distribution method. (False)
56.A manager setting specific measurable goals with each employee
and then periodically discussing the employee's progress toward
the goals is a feature of management by objectives. (True)
57.A supervisor who rates an employee high on all job traits because
the employee has good computer skills has fallen prey to the halo
effect. (True)
58.Performance appraisal problems like bias and halo effects can be
cancelled out by using multiple raters. (True)

MCQs
1. The system that seeks to tie the performance appraisal process to
the firms strategies through specifying at the beginning of the
evaluation period what types and levels of performance must be
accomplished is called the
a. performance appraisal and evaluation system.
b. performance feedback system.
c. performance management system.
d. performance planning and evaluation system.
Ans: d

2. Which of the following

management systems?

is

a. The administrative purpose

b. The developmental purpose
c. The feedback purpose
d. The strategic purpose
Ans: c

not

purpose

of

performance

3. Most performance appraisal systems focus on

a. administrative and strategic purposes.
b. strategic and developmental purposes.
c. administrative and feedback purposes.
d. developmental and administrative purposes.
Ans: d

4. What performance management evaluation criterion is concerned

with maximizing the overlap between actual job performance and
the measure of job performance?
a. Reliability
b. Acceptability
c. Specificity
d. Validity
Ans: d

5. A performance management system that evaluates irrelevant

aspects of performance is
a. unreliable.
b. invalid.
c. Contaminated.
d. inconsistent.
Ans: c

6. Which of the following is not a criterion that should be

used to evaluate performance management systems?

a. Acceptability
b. Specificity
c Complexity
d. Reliability
Ans: c

7. The extent to which the performance measure assesses all the

relevant aspects of performance is called
a. reliability.
b. validity.
c. specificity.
d. acceptability.
Ans: b

8. The consistency among the different individuals who evaluate the

employees performance is known as
a. internal consistency reliability.
b. interrater reliability.
c. intrarater reliability.
d. test-retest reliability.
Ans: b

9. The extent to which all of the items rated are consistent with
respect to content refers to
a. internal consistency reliability.
b. interrater reliability.

c. intrarater reliability.
d. test-retest reliability.
Ans: a

10.
A measure that results in dramatically different ratings over
time lacks
a. internal consistency reliability.
b. interrater reliability.
c. intrarater reliability.
d. test-retest reliability.
Ans: d

11.

If a performance appraisal method is not reliable, it;

a. can still be valid.
b. can still be acceptable.
c. cannot be valid.
d. cannot be acceptable.
Ans: c

12.
Performance can be managed by focusing on all of the
following except
a. behaviors.
b. weaknesses.
c. results.
d. employee attributes.

Ans: b

13. The extent to which the performance measure gives

guidance to employees about what is expected of them is
called
a. reliability.
b. validity.
c. specificity.
d. acceptability.
Ans: c

14. Which is not a component of management by objectives?

a. Specific goals
b. Subordinate participation
c. Managerial feedback
d. Modification of goals
Ans: d

15. Which of the following is the most objective performance

measure?
a. Attitude
b. Degree of cooperation
c. Initiative
d. Number of errors made
Ans: d

16. When managers are being evaluated, who are especially

valuable sources of information?
a. Othermanagers
b. Subordinates
c Customers
d.Their bosses
Ans: b
17. Which rater error is made when one judges individuals in the
immediate work group higher than those who are not?
a. Contrast
b. Distributional error
c. Halo/horns
d. Similar to me
Ans: d
18. What rater error is a result of a raters tendency to use only
one part of the rating scale?
a. Contrast
b. Distributional error
c. Halo/horns
d. Similar to me
Ans: b

19.

When a rater fails to distinguish among different aspects of

performance, what kind of error is present?

a. Contrast
b. Distributional error c.
Halo/horns
d. Similar to me
Ans: c

20. What rater error leads employees to believe that no

aspects of their performance need improvement?
a. Contrast b.
b. Halo
c. Horns
d. Similar to me
Ans: b
21.To improve the performance feedback process, employers should
not
a. give employees feedback every day.
b. let employees rate their performance before the feedback
session.
c. discuss every criticism of the employee.
d. focus on behavior or results.
Ans: c

22.
Which of the following is not one of the main reasons for
major changes in performance appraisal in recent years?
a) Culture change programmes.
b) Team working initiatives.

c)
d)
e)
f)

Government legislation.
Changes in payment systems.
Total quality management.
Knowledge management initiatives.

23.
Which of the following statement are correct? Select all that
apply.
a) Performance appraisal is not used in the public sector.
b) Performance appraisal now includes previously
untouched organisations and occupational groups.
c) Performance appraisal has become more
widespread.
d) Performance appraisal is diminishing in importance.
24.
Which of the following is not a type of performance
appraisal?
a) 45 degree appraisal.
b) Team based appraisal.
c) Appraisal of managers.
d) Customer appraisals.
25.
Why might an organisation use multiple systems of
appraisal? Select all that apply.
a) Different systems for different organisational
groups.
b) To provide employees with a choice of methods.
c) Different systems for different part of the
organisation.
d) To prevent the misuse of performance appraisal systems by
line managers.
e) To separate reward and non-reward aspects of
appraisal.

f) All except D
26.
Which of the following is not a reason why performance
appraisal is used by organisations?
a)
b)
c)
d)
e)
f)

To improve team, individual, and corporate performance.

To determine promotion.
To clarify and define performance expectations.
To allocate financial rewards.
Because it is a legal requirement.
To motivate employees.

27.
Performance management is believed to have originated
from which country?
a)
b)
c)
d)
e)

France.
Germany.
USA.
Denmark.
Japan.

28.
Which of the following statements about performance
management systems is not true?
a) They cause stress for employees.
b) Performance management systems are ineffective.
c) They improve organisational performance in the
long-term.
d) Commitment from line managers is questionable.
e) Recommendations are prescriptive and suggest one best
way.
f) They encourage a short-term view among managers.
29.
Which of the following statements about performance
appraisal is not true?

a) Performance appraisal reduces managerial control.

b) Companies use appraisal to encourage employee loyalty
and commitment.
c) Employees may be appraised on both objective and
subjective measures.
d) Performance appraisal has become a tool to motivate and
control workers.
30.

31.

What is the meaning of upward appraisal?

a) Senior managers rate the performance of line managers.
b) Employees rate the performance of their manager.
c) Employees rate the performance of their peers.
d) Line managers rate the performance of employees.
What is meant by 360 degree appraisal?
a) A system where every employee rates another employee
chosen at random.
b) A system where the line manager rates subordinates
simultaneously.
c) A system where feedback is obtained from peers
subordinates and supervisors.
d) A system where a senior manager rates all line managers
simultaneously.

32.
Which of the following statements about 360 degree
appraisal is not true?
a) Feedback may comprise both open and closed questions.
b) The data generated is normally highly accurate,
valid and meaningful.
c) 360 degree appraisal is normally conducted anonymously.
d) 360 degree appraisal may be linked to pay awards
.
33.
What is the purpose of a 'mystery shopper'?
a) A person who pretends to be an employee in order to test
service process.

b) A person who pretends to be a manager in order to test the

service process.
c) A person who works for a competitor and pretends to be a
customer in order to test the service encountered.
d) A person pretends to be a real customer in order to
test the service encountered.
34.

What is meant by the 'Veblen effect'?

a)
b)
c)
d)

35.

The practice of giving everyone high ratings.

The practice of giving everyone low ratings.
The practice of giving everyone average ratings.
The practice of giving everyone random ratings.

What is meant by 'Impression effect'?

a) The notion that closeness between manager and employee
may create distortions in the appraisal process.
b) The notion that some employees can manage their
reputation to ensure managers have a good
impression of them.
c) Where a single negative aspect dominates and distorts the
appraisal.
d) Where the ratings reflect the similarity between appraiser
and appraisee.

36. Performance management is viewed as a process carried out

as a(n)
a. once-a-year task
b. twice-a-year activity
c. ongoing process or cycle
d. None of the above
37. Performance evaluation can be defined as a process of
evaluating

a.
b.
c.
d.
38.

past performance
present performance
future performance
past and present performance

The term performance rating system stands for

a. a grade or score concerning the overall
performance
b. the information about the extent to which the work
objectives were met
c. the past objectives of the organization
d. the achievements for a period of one year

39. The 360-degree performance feedback involves the

evaluation of employees by
a.
b.
c.
d.
40.

HR managers
employees
supervisors
all who are directly in contact with the ratee

Which of the following is an essential prerequisite of MBO?

a.
b.
c.
d.

Joint goal-setting
Mid-term review
Developing reviews
All of the above

41. The evaluation method that requires the supervisors to keep

a written record of positive and negative work-related actions of
the employees is called
a. Critical incident method

b. Essay method
c. Work standard method
d. Field review method

42. Job evaluation is a technique adopted for determining the

_______ of the job.
a. internal worth
b. external worth
c. internal and external worth
d. None of the above
43.The aim of performance management is to:
a. Ensure employee's performance is supporting the
company's strategic aims.
b. Consolidate goal setting.
c. Ensure employee has the tools needed to perform
the job.
d. Evaluate employee's performance against standards.
44.The increasing use of performance management reflects:
a. Every employee's efforts must focus on helping the
company achieve its strategic goals.
b. The popularity of TQM concepts.
c. Traditional performance appraisals are often counterproductive.
d. All of the above.
45.Reasons for appraising a subordinate's performance include:
a. The supervisor and the employee together develop a plan
for correcting the employee's deficiencies.
b. Appraisals play an integral role in performance
management.
c. Appraisals play a part in the employer's salary raise
decisions.
d. All of the above.
46.Steps that supervisors should follow in the performance appraisal
process include all the following except:
a. Define the job.
b. Prepare detailed forms and procedures to be used.
c. Provide feedback.
d. Appraise performance.
47.A problem(s) with management by objectives is (are) that it can:

a. Be time consuming.
b. Result in unmeasurable objectives.
c. 1 and 2
d. None of the above.
48.Rating an employee high on several traits because he or she does
one thing well is called the:
a. Central tendency.
b. Bias problem.
c. Halo effect.
d. Unclear standards.
49.The problem with self-ratings is that:
a. Supervisors rate employees too highly.
b. Supervisors accentuate differences and rigidify positions.
c. Employees rate themselves higher than do
supervisors.
d. All of the above.
50.Supervisors can ensure that employees are satisfied with their
performance appraisals by ensuring that employees:
a. Do not feel threatened during the interview.
b. Have a helpful and constructive supervisor conduct the
interview.
c. Have the opportunity to present their ideas and feelings.
d. All of the above.

Short Questions
1. Define Performance Management
Continuous Process of
Identifying performance of individuals and teams
Measuring performance of individuals and teams
Developing performance of individuals and teams
and

 Aligning performance with the strategic goals of the

organization
2. Working with your introverted employees
1. Listen:
2. Accept silence:
3. Give introverts their space:
4. Use e-mail:
5. Be mindful:
6. Dont interrupt:
7. Discover their interests:
8. Provide peace offerings:
9. Dont expect them to show up:
10.Allow them to telecommute:
11.Plan, plan, and plan:
3. Discuss Aligning performance with the strategic goals of
the organization
Performance management requires that managers ensure that
employees activities and outputs are congruent with the
organisations goals and, consequently, help the organisation gain
a competitive business advantage. Performance management
therefore creates a direct link between employee performance
and organisa tional goals, and makes the employees contribution
to the organisation explicit.
4. Disadvantages/Dangers of Poorly Implemented PM
Systems

Employees may quit due to results

False or misleading information may be used

Self-esteem may be lowered

Time and money are wasted

Relationships are damaged

Motivation to perform is decreased

Employees suffer from job burnout and job dissatisfaction

There is increased risk of litigation

Managers are required to use an unjustified amount of

resources

Standards and ratings vary and are unfair

Biases can replace standards

Mystery surrounds how ratings were derived

5. Why you say that Performance Management is a

Continuous process.
Performance management is ongoing. It involves a never-ending
process of setting goals and objectives, observing performance,
and giving and receiving ongoing coaching and feedback.
6. What is performance problem?
A performance problem is any gap between desired results and
actual results.
7. What is performance improvement?
Performance Improvement is any effort targeted at closing the
gap between actual results and desired results
8. Human performance improvement
is the systematic process of discovering and analyzing important
human performance gaps, planning for future improvements in
human performance, designing and developing cost-effective and
ethically justifiable interventions to close performance gaps,
implementing the interventions, and evaluating the financial and
non-financial results.
9. Uses of Performance Appraisal Data;
1. HR Planning
2. Recruitment Selection
3. Training & Development
4. Career Planning
5. Compensation & Benefits
6. Internal Employee Relations
7. Assessment of Employees Potential
8. Areas for performance Improvement
10.
Performance Management Involves;
Clarity of Vision
Setting Performance Standards
Measuring Performance against standards
Feedback & Corrective actions
11.

Contributions of PM
Motivation to perform is increased
Self-esteem is increased
Managers gain insight about subordinates
The definitions of job and criteria are clarified
Self-insight and development are enhanced
Admisnistrative actions are more fair and appropriate
Organisational goals are made clear


Employees become more competent

There is better protection from lawsuits

There is better and more timely differentiation between good

and poor performers

Supervisors views of performance are communicated more

clearly

Organisational change is facilitated

Motivation, commitment and intention to stay in organization

is increased
12.
Define Reward System
Set of mechanisms for distributing
Tangible returns
and
Intangible or relational returns
As part of an employment relationship
13.
Returns and their degree of dependence on the
performance management system
Return
Base pay
Moderate Cost of living
adjustment
Low
Contingent pay
High
Short-term incentives
High
Long-term incentives
High
Income protection
Low
Work/life focus
Moderate Allowances
Moderate
Relational returns

Degree of dependence

Moderat

14.
Aims and Role of PM Systems
The information collected by a performance management system
is most frequently used for salary administration, performance
feedback and the identification of employee strengths and
weaknesses. In general, however, performance management
systems can serve the following purposes: (a) strategic, (b)

administrative, (c) information, (d) developmental, (e)

organisational maintenance, and (f) documentation. Lets consider
each of these purposes in turn.
Table 1.4
Purposes served by a performance
management system
Strategic:
To help top management
achieve strategic business
objectives
Administrative:
To furnish valid and useful
information for making administrative decisions about employees
Information:
To inform employees about how
they are doing and about the
organisations and the supervisors
expectations
Developmental:
To allow managers to provide
coaching to their employees

 Organisational maintenance:
To provide information to be used in workplace
planning and _____________________________ allocation of human resources
Documentation:

To collect useful information that can be used

for various purposes (e.g., test development,
personnel decisions)

15.
Three major points to consider while offering voluntary
benefits
What are the demographics of our company, and how might they change with
future recruits?
Which benefits will appeal to most employees?
How can we present these products in a way that doesnt cause information
overload?
16.

Characteristics of an ideal performance management system

Strategic congruence
Thoroughness
Practicality
Meaningfulness
Specificity
Identification of effective and ineffective performance
Reliability
Validity
Acceptability and fairness
Inclusiveness
Openness
Correctability
Standardisation
Ethicality

17.
Leading vs Lagging
Leading KPI - A leading indicator is a metric that mainly refers to future
developments and drivers/causes . e.g. % of employees involved in the
innovation process
Lagging KPI - A lagging indicator is a metric that mainly refers to past
developments and effects/results, e.g. reflects history and outcomes of
certain actions and processes.
18.
Tools for critically analyzing KPI: (SMARTER)
Specific
Measurable
Aligned
Realistic
Timely
Ethical
Recorded
19.

Characteristics of KPIs

20.

1. KPIs should not be an end in themselves, but be considered as an aid

to management.
2. KPIs should be seen within their local context and have more a
meaning as a comparison over time than as a comparison between
organizations.
3. KPIs should be reviewed and updated.
4. The targeted performance description, which is described in
measurable terms through the KPIs, must be deployed to the
organizational level that has the authority and knowledge to take the
necessary action.
Tips for Good KPIs
1. Have them.
2. Align them to standards.
3. Test them for validity and reliability.
4. Discuss and review them. Are they really key? Dont overestimate
their importance!
5. Differentiate between lag and lead indicators.
6. Benchmark them.
7. Do something with them. KPI should lead to change.
8. Keep them simple but not too simple!
9. Balance focus on positive and negative news (i.e. opportunities for
improvement).

21.

A compensation program must be:

Internally equitable
Externally competitive
Affordable
Understandable, legal, and defensible
Efficient to administer
Capable of being reshaped for the future
Appropriate for the organization
Attractive and able to retain and motivate employees
22.
Key Performance Indicator
Key Performance Indicator (KPI) is a quantifiable metric that reflects how
well an organization or division or department or individual employee is
achieving its stated goals and objectives.

23.
What are Key Performance Indicators?
A KPI is not a single component, but an integrated collection of components
such as;
Objectives: what are we trying to achieve?
Indicators: what are you going to measure?
Measures: how are you going to measure it?
Targets: what is the desired result?
Results: what have you actually achieved?

24.
What is a Total Reward Statement?
TRS are personalized statements listing everything that comes from the
organization to the individual employee. Provide a reassuring picture to
employees and are a tangible reminder of the companys financial
commitment to them beyond just base pay and benefits.
25.
Use of Total Reward Statement?
Demonstrating how employees are valued is more important than ever now
the economy is improving and retention can no longer be taken for granted.
26.
What to Include in a Total Reward Statement?
Total reward statements do not need to be too complicated. However, at a
minimum, the following items should be included:
Compensation Information;
this includes base salary, overtime, bonuses, incentives, and commissions.
These are the basic staples of a total reward statement, the information is in
front of employees faces all the time already.
Leave Benefits;
(number of days off). Analyze what your company offers in terms of holidays,
personal time, vacation/PTO banks, sick leave, bereavement, and even jury
duty.
Insurance Benefits;
be sure to account for both employee cost and employer cost on the
statement; show how much your organization has invested, and that the
employee isnt shouldering all costs. Examples include medical; dental;
vision; flexible spending accounts; cafeteria plans; healthcare spending
accounts; basic life insurance; accidental death and dismemberment costs;
supplemental/dependent life benefits; short-term and long-term disability;
and/or business travel accident insurance.
Financial Security Elements;
again, divide this up into employee cost and employer cost. Include social
security, Medicare, federal unemployment insurance, state unemployment
insurance, workers compensation costs, and retirement plan elements (such
as 401(k) matches or employee stock ownership plans).
Additional Benefits;
including work/life programs. This can be huge, youre only restricted by your
own innovation and creativity. Just make sure these benefits are aligned with
company culture! For a total reward statement, you could incorporate any
number of things, including adoption assistance, auto allowances, childcare
programs, education/tuition reimbursements, employee assistance programs,
employee meals, health club discounts, paid parking, or uniform expenses
27.

Define Introverted Employees

28.
o
o

Working with your introverted employees!

Listen
Accept silence

o
o
o
o
o
o
o
o
o

Give introverts their space

Use e-mail
Be mindful
Dont interrupt
Discover their interests
Provide peace offerings
Dont expect them to show up
Allow them to telecommute
Plan, plan, and plan

29.

Define Direct Compensation.

30.

Define Indirect Compensation

31.

Difference between direct & direct compensation.

32.
Why do performance management systems often fail?
Performance management systems often fail for several reasons. One of the
primary reasons for failure is the mistrust of those being rated and of those
who provide the ratings. Another reason for failure is that ratees and raters
often feel ill at ease during the process but will intentionally try to downplay
the emotional aspects of the performance appraisal process. Additionally,
various systems may have built in technical problems, rating inconsistencies,
and poorly understood performance goals. Finally, performance management
systems may fail because the system does not tie into the organizations
vision, mission, and strategic priorities.
33.
What is the difference between performance management and
performance appraisal?
Performance appraisal is a systematic evaluation of the strengths and
weaknesses of individuals and groups with regard to their job specifications.
In the United States, performance appraisals usually occur once a year and
may be tied to increases in pay. In other countries, appraisals may occur
every 5 to 10 years. Performance management occurs continuously as a
process which identifies, measures, and develops individual and group
performances toward organizational goals. Both performance appraisals and
performance management need to be behaviorally based and exhibit
relevancy with regard to organizational strategy. However, a basic difference
exists in that performance appraisals occur at one time and performance
management occurs continuously. Performance appraisal processes are
generally understood and accepted within organizations by employees and
managers. Performance management is not as readily understood and, if not
implemented correctly, may lead to an overall distrust within organizations
and may serve to undermine employee performance at all organizational
levels.

34.
What are the three most important purposes of performance
management systems and why? The three most important purposes of
performance management systems may be categorized as strategy,
communication, and employment decision based. Strategically, performance
management systems serve to link organizational missions to employee
behaviors and responsibilities. Performance management systems serve to as
communicate how well an employee is doing and what the organization
expects from an employee. Employment decisions based on performance
management include whether to train, promote, transfer, discipline, or
terminate employees. Performance management systems may serve
additional purposes, too. These include providing criteria data, training
development information, organizational development information, personal
development information, a source for feedback information, and human
resources record keeping.
35.
Under what circumstances can performance management
systems be said to work?
Performance management systems may be said to work when they address
and include nine requirements. These requirements include congruence with
strategy, thoroughness, practicality, meaningfulness, specificity,
discriminability, reliability/validity, inclusiveness, and fairness/acceptability.
Taken in order Congruency means that the performance management system ties behaviors
and expectations to organizational goals.
Thoroughness means that the performance management system includes all
job related behaviors for the entire time covered by the review.
Practicality refers to an organizations ability to administer the systems with
the benefits outweighing any associated costs.
Meaningfulness refers to the perceptions that employees and managers have
with regard to the usefulness of the information gathered for everyone
involved.
Specificity is accomplished when the system provides clearly understood
guidance for employees and management.
Discriminability is exhibited when the system clearly distinguishes between
effective and ineffective employees.
Reliable and valid performance management systems produce consistent
ratings over time that accurately measure and predict performances.
Inclusiveness is demonstrated when raters and ratees actively participate in
the review process.
Fairness/acceptability means that raters and ratees perceive the performance
management system as conducted with justice and equitability.
36.
What kinds of unique information about performance can each
of the following provide: immediate supervisors, peers, self,
subordinates, and clients served?

Immediate supervisors provide unique information with regard to a

subordinates behavioral contribution to an organizations goals. Supervisors
must also distinguish between effective and ineffective performances as
related to the distribution of rewards and disciplinary actions. This
relationship works well when supervisors interact frequently with their
subordinates but does not perform as well when subordinates function with
more autonomy. For these employees, other sources need to contribute to
performance information.
Peers provide valuable performance information when members of groups
work with each other consistently. Peer ratings may be gathered by using
nominations (high and low knowledge, skills, abilities, or others), ratings (for
feedback), and rankings (highest to lowest performers). Peer ratings
research demonstrates reliability, validity, and ratee acceptance. Ratings
usefulness may suffer when group friendship bias exists or when the group
members rate behaviors unrelated to the work (common method variance).
Subordinates provide unique and extremely valuable performance
information with regard to a managers or a supervisors administrative
effectiveness, planning, delegation, communications, and leadership. These
ratings appear to be both reliable and valid. However, some caution is
warranted as subordinate ratings tend to show more leniencies with regard to
salary and promotion decisions compared to decisions for managerial
development.
Self ratings contribute significantly to effective goal-setting, personal
development, and acceptance of the overall performance management
system. Self ratings do exhibit some weakness or challenge with regard to
leniency, variability, bias, and agreement with other raters. These challenges
may be explained by differences in perspectives or on the focus of the rated
behaviors and actions. The effectiveness of self ratings can be improved by
following four steps. These steps include the use of absolute and relative
performance scales, collection of multiple self ratings, assurance of
confidentiality, and focus on the future.
Client ratings offer unique perspectives for an employees performance as
seen through individuals outside of an organization. While these perceptions
may not reflect an accurate assessment of an organizations goals, the
perceptions can contribute to organizational decisions regarding promotion,
transfer, training, development, and criterion measurement.
37.
What are some of the interpersonal/social interaction
dimensions that should be considered in implementing a
performance management system?
Interpersonal and social interaction dimensions should be considered when
implementing performance management systems. Interpersonal dimensions
to consider include communication effectiveness and beliefs in the
performance management systems process. Social interaction dimensions to
consider include measurement characteristics, behavioral observations, and

attitudinal issues. Measurement characteristics refer to the use of objective

versus subjective data and relative versus absolute. Additional measurement
characteristics to consider are the types of scales (behavioral, graphic, forced
choice, rank ordering) and the frequencies and repetitions of the
measurement. Behavioral observation characteristics to consider are the
sources (supervisor, subordinate, self, client) of observations and the
verifiability of the observations. Attitudinal interactions include the perceived
fairness and the perceived procedural justice of the performance
management system. These attitudinal perceptions are influenced by
contextual performance and the assertiveness of the ratee.
38.
Under what circumstances would you recommend that the
measurement of performance be conducted as a group task?
I would recommend that performance management be conducted as a group
task when three conditions are present. The first condition indicating group
rating effectiveness is when individuals interact often with members of a
work group. Research supports the effectiveness of group ratings when group
members work with each other consistently over time. Second, group ratings
are indicated when specific behaviors over time are of interest. Groups are
better at remembering definite, unique, and combined group member
effectiveness and effort. Finally, group ratings are appropriate when the
magnitude of the individual performance is not too large. In summary, group
ratings offer a more complete picture of the effects individuals have on group
and organizational performance.
39.
What key elements would you design into a rater-training
program?
Three key elements to design into a rater-training program (aka train the
trainer) are improving observational skills, reducing judgmental biases, and
improving rater communications with ratees. To improve observational skills,
I would teach the raters what behaviors to attend to. For example, having the
rater play the role or complete the job of the person they are to rate will
assist the raters ability to focus on necessary and effective behaviors and to
screen out the unnecessary or irrelevant behaviors. To reduce judgmental
biases, I would teach the raters about the types of biases and allow them to
experience the recognition of these biases through case studies, video
demonstrations, and rating practice. I would make sure that the training
program also offered occasional re-training to assist the rater to develop long
term rating skills. The specific approach with each of these training efforts
will include a focus on the most appropriate Frames of Reference for the jobs
performances.
This training will include six specific steps. First, trainees receive instructions
to evaluate three ratees on three dimensions. Next, trainees read the
dimensions while hearing the dimensions read aloud. Then, the trainer
discusses the appropriate ratings per ratee per dimension. Videos are shown

demonstrating the behaviors. Ratings are collected from the raters, written
on a board, and discussed as a group. Finally, the trainer will provide the
preferred ratings per ratee per dimension allowing questions and answers to
occur as the presentation is given.
40.
Assume an organization is structured around teams. What role,
if any, would a performance management system based on
individual behaviors and results play with respect to a team-based
performance management system?
As organizational interests continue to increase with regard to team based
management and performance, it is necessary to understand how each
individual contributes to a teams successful performance. As individual
contributions to team performance is understood, overall team performance
should increase leading to increases in individual performance in a repetitive
and iterative process. The critical nature of performance will be a function of
the type of team involved. For example, project teams may not work together
long enough for an individual to need a team based performance appraisal.
Work or service teams may have members needing specific behavioral
training and evaluation to increase the overall teams performance. Network
team members will need to receive individual training and performance
evaluation to make sure that all of the members have equivalent or the
necessary specific technological skills.
41.
Discuss three dos and three donts with respect to
appraisal interviews.
Three dos for performance appraisal interviews are to communicate
frequently with the ratee(s), stay current with appraisal training, and to judge
your own performance first Appraisals receive more acceptance when they
occur often and are specific rather than long term and general. Frequent
communications come across more as a coaching encounter than as a
potentially threatening or possibly embarrassing appraisal. Just as jobs are
becoming more and more technologically dependent and experiencing
frequent changes, appraisal methodologies and purposes change. This
requires effective appraisers to stay current with their own training, too.
Learning how to evaluate your own performance effectively also helps you to
rate others more effectively. Becoming an effective self evaluator requires
time and intentional awareness but does lead to better appraisals for others,
as well. Other dos for performance appraisal interviewers include
encouraging subordinate participation, use of priming information, being
warm and encouraging, judging performance not personality, being specific,
listening actively, avoiding criticisms, setting effective goals, assessing goals
regularly, and tying organizational rewards to performance. With these dos
in mind, several donts include limiting subordinate participation, avoiding
priming information, being cold and discouraging, attacking the ratees

personality, being vague, failing to listen, threatening a ratees self-esteem,

setting rigid goals, communicating infrequently and inconsistently, failing to
tie organizational rewards to performance.
42.

INDIRECT VERSUS DIRECT COMPENSATION

There are two types of compensation: direct and indirect. Direct

compensation consists of things like cash money and bonuses;
indirect compensation consists of things other than cash money,
including benefits, rewards programs, and long-term incentives.
Indirect forms of compensation are becoming more and more popular.
Good group benefits or paid leave policies can often make up for what
might otherwise be seen as pay deficiencies.