Chapter 10

Managing Employees' Performance

 
 

True / False Questions

 

1. Performance management requires knowing what activities and outputs are desired, observing whether they
occur, and providing feedback to help employees meet expectations. 
 
True    False
 
2. Performance management systems are established to meet three broad purposes of the organization:
strategic, administrative, and developmental. 
 
True    False
 
3. In a performance appraisal, the term validity refers to whether the appraisal measures all aspects of
performance, both relevant and irrelevant. 
 
True    False
 
4. The paired-comparison method measures the consistency of results over time. 
 
True    False
 
5. In the simple ranking method of performance measurement, managers rank employees in their group from
the highest performer to the poorest performer. 
 
True    False
 
6. The paired-comparison method involves comparing each employee with each other employee to establish
rankings. 
 
True    False
 
7. While rating attributes of individuals, measurement of attributes is rarely linked to the organization's
strategy. 
 
True    False
 
8. To rate employee behaviors, an organization begins by defining which behaviors are associated with the
employee's personality traits. 
 
True    False
 
9. The critical-incident method requires managers to keep a record of specific examples of the employee
acting in ways that are either effective or ineffective. 
 
True    False
 
10. A disadvantage of behaviorally anchored rating scales (BARS) is that it can bias a manager's memory. 
 
True    False
 
11. Compared to a behavioral observation scale (BOS), a behaviorally anchored rating scale (BARS) makes it
easier for providing feedback, maintaining objectivity, and suggesting training needs. 
 
True    False
 
12. Organizational behavior modification (OBM) is a plan for managing the behavior of employees through an
informal system of feedback and reinforcement. 
 
True    False
 
13. Behavioral approaches to performance measurement, such as organizational behavior modification and
rating scales, tend to be biased. 
 
True    False
 
14. Management by objectives (MBO) links employee performance with the organization's strategic goals. 
 
True    False
 
15. Traditional performance management differs from total quality management (TQM) in that it assesses both
individual performance and the system within which the individual works. 
 
True    False
 
16. Using an employee's manager for feedback is very useful because their own success depends so much on
their employees' performance. 
 
True    False
 
17. Peer reviews are an excellent source of information about performance in a job where the supervisor does
not often observe the employee. 
 
True    False
 
18. Self-appraisals are appropriate as the basis for administrative decisions. 
 
True    False
 
19. In order to minimize distributional errors, raters should use only one part of the rating scale. 
 
True    False
 
20. Appraisal politics are most likely to occur when a performance appraisal is directly linked to highly
desirable rewards. 
 
True    False
 
21. In a "tell-and-sell" approach, managers tell the employees their ratings and then justify those ratings. 
 
True    False
 
22. The content of feedback is more effective when it is directed toward personalities. 
 
True    False
 
23. The improvement of an employee's performance varies according to the employee's ability and level of
motivation. 
 
True    False
 
24. Lawsuits filed against performance management usually involve charges of discrimination or unjust
dismissal. 
 
True    False
 
25. The requirements for job success are clearly communicated to employees to protect against lawsuits. 
 
True    False
 
 

Multiple Choice Questions

 

26. _____ is the process through which managers ensure that employees' activities and outputs contribute to the
organization's goals. 
 

A. Quality analysis
B. Administrative planning
C.  Project management
D. Strategic planning
E.  Performance management
 
27. Which of the following statements is true of effective performance management? 
 

A. It can tell top performers they are valued.

B. It can evaluate employees without establishing standards.
C.  It averts communication between managers and their employees.
D. It uses just one person as a source of information.
E.  It does not affect employees who meet expectations.
 
28. Which of the following is the first step in performance management process? 
 

A. Evaluating performance
B. Developing employee goals, behavior, and actions to achieve outcomes
C.  Providing consequences for performance results
D. Defining performance outcomes for company division and department
E.  Identifying improvements needed
 
29. Which of the following is the last step in performance management process? 
 

A. Defining performance outcomes for company division and department

B. Identifying improvements needed
C.  Developing employee goals, behavior, and actions to achieve outcomes
D. Evaluating performance
E.  Providing consequences for performance results
 
30. "Performance management serves as a basis for improving employees' knowledge and skills." This
statement corresponds to which of the following purposes of performance management? 
 

A. Developmental purpose
B. Administrative purpose
C.  Investigative purpose
D. Strategic purpose
E.  Executive purpose
 
31. In the context of effectiveness of performance management, _____ means the extent to which a
measurement tool actually measures what it is intended to measure. 
 

A. validity
B. dependability
C.  acceptability
D. reliability
E.  specificity
 
32. In the context of validity in performance appraisal, information that is gathered but irrelevant is called
_____. 
 

A. feedback
B. knowledge
C.  concatenation
D. adjunct
E.  contamination
 
33. Crimson Inc. is conducting their annual performance review process for employees. The company uses a
tool that measures entrepreneurial behavior and found there was a lot of irrelevant information that was
also gathered. The irrelevant information gathered from the results is termed _____. 
 

A. deficiency
B. validity
C.  contamination
D. specificity
E.  reliability
 
34. Lily, a manager at Pyramid Inc., uses a rating tool to evaluate the performance of her subordinates.
However, she finds that the scale she used did not yield consistent results and could not determine if a
change had taken place in the performance of the employees. Which of the following was lacking in the
rating scale? 
 

A. Validit
y
B. Acceptability
C.  Reliability
D. Transparency
E.  Specificity
 
35. Charles, the HR manager at Telcare Inc., establishes a performance management system for his company.
He wants to check the consistency of results over time. In the context of criteria for determining the
effectiveness of performance measures, Charles is trying to check the _____ of the performance
management system. 
 

A. validity
B. test-retest reliability
C.  specificity
D. interrater reliability
E.  acceptability
 
36. In the context of performance management, which of the following terms refers to a measure that obtains
consistency of results over time? 
 

A. Validit
y
B. Interrater reliability
C.  Acceptability
D. Test-retest reliability
E.  Specificity
 
37. Which of the following helps performance management meet the goals of supporting strategy and
developing employees? 
 

A. Strategic fit
B. Specific feedback
C.  Overall opinion
D. Employee orientation
E.  Generalized instruction
 
38. Bill and Nancy, managers at Sanzen Inc., want to the check the consistency of results for an employee on a
scale of 1 to 10. This will help them evaluate his performance. In the context of criteria for effective
performance management, Bill and Nancy are testing the _____. 
 

A. validity
B. test-retest reliability
C.  specificity
D. interrater reliability
E.  accountability
 
39. Donna, a supervisor at Cenate Inc., wants to compare her subordinate John's performance with other
employees to assess their effectiveness. Which of the following methods for measuring performance is best
suited for this task? 
 

A. Simple ranking
B. Mixed-standards scale
C.  Critical-incident method
D. Graphic rating scale
E.  Organizational behavior modification
 
40. Salman, a production manager at Telecal Inc., needs to measure the performance of 10 subordinates. He
writes their names on a paper and circles Karim's name as the best-performing employee of the group. He
then circles Dillon's name as the worst employee of the group. He rates the remaining employees as second
best, second worst, and so on. In the context of methods of performance measurement, Salman is using the
_____ method. 
 

A. forced-distribution
B. alternation ranking
C.  graphic rating
D. mixed-standard
E.  critical-incident
 
41. Margaret, a production manager at Falcon Inc., needs to measure the performance of 12 of her
subordinates. She divides the number of employees into categories like exceptional, above average,
average, and below average. She assigns a certain percentage of employees to each category to determine
the quality of their performances. In the context of methods for measuring performance, Margaret is using
the _____ method. 
 

A. alternation ranking
B. rating attribute
C.  mixed-standard
D. paired-comparison
E.  forced-distribution
 
42. Joseph, a supervisor at H2O Chemicals Inc., needs to assess the behavior of 25 people, who constitute a
large group of his subordinates. Which of the following must Joseph ideally do to assess the behavior of his
subordinates and why? 
 

A. Joseph must use a behavioral observation scale because it is relatively easier than other methods of
assessing behavior and providing feedback.
B. Joseph must use an organizational behavior modification approach because it is often preferred by
managers for its simplicity.
C.  Joseph must use a behaviorally anchored rating scale because it is good for large groups.
D. Joseph must use a critical-incident method to individually assess each employee because this method
requires less documentation.
E.  Joseph must use behaviorism because it helps in predicting behavior of an employee based on his past
experiences.
 
43. Payne Corp. wants to assess the performance of its employees. It uses a questionnaire that has a high fit
with strategy, high validity, high reliability, moderate acceptability, and very high specificity. Which of the
following approaches to employee performance is being focused on by this questionnaire? 
 

A. Results
B. Quality
C.  Behavioral
D. Comparative
E.  Attribute
 
44. In the context of methods for measuring performance, alternation ranking is a variation of _____ ranking. 
 

A. simple
B. distributed
C.  paired
D. attribute
E.  scalar
 
45. Janet, a production manager, thinks management by objectives is a good way to measure performance
results of employees in an organization. However, her colleague, Ferdinand, disagrees with her. Whose
argument is correct and why? 
 

A. Ferdinand is right because the goals in this strategy are subjective.

B. Janet is right because managers and employees have to set their own goals independently.
C.  Ferdinand is right because management by objectives can have negative consequences on productivity.
D. Janet is right because results-oriented performance measurement is relatively easy to link to the
organization's goals.
E.  Ferdinand is right because management by objectives focuses only on individual goals.
 
46. Paul is a manager at Firefly Corp., and he uses a rating approach to evaluate his employees. He considers
one employee at a time and circles a number or a word to signify the degree to which that employee
demonstrates a particular trait in the scale. Which of the following approaches is Paul using to assess his
employees? 
 

A. Mixed-standard scale
B. Critical-incident approach
C.  Graphic rating scale
D. Behavioral observation scale
E.  Behaviorally anchored rating scale
 
47. The _____ method of performance measurement uses several statements describing each trait to produce a
final score for that trait. 
 

A. behaviorally anchored rating scale

B. mixed-standard scale
C.  behavioral observation scale
D. graphic rating scale
E.  behavior-response scale
 
48. Identify a true statement about the mixed-standard scale. 
 

A. It is intended to define performance dimensions specifically using statements of behavior that describe
different levels of performance.
B. It uses several statements describing each trait to produce a final score for that trait.
C.  It may use 15 behaviors to define levels of performance.
D. It lists traits and provides a rating scale for each trait.
E.  It involves comparing each employee with each other employee to establish rankings.
 
49. The _____ performance management method requires managers to rate the frequency with which an
employee has exhibited a behavior during a rating period. 
 

A. behaviorally anchored rating scale

B. behavioral observation scale
C.  graphic rating scale
D. mixed-standard scale
E.  forced-distribution scale
 
50. James was recently made the manager of his department at Patches Inc., and he has to evaluate his
subordinates' behavior in the next two weeks. He is unsure if he should use the behaviorally anchored
rating scale (BARS) or the behavioral observation scale (BOS) to assess their behavior. Which of the
following characteristics of the two would help James decide the scale that would be most appropriate for
him to use? 
 

A. A BARS asks the manager to rate the frequency with which the employee has exhibited the behavior
during the rating period.
B. A BOS discards many items in creating the rating scale.
C.  A BOS uses many instances to specify the behaviors necessary for effective performance.
D. A BARS is represented by ease of use and maintains objectivity efficiently.
E.  A BARS requires a large amount of information as compared to BOS.
 
51. Identify the statement that accurately characterizes behavioral approaches to performance measurement. 
 

A. They link the company's goals to the specific behavior required to achieve those goals.
B. They work well for complex jobs.
C.  They provide little feedback on areas of improvement.
D. They have a low degree of validity and reliability.
E.  They have a low degree of acceptability.
 
52. Ray, the CEO of Textiles Inc., believes the goals of the company must be divided into smaller departmental
and individual goals, and the accomplishment of these smaller goals will result in accomplishment of the
bigger goals of the company. In the context of measuring performance results, Ray's belief can be best
justified using _____. 
 

A. total quality management

B. the behavioral observational scale method
C.  the critical-incident method
D. statistical quality control
E.  management by objectives
 
53. Which of the following is an advantage of using the results-oriented performance measurement? 
 

A. They are very effective in providing guidance on how to improve.

B. They are relatively easy to link to the organization's goals.
C.  They are generally more subjective than other kinds of performance measurement.
D. They are highly acceptable to employees, but not to managers.
E.  They tend to be highly valid.
 
54. Barry, a supervisor at Yenzen Hotels Inc., thinks self-appraisal is a valid measure of performance appraisal.
However, his colleague Vincent disagrees. Whose argument is most likely to be correct and why? 
 

A. Vincent is right because there are no disagreements between a manager and an employee when self-
appraisal is used.
B. Barry is right because self-rating is the most preferred source of performance appraisal information.
C.  Vincent is right because employees have a tendency to inflate their self-assessments.
D. Barry is right because self-appraisals serve as an ideal basis for administrative decisions.
E.  Vincent is right because self-appraisals are important for a 360-degree performance appraisal.
 
55. Fernando, a production manager at Wind Chimes Inc., thinks subordinates are unreliable sources of
performance appraisal information for evaluating the performance of managers. However, Jose, the sales
manager, thinks subordinates act as good sources of performance appraisal information. Whose argument is
most likely to be correct and why? 
 

A. Jose is right because subordinates often have reliable information about a manager's behavior toward
employees.
B. Fernando is right because subordinates are often willing to say negative things about the person to
whom they report.
C.  Jose is right because when feedback forms need subordinates' names on them, the subordinates tend to
give lower ratings to the manager.
D. Fernando is right because when managers receive ratings from their subordinates, the employees have
less power.
E.  Jose is right because subordinate evaluations are most appropriate for strategic purposes.
 
56. James, the production manager of Zenfax Inc., thinks performance appraisal information from peers is a
less reliable source than other sources of information. However, Ron, a sales manager in the company,
thinks peers give valuable information for appraisal. Whose argument is most likely to be correct and
why? 
 

A. James is right because information from peers does not add value to the assessment of performance.
B. Ron is right because peers are comfortable rating employees for decisions that may affect themselves.
C.  James is right because peers fail to meet the expectations of bringing a different perspective to the
evaluation.
D. Ron is right because peers have expert knowledge of job requirements.
E.  James is right because peers may not have enough opportunity to observe an employee in day-to-day
activities.
 
57. Lydia, a supervisor at Sansen Inc., needs to appraise the performance of her subordinate, Charlie. In the
context of performance information, which of the following is the least biased source of information for
appraisal and why? 
 

A. Peers are the least biased source of information for appraisal because they often understand an employee
better than superiors.
B. Managers are the least biased source of information for appraisal because their success depends on the
employee's productivity.
C.  Customers are the least biased source of information for appraisal because employees are often directly
in contact with them.
D. A subordinate is the least biased source of information for appraisal because the power relationships
motivate a subordinate to provide honest information.
E.  The employee himself because there is generally better agreement between an employee and his or her
supervisor.
 
58. For which of the following purposes is it most appropriate to use performance results when making
subordinate evaluations of performance? 
 

A. Administrative
B. Investigative
C.  Strategic
D. Developmental
E.  Executive
 
59. Jonathan, a supervisor, needs to assess his subordinate's performance. He uses a method that compares one
employee with another. In doing so, he rates an exceptional employee as an average performer by mistake.
Jonathan's manager tells him that he can avoid this type of error if he uses an assessment method that
compares an employee with an objective standard rather than another employee. In the context of types of
rating errors, Jonathan commits the _____ error. 
 

A. horns
B. contrast
C.  leniency
D. halo
E.  distributional
 
60. Clayton, a supervisor, needs to rate the performance of 20 subordinates. He uses a rating scale to rate them
on a scale of 1 to 10. He rates 18 employees at 5, which leads to central tendency. In the context of types of
rating errors, Clayton commits the _____ error. 
 

A. distributional
B. contrast
C.  horns
D. statistical
E.  halo
 
61. Roberto, a manager at Z-Cart Inc., is asked by his manager to rate his subordinates' performance. He needs
to rate 30 employees on a scale that ranges from 1 to 10. He rates 25 employees with a score of 8. In doing
so, Roberto commits a rating error. In the context of types of rating errors, Roberto's mistake is called
_____. 
 

A. central tendency
B. halo error
C.  horns error
D. leniency
E.  statistical error
 
62. Jacinta, a production manager at Alphonso Inc., needs to evaluate the performance of her employees. She
asks her subordinate, June, to carry out this job. June uses a rating scale, which ranges from 1 to 10, to rate
50 employees. She gives a score of 3 to 39 employees. In doing so, June commits the _____ error. 
 

A. mean inclination
B. strictness
C.  central tendency
D. halo effect
E.  statistical error
 
63. When an employee evaluates his or her manager low on all performance criteria due to dissatisfaction with
the manager's disposition, the employee has most likely committed a(n) _____. 
 

A. error based on similarity

B. halo error
C.  central tendency
D. horns error
E.  contrast error
 
64. Name the rating error that leads employees to believe that no aspect of their performance needs
improvement. 
 

A. Contrast error
B. Halo error
C.  Horn error
D. Strictness error
E.  Central tendency error
 
65. Under which of the following circumstances is appraisal politics most likely to occur? 
 

A. When top executives forbid distorted ratings

B. When the goals of rating are compatible with one another
C.  When performance appraisal results are directly linked to developmental programs
D. When senior employees tell newcomers stories about distorted ratings
E.  When performance appraisal is not directly linked to highly desirable rewards
 
66. Paula, the CEO of Gester Inc., wants to carry out the first company-wide performance appraisal. However,
she needs to make sure that the information obtained for performance appraisal is free of bias, and that the
managers have provided information about subordinates without any personal needs influencing the
information. Which of the following options will be assist Paula in obtaining her objective? 
 

A. Paula must focus on obtaining information only from supervisors of employees being appraised because
managers have incentives for giving accurate information.
B. Paula must occasionally work alongside the employees to ensure that they are working diligently.
C.  Paula must personally question all the managers who appraise their subordinates in the performance
appraisal as this will ensure integrity of information.
D. Paula must devise a policy that focuses on confidentiality of appraisal information once it is gathered
from different sources because this will ensure security of information.
E.  Paula must hold calibration meetings because they hold managers accountable for the appraisal
information they provide about their subordinates.
 
67. Identify a way in which an organization can promote fairness and reduce political behavior in the appraisal
system. 
 

A. Use different performance standards to evaluate different employees.

B. Train managers to use the appraisal process.
C.  Discourage employees from discussing their weaknesses.
D. Require that managers give feedback once a year during annual appraisal.
E.  Encourage managers to recognize accomplishments that only employees have identified.
 
68. Which of the following approaches to performance feedback is generally most effective? 
 

A. Problem-solving
B. Tell-and-sell
C.  Tell-and-listen
D. Tell-and-train
E.  Listen-and-sell
 
69. The _____ approach to performance feedback is used by most managers. 
 

A. problem-solving
B. tell-and-sell
C.  tell-and-listen
D. tell-and-train
E.  listen-and-sell
 
70. How can managers improve employee satisfaction with the feedback process? 
 

A. By keeping the feedback session short and concentrating on only the positive aspects of performance
B. By using the tell-and-sell approach during the feedback session
C.  By avoiding decisions about following up on goals as these tend to intimidate the employee
D. By letting employees voice their opinions and discuss performance goals during the feedback process
E.  By focusing on the employee's personality
 
71. Roxanne, a new employee at Fenz Pharmaceuticals, has demonstrated low productivity for a long period.
Her manager evaluates her performance and finds that she requires more training to improve her
productivity. In the context of improving employee's performance, Roxanne lacks _____. 
 

A. required motivation
B. necessary abilities
C.  accountability
D. ethical values
E.  integrity
 
72. Jim, a sales manager at Elexon Inc., finds that Bill, a salesman, lacks motivation to perform well in his job.
In the context of finding solutions to performance problems, which of the following is the right way to deal
with this situation? 
 

A. Jim must reduce Bill's pay to punish him.

B. Jim must warn Bill that he will be demoted if his performance continues to be poor.
C.  Jim must ask Bill to learn from salespeople who perform better than he does.
D. Jim must counsel Bill to help him understand the factors that are affecting his motivation.
E.  Jim must ask Bill to take a vacation to think about what is causing his lack of motivation.
 
73. Mathew was an employee at Bolton Inc., and he was dismissed for poor performance. He filed a lawsuit
against Bolton Inc. on the grounds of unjust dismissal. Which of the following is likely to be a reason for
Mathew's claim? 
 

A. Mathew's manager was uninterested in the specific feedback provided by him.

B. Mathew was dismissed after he complained to senior management about his manager's unethical
practices.
C.  Mathew's manager did not think he had the skills required for the job.
D. Mathew's manager refused to restructure the job to fit Mathew's capabilities.
E.  Mathew was not given rewards by his manager when he did not perform his tasks efficiently.
 
74. How can an organization protect itself against discrimination and unjust dismissal lawsuits? 
 

A. The organization should provide for a review of all top performance ratings by senior managers.
B. Performance measures should evaluate personal traits.
C.  Requirements for job success should be clearly communicated to employees.
D. The organization should use a single rater to rate all the employees.
E.  The organization should dismiss poor performers.
 
75. Gary, the CEO of Zansofel Inc., believes in providing employees with a flexible and open environment to
enhance their skills and growth in the company. In the context of performance management and ethical
issues associated with it, which of the following would Gary most likely oppose and why? 
 

A. He would oppose calibration meetings because they question the integrity of performance appraisal
information provided by managers.
B. He would oppose 360-degree appraisal because it gathers information from colleagues and subordinates,
which can make the employees self-conscious.
C.  He would be against having a legally defensible performance management system because it focuses on
scrutinizing employees who file a case against the company.
D. He would be against electronic monitoring systems because they make the employees feel like robots
and that they are being watched.
E.  He would be against top management carrying out performance appraisal of employees because it may
lead to appraisal politics.
 
 

Essay Questions
 

76. Discuss the steps involved in the performance management process. 

 

 
77. Discuss the various purposes of performance management systems. 
 

 
78. Briefly describe the five criteria that measure the effectiveness of a performance management system. 
 

 
79. Distinguish between behavioral observation scales (BOS) and behaviorally anchored rating scales (BARS). 
 

 
80. List the advantages and disadvantages of using managers, peers, subordinates, self, and customers as
sources of performance information. 
 

 
81. Describe the types of rating errors that influence performance evaluation, and explain the ways in which
they can be minimized. 
 

 
82. Briefly describe a calibration meeting. 
 

 
83. List the ways in which a performance feedback session can be improved. 
 

 
84. Suggest the different means by which an employee's unsatisfactory performance can be improved. 
 

 
85. Identify the measures that a company should take to ensure a legally defensible performance management
system. 
 

 
 Chapter 10 Managing Employees' Performance Answer Key

True / False Questions

 

1. Performance management requires knowing what activities and outputs are desired, observing whether
they occur, and providing feedback to help employees meet expectations. 
 
TRUE

Performance management is the process through which managers ensure that employees' activities and
outputs contribute to the organization's goals. This process requires knowing what activities and outputs
are desired, observing whether they occur, and providing feedback to help employees meet
expectations. In the course of providing feedback, managers and employees may identify performance
problems and establish ways to resolve those problems.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management
 
2. Performance management systems are established to meet three broad purposes of the organization:
strategic, administrative, and developmental. 
 
TRUE

Organizations establish performance management systems to meet three broad purposes: strategic,
administrative, and developmental.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-02 Discuss the purposes of performance management systems.
Level of Difficulty: 1 Easy
Topic: Purposes of Performance Management
 
3. In a performance appraisal, the term validity refers to whether the appraisal measures all aspects of
performance, both relevant and irrelevant. 
 
FALSE

Validity is the extent to which a measurement tool actually measures what it is intended to measure. In
the case of performance appraisal, validity refers to whether the appraisal measures all the relevant
aspects of performance and omits irrelevant aspects of performance.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management
 
4. The paired-comparison method measures the consistency of results over time. 
 
FALSE

Test-retest reliability refers to consistency of results over time. If a performance measure lacks test-
retest reliability, determining whether an employee's performance has truly changed over time will be
impossible.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management
 
5. In the simple ranking method of performance measurement, managers rank employees in their group
from the highest performer to the poorest performer. 
 
TRUE

The simple ranking method requires managers to rank employees in their group from the highest
performer to the poorest performer.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
6. The paired-comparison method involves comparing each employee with each other employee to
establish rankings. 
 
TRUE

One of the variations on rankings is the paired-comparison method. This approach involves comparing
each employee with each other employee to establish rankings.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
7. While rating attributes of individuals, measurement of attributes is rarely linked to the organization's
strategy. 
 
TRUE

While rating attributes of individuals, measurement of attributes is rarely linked to the organization's
strategy.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
Topic: Rating Individuals
 
8. To rate employee behaviors, an organization begins by defining which behaviors are associated with the
employee's personality traits. 
 
FALSE

To rate behaviors, an organization begins by defining which behaviors are associated with success on
the job. The appraisal form asks the manager to rate an employee in terms of each of the identified
behaviors that help the organization to achieve its goals.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
9. The critical-incident method requires managers to keep a record of specific examples of the employee
acting in ways that are either effective or ineffective. 
 
TRUE

One way to rate behaviors is with the critical-incident method. This approach requires managers to keep
a record of specific examples of the employee acting in ways that are either effective or ineffective.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
10. A disadvantage of behaviorally anchored rating scales (BARS) is that it can bias a manager's memory. 
 
TRUE

Although behaviorally anchored rating scales (BARS) can improve interrater reliability, this method can
bias the manager's memory. The statements used as anchors can help managers remember similar
behaviors, at the expense of other critical incidents.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
11. Compared to a behavioral observation scale (BOS), a behaviorally anchored rating scale (BARS) makes
it easier for providing feedback, maintaining objectivity, and suggesting training needs. 
 
FALSE

Compared to a behaviorally anchored rating scale (BARS) and graphic rating scales, managers and
employees have said they prefer a behavioral observation scale (BOS) for ease of use, providing
feedback, maintaining objectivity, and suggesting training needs.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
12. Organizational behavior modification (OBM) is a plan for managing the behavior of employees through
an informal system of feedback and reinforcement. 
 
FALSE

Applied to behavior in organizations, organizational behavior modification (OBM) is a plan for

managing the behavior of employees through a formal system of feedback and reinforcement.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
13. Behavioral approaches to performance measurement, such as organizational behavior modification and
rating scales, tend to be biased. 
 
FALSE

Behavioral methods can generate specific feedback, along with guidance in areas requiring
improvements. As a result, these methods tend to be valid. The people to be measured often help in
developing the measures, so acceptance tends to be high as well. When raters are well trained, reliability
also tends to be high.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance
 
14. Management by objectives (MBO) links employee performance with the organization's strategic goals. 
 
TRUE

Since staff members are involved in setting goals, it is likely that management by objectives (MBO)
effectively links individual employees' performance with the organization's overall goals.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
15. Traditional performance management differs from total quality management (TQM) in that it assesses
both individual performance and the system within which the individual works. 
 
FALSE

Total quality management (TQM) differs from traditional performance measurement in that it assesses
both individual performance and the system within which the individual works.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
16. Using an employee's manager for feedback is very useful because their own success depends so much
on their employees' performance. 
 
TRUE

An advantage of using managers to evaluate performance is that they have an incentive to provide
accurate and helpful feedback because their own success depends so much on their employees'
performance.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 2 Medium
Topic: Sources of Performance Information
 
17. Peer reviews are an excellent source of information about performance in a job where the supervisor
does not often observe the employee. 
 
TRUE

Peers are an excellent source of information about performance in a job where the supervisor does not
often observe the employee. Generally, peers are more favorable toward participating in reviews to be
used for employee development.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 1 Easy
Topic: Sources of Performance Information
 
18. Self-appraisals are appropriate as the basis for administrative decisions. 
 
FALSE

Social psychologists have found that, in general, people tend to blame outside circumstances for their
failures while taking a large part of the credit for their successes. Supervisors can soften this tendency
by providing frequent feedback, but because people tend to perceive situations this way, self-appraisals
are not appropriate as the basis for administrative decisions.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 1 Easy
Topic: Sources of Performance Information
 
19. In order to minimize distributional errors, raters should use only one part of the rating scale. 
 
FALSE

Raters make distributional errors when they tend to use only one part of a rating scale. Distributional
errors make it difficult to compare employees rated by the same person.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
20. Appraisal politics are most likely to occur when a performance appraisal is directly linked to highly
desirable rewards. 
 
TRUE

Appraisal politics are most likely to occur when raters are accountable to the employee being rated, the
goals of rating are not compatible with one another, performance appraisal is directly linked to highly
desirable rewards, top executives tolerate or ignore distorted ratings, and senior employees tell
newcomers company "folklore" that includes stories about distorted ratings.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 1 Easy
Topic: Errors in Performance Management
 
21. In a "tell-and-sell" approach, managers tell the employees their ratings and then justify those ratings. 
 
TRUE

During the feedback session, managers can take any of three approaches. One of them is a "tell-and-
sell" approach. In the "tell-and-sell" approach, managers tell the employees their ratings and then justify
those ratings.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 1 Easy
Topic: Giving Performance Feedback
 
22. The content of feedback is more effective when it is directed toward personalities. 
 
FALSE

The content of feedback should emphasize behavior, not personalities. For example, "You did not meet
the deadline" can open a conversation about what needs to change, but "You're not motivated" may
make the employee feel defensive and angry.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 2 Medium
Topic: Giving Performance Feedback
 
23. The improvement of an employee's performance varies according to the employee's ability and level of
motivation. 
 
TRUE

The most effective way to improve performance varies according to the employee's ability and
motivation. In general, when employees have high levels of ability and motivation, they perform at or
above standards. But when they lack ability, motivation, or both, corrective action is needed.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 1 Easy
Topic: Finding Solutions to Performance Problems
 
24. Lawsuits filed against performance management usually involve charges of discrimination or unjust
dismissal. 
 
TRUE

Since performance measures play a central role in decisions about pay, promotions, and discipline,
employment-related lawsuits often challenge an organization's performance management system.
Lawsuits related to performance management usually involve charges of discrimination or unjust
dismissal.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-09 Discuss legal and ethical issues that affect performance management.
Level of Difficulty: 1 Easy
Topic: Legal and Ethical Issues in Performance Management
 
25. The requirements for job success are clearly communicated to employees to protect against lawsuits. 
 
TRUE

To protect against lawsuits, it is important to have a legally defensible performance management

system. Such a system would be based on valid job analyses, with the requirements for job success
clearly communicated to employees.

 
AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-09 Discuss legal and ethical issues that affect performance management.
Level of Difficulty: 1 Easy
Topic: Legal and Ethical Issues in Performance Management
 
 

Multiple Choice Questions

 
26. _____ is the process through which managers ensure that employees' activities and outputs contribute to
the organization's goals. 
 

A.  Quality analysis

B.  Administrative planning
C.  Project management
D.  Strategic planning
E.  Performance management

The process through which managers ensure that employees' activities and outputs contribute to the
organization's goals is known as performance management. Effective performance management can tell
top performers that they are valued, encourage communication between managers and their employees,
establish uniform standards for evaluating employees, and help the organization identify its strongest
and weakest performers.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management
 
27. Which of the following statements is true of effective performance management? 
 

A.  It can tell top performers they are valued.

B.  It can evaluate employees without establishing standards.
C.  It averts communication between managers and their employees.
D.  It uses just one person as a source of information.
E.  It does not affect employees who meet expectations.

Effective performance management can tell top performers they are valued, encourage communication
between managers and their employees, establish consistent standards for evaluating employees, and
help the organization identify its strongest and weakest employees. To meet these objectives, companies
must think of effective performance management as a process, not an event.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 2 Medium
Topic: The Process of Performance Management
 
28. Which of the following is the first step in performance management process? 
 

A.  Evaluating performance

B.  Developing employee goals, behavior, and actions to achieve outcomes
C.  Providing consequences for performance results
D.  Defining performance outcomes for company division and department
E.  Identifying improvements needed

Organizations establish performance management systems to meet three broad purposes: strategic,
administrative, and developmental. The first step in the performance management process is defining
performance outcomes for company division and department.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management
 
29. Which of the following is the last step in performance management process? 
 

A.  Defining performance outcomes for company division and department

B.  Identifying improvements needed
C.  Developing employee goals, behavior, and actions to achieve outcomes
D.  Evaluating performance
E.  Providing consequences for performance results

The last step in performance management process is providing consequences for achieving (or failing to
achieve) performance outcomes (such as pay increases, bonuses, or action plans).

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management
 
30. "Performance management serves as a basis for improving employees' knowledge and skills." This
statement corresponds to which of the following purposes of performance management? 
 

A.  Developmental purpose

B.  Administrative purpose
C.  Investigative purpose
D.  Strategic purpose
E.  Executive purpose

In the context of purposes of performance management, the developmental purpose corresponds to

improving employees' knowledge and skills. Giving timely performance feedback can help even the
employees who are meeting the company's expectations.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-02 Discuss the purposes of performance management systems.
Level of Difficulty: 2 Medium
Topic: Purposes of Performance Management
 
31. In the context of effectiveness of performance management, _____ means the extent to which a
measurement tool actually measures what it is intended to measure. 
 

A.  validity
B.  dependability
C.  acceptability
D.  reliability
E.  specificity

Validity is the extent to which a measurement tool actually measures what it is intended to measure. In
the case of performance appraisal, validity refers to whether the appraisal measures all the relevant
aspects of performance and omits irrelevant aspects of performance.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management
 
32. In the context of validity in performance appraisal, information that is gathered but irrelevant is called
_____. 
 

A.  feedback
B.  knowledge
C.  concatenation
D.  adjunct
E.  contamination

In the context of validity in performance appraisal, information that is gathered but irrelevant is called
contamination. This irrelevant information is often omitted in performance appraisal.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management
 
33. Crimson Inc. is conducting their annual performance review process for employees. The company uses
a tool that measures entrepreneurial behavior and found there was a lot of irrelevant information that
was also gathered. The irrelevant information gathered from the results is termed _____. 
 

A.  deficiency
B.  validity
C.  contamination
D.  specificity
E.  reliability

In the case of performance appraisal, validity refers to whether the appraisal measures all the relevant
aspects of performance and omits irrelevant aspects of performance. Information that is gathered but
irrelevant is "contamination."

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 3 Hard
Topic: Criteria for Effective Performance Management
 
34. Lily, a manager at Pyramid Inc., uses a rating tool to evaluate the performance of her subordinates.
However, she finds that the scale she used did not yield consistent results and could not determine if a
change had taken place in the performance of the employees. Which of the following was lacking in the
rating scale? 
 

A.  Validit
y
B.  Acceptability
C.  Reliability
D.  Transparency
E.  Specificity

With regard to a performance measure, reliability describes the consistency of the results that the
performance measure will deliver. If a performance measure lacks test-retest reliability, determining
whether an employee's performance has truly changed over time will be impossible.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 3 Hard
Topic: Criteria for Effective Performance Management
 
35. Charles, the HR manager at Telcare Inc., establishes a performance management system for his
company. He wants to check the consistency of results over time. In the context of criteria for
determining the effectiveness of performance measures, Charles is trying to check the _____ of the
performance management system. 
 

A.  validity
B.  test-retest reliability
C.  specificity
D.  interrater reliability
E.  acceptability

Test-retest reliability refers to consistency of results over time. If a performance measure lacks test-
retest reliability, determining whether an employee's performance has truly changed over time will be
impossible. In this case, Charles is trying to check the test-retest reliability of the performance
management system.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 3 Hard
Topic: Criteria for Effective Performance Management
 
36. In the context of performance management, which of the following terms refers to a measure that
obtains consistency of results over time? 
 

A.  Validit
y
B.  Interrater reliability
C.  Acceptability
D.  Test-retest reliability
E.  Specificity

Test-retest reliability refers to consistency of results over time. If a performance measure lacks test-
retest reliability, determining whether an employee's performance has truly changed over time will be
impossible.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management
 
37. Which of the following helps performance management meet the goals of supporting strategy and
developing employees? 
 

A.  Strategic fit

B.  Specific feedback
C.  Overall opinion
D.  Employee orientation
E.  Generalized instruction

Specific feedback refers to telling employees what is expected of them and how they can meet those
expectations. Being specific helps performance management meet the goals of supporting strategy and
developing employees.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 2 Medium
Topic: Criteria for Effective Performance Management
 
38. Bill and Nancy, managers at Sanzen Inc., want to the check the consistency of results for an employee
on a scale of 1 to 10. This will help them evaluate his performance. In the context of criteria for
effective performance management, Bill and Nancy are testing the _____. 
 

A.  validity
B.  test-retest reliability
C.  specificity
D.  interrater reliability
E.  accountability

The consistency of results when more than one person measures performance is called interrater
reliability. In this scenario, Bill and Nancy, are evaluating the performance of the same employee for
consistency of results.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 3 Hard
Topic: Criteria for Effective Performance Management
 
39. Donna, a supervisor at Cenate Inc., wants to compare her subordinate John's performance with other
employees to assess their effectiveness. Which of the following methods for measuring performance is
best suited for this task? 
 

A.  Simple ranking

B.  Mixed-standards scale
C.  Critical-incident method
D.  Graphic rating scale
E.  Organizational behavior modification

Techniques for comparing one individual's performance with that of others are simple ranking, forced
distribution, and paired comparison. In this scenario, Donna should use simple ranking.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
40. Salman, a production manager at Telecal Inc., needs to measure the performance of 10 subordinates. He
writes their names on a paper and circles Karim's name as the best-performing employee of the group.
He then circles Dillon's name as the worst employee of the group. He rates the remaining employees as
second best, second worst, and so on. In the context of methods of performance measurement, Salman is
using the _____ method. 
 

A.  forced-distribution
B.  alternation ranking
C.  graphic rating
D.  mixed-standard
E.  critical-incident

Alternation ranking method is a variation of simple ranking method. In this method, the manager works
from a list of employees. First, the manager decides which employee is best and crosses that person's
name off the list. From the remaining names, the manager selects the worst employee and crosses off
that name. The process continues with the manager selecting the second best, second worst, third best,
and so on, until all the employees have been ranked. In this scenario, Salman is using the alternation
ranking method.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
41. Margaret, a production manager at Falcon Inc., needs to measure the performance of 12 of her
subordinates. She divides the number of employees into categories like exceptional, above average,
average, and below average. She assigns a certain percentage of employees to each category to
determine the quality of their performances. In the context of methods for measuring performance,
Margaret is using the _____ method. 
 

A.  alternation ranking

B.  rating attribute
C.  mixed-standard
D.  paired-comparison
E.  forced-distribution

A forced-distribution method assigns a certain percentage of employees to each category in a set of

categories. A manager completing the performance appraisal would rate 5% of his or her employees as
exceptional, 25% as exceeding standards, and so on. A forced-distribution approach works best if the
members of a group really do vary this much in terms of their performance. It overcomes the temptation
to rate everyone high in order to avoid conflict. In this scenario, Margaret is using the forced-
distribution method.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
 Blooms: Apply
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
42. Joseph, a supervisor at H2O Chemicals Inc., needs to assess the behavior of 25 people, who constitute a
large group of his subordinates. Which of the following must Joseph ideally do to assess the behavior of
his subordinates and why? 
 

A.  Joseph must use a behavioral observation scale because it is relatively easier than other methods of
assessing behavior and providing feedback.
B.  Joseph must use an organizational behavior modification approach because it is often preferred by
managers for its simplicity.
C.  Joseph must use a behaviorally anchored rating scale because it is good for large groups.
D.  Joseph must use a critical-incident method to individually assess each employee because this
method requires less documentation.
E.  Joseph must use behaviorism because it helps in predicting behavior of an employee based on his
past experiences.

Behavioral observation scale (BOS) is easier than graphic rating scales and other types of behavioral
assessment methods. It is often preferred by managers and employees for its ease of use, providing
feedback, maintaining objectivity, and suggesting training needs.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
43. Payne Corp. wants to assess the performance of its employees. It uses a questionnaire that has a high fit
with strategy, high validity, high reliability, moderate acceptability, and very high specificity. Which of
the following approaches to employee performance is being focused on by this questionnaire? 
 

A.  Results
B.  Quality
C.  Behavioral
D.  Comparative
E.  Attribute

Performance measures that focus on employee behavior have high fit with strategy, usually high
validity, usually high reliability, moderate acceptability, and very high specificity. Refer to Table 10.1.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
  
44. In the context of methods for measuring performance, alternation ranking is a variation of _____
ranking. 
 

A.  simple
B.  distributed
C.  paired
D.  attribute
E.  scalar

Alternation ranking is a variation of simple ranking. In this method, the manager decides which
employee is best and crosses that person's name off the list. From the remaining names, the manager
selects the worst employee and crosses off that name. The process continues with the manager selecting
the second best, second worst, third best, and so on, until all employees have been ranked.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
45. Janet, a production manager, thinks management by objectives is a good way to measure performance
results of employees in an organization. However, her colleague, Ferdinand, disagrees with her. Whose
argument is correct and why? 
 

A.  Ferdinand is right because the goals in this strategy are subjective.
B.  Janet is right because managers and employees have to set their own goals independently.
C.  Ferdinand is right because management by objectives can have negative consequences on
productivity.
D.  Janet is right because results-oriented performance measurement is relatively easy to link to the
organization's goals.
E.  Ferdinand is right because management by objectives focuses only on individual goals.

In this scenario, Janet is right because results-oriented performance measurement is relatively easy to
link to the organization's goals. Also, measuring results is often acceptable to both employees and
managers.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
46. Paul is a manager at Firefly Corp., and he uses a rating approach to evaluate his employees. He
considers one employee at a time and circles a number or a word to signify the degree to which that
employee demonstrates a particular trait in the scale. Which of the following approaches is Paul using to
assess his employees? 
 

A.  Mixed-standard scale

B.  Critical-incident approach
C.  Graphic rating scale
D.  Behavioral observation scale
E.  Behaviorally anchored rating scale

The graphic rating scale method lists traits and provides a rating scale for each trait. The employer uses
the scale to indicate the extent to which the employee being rated displays the traits. The rating scale
may provide points to a circle (as on a scale going from 1 for poor to 5 for excellent), or it may provide
a line representing a range of scores, with the manager marking a place along the line.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
47. The _____ method of performance measurement uses several statements describing each trait to
produce a final score for that trait. 
 

A.  behaviorally anchored rating scale

B.  mixed-standard scale
C.  behavioral observation scale
D.  graphic rating scale
E.  behavior-response scale

The method of performance measurement that uses several statements describing each trait to produce a
final score for that trait is known as the mixed-standard scale.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
 
48. Identify a true statement about the mixed-standard scale. 
 

A.  It is intended to define performance dimensions specifically using statements of behavior that
describe different levels of performance.
B.  It uses several statements describing each trait to produce a final score for that trait.
C.  It may use 15 behaviors to define levels of performance.
D.  It lists traits and provides a rating scale for each trait.
E.  It involves comparing each employee with each other employee to establish rankings.

Mixed-standards scales use several statements describing each trait to produce a final score for that trait.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance
 
49. The _____ performance management method requires managers to rate the frequency with which an
employee has exhibited a behavior during a rating period. 
 

A.  behaviorally anchored rating scale

B.  behavioral observation scale
C.  graphic rating scale
D.  mixed-standard scale
E.  forced-distribution scale

A behavioral observation scale (BOS) asks the manager to rate the frequency with which the employee
has exhibited the behavior during the rating period. These ratings are averaged to compute an overall
performance rating.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance
 
50. James was recently made the manager of his department at Patches Inc., and he has to evaluate his
subordinates' behavior in the next two weeks. He is unsure if he should use the behaviorally anchored
rating scale (BARS) or the behavioral observation scale (BOS) to assess their behavior. Which of the
following characteristics of the two would help James decide the scale that would be most appropriate
for him to use? 
 

A.  A BARS asks the manager to rate the frequency with which the employee has exhibited the
behavior during the rating period.
B.  A BOS discards many items in creating the rating scale.
C.  A BOS uses many instances to specify the behaviors necessary for effective performance.
D.  A BARS is represented by ease of use and maintains objectivity efficiently.
E.  A BARS requires a large amount of information as compared to BOS.

While a behaviorally anchored rating scale (BARS) discards many examples in creating the rating scale,
a behavioral observation scale (BOS) uses many of them to define all behaviors necessary for effective
performance. A BOS asks the manager to rate the frequency with which the employee has exhibited the
behavior during the rating period.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
51. Identify the statement that accurately characterizes behavioral approaches to performance
measurement. 
 

A.  They link the company's goals to the specific behavior required to achieve those goals.
B.  They work well for complex jobs.
C.  They provide little feedback on areas of improvement.
D.  They have a low degree of validity and reliability.
E.  They have a low degree of acceptability.

Behavioral approaches such as organizational behavior modification and rating scales can link the
company's goals to the specific behavior required to achieve those goals. Behavioral methods can
generate specific feedback, along with guidance in areas requiring improvements.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance
 
52. Ray, the CEO of Textiles Inc., believes the goals of the company must be divided into smaller
departmental and individual goals, and the accomplishment of these smaller goals will result in
accomplishment of the bigger goals of the company. In the context of measuring performance results,
Ray's belief can be best justified using _____. 
 

A.  total quality management

B.  the behavioral observational scale method
C.  the critical-incident method
D.  statistical quality control
E.  management by objectives

Management by objectives is a system in which people at each level of the organization set goals in a
process that flows from top to bottom, so employees at all levels are contributing to the organization's
overall goals. These goals become the standards for evaluating each employee's performance. In this
scenario, Ray's belief can be best justified using management by objectives.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance
 
53. Which of the following is an advantage of using the results-oriented performance measurement? 
 

A.  They are very effective in providing guidance on how to improve.

B.  They are relatively easy to link to the organization's goals.
C.  They are generally more subjective than other kinds of performance measurement.
D.  They are highly acceptable to employees, but not to managers.
E.  They tend to be highly valid.

In general, evaluation of results can be less subjective than other kinds of performance measurement.
This makes measuring results highly acceptable to employees and managers alike. Results-oriented
performance measurement is also relatively easy to link to the organization's goals.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance
 
54. Barry, a supervisor at Yenzen Hotels Inc., thinks self-appraisal is a valid measure of performance
appraisal. However, his colleague Vincent disagrees. Whose argument is most likely to be correct and
why? 
 

A.  Vincent is right because there are no disagreements between a manager and an employee when self-
appraisal is used.
B.  Barry is right because self-rating is the most preferred source of performance appraisal information.
C.  Vincent is right because employees have a tendency to inflate their self-assessments.
D.  Barry is right because self-appraisals serve as an ideal basis for administrative decisions.
E.  Vincent is right because self-appraisals are important for a 360-degree performance appraisal.

In this scenario, Vincent is right because employees have a tendency to inflate assessments of their
performance. Especially if the ratings will be used for administrative decisions, exaggerating one's
contributions has practical benefits.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information
 
55. Fernando, a production manager at Wind Chimes Inc., thinks subordinates are unreliable sources of
performance appraisal information for evaluating the performance of managers. However, Jose, the
sales manager, thinks subordinates act as good sources of performance appraisal information. Whose
argument is most likely to be correct and why? 
 

A.  Jose is right because subordinates often have reliable information about a manager's behavior
toward employees.
B.  Fernando is right because subordinates are often willing to say negative things about the person to
whom they report.
C.  Jose is right because when feedback forms need subordinates' names on them, the subordinates tend
to give lower ratings to the manager.
D.  Fernando is right because when managers receive ratings from their subordinates, the employees
have less power.
E.  Jose is right because subordinate evaluations are most appropriate for strategic purposes.

In this scenario, Jose is right because subordinates often have the best chance to see how well a manager
treats employees.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information
 
56. James, the production manager of Zenfax Inc., thinks performance appraisal information from peers is a
less reliable source than other sources of information. However, Ron, a sales manager in the company,
thinks peers give valuable information for appraisal. Whose argument is most likely to be correct and
why? 
 

A.  James is right because information from peers does not add value to the assessment of performance.
B.  Ron is right because peers are comfortable rating employees for decisions that may affect
themselves.
C.  James is right because peers fail to meet the expectations of bringing a different perspective to the
evaluation.
D.  Ron is right because peers have expert knowledge of job requirements.
E.  James is right because peers may not have enough opportunity to observe an employee in day-to-
day activities.

An employee's peers act as excellent sources of information because they have expert knowledge of job
requirements. They also bring a different perspective to the evaluation and can provide extremely valid
assessments of performance. In this scenario, Ron is right because he thinks peers provide valuable
information for appraisal.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information
 
57. Lydia, a supervisor at Sansen Inc., needs to appraise the performance of her subordinate, Charlie. In the
context of performance information, which of the following is the least biased source of information for
appraisal and why? 
 

A.  Peers are the least biased source of information for appraisal because they often understand an
employee better than superiors.
B.  Managers are the least biased source of information for appraisal because their success depends on
the employee's productivity.
C.  Customers are the least biased source of information for appraisal because employees are often
directly in contact with them.
D.  A subordinate is the least biased source of information for appraisal because the power relationships
motivate a subordinate to provide honest information.
E.  The employee himself because there is generally better agreement between an employee and his or
her supervisor.

Managers possess the basic qualifications for carrying out performance appraisal. Managers have an
incentive to provide accurate and helpful feedback because their own success depends on their
subordinates' performance.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
 Blooms: Analyze
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information
 
58. For which of the following purposes is it most appropriate to use performance results when making
subordinate evaluations of performance? 
 

A.  Administrative
B.  Investigative
C.  Strategic
D.  Developmental
E.  Executive

When managers receive ratings from their subordinates, the employees have more power, so managers
tend to emphasize employee satisfaction, even at the expense of productivity. Therefore, subordinate
evaluations are most appropriate for developmental purposes.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 1 Easy
Topic: Sources of Performance Information
 
59. Jonathan, a supervisor, needs to assess his subordinate's performance. He uses a method that compares
one employee with another. In doing so, he rates an exceptional employee as an average performer by
mistake. Jonathan's manager tells him that he can avoid this type of error if he uses an assessment
method that compares an employee with an objective standard rather than another employee. In the
context of types of rating errors, Jonathan commits the _____ error. 
 

A.  horns
B.  contrast
C.  leniency
D.  halo
E.  distributional

If a rater compares an individual, not against an objective standard, but against other employees,
contrast errors occur. A competent performer who works with exceptional people may be rated lower
than competent, simply because of the contrast. In this scenario, Jonathan commits a contrast error.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management
 
60. Clayton, a supervisor, needs to rate the performance of 20 subordinates. He uses a rating scale to rate
them on a scale of 1 to 10. He rates 18 employees at 5, which leads to central tendency. In the context of
types of rating errors, Clayton commits the _____ error. 
 

A.  distributional
B.  contrast
C.  horns
D.  statistical
E.  halo

Raters make distributional errors when they tend to use only one part of a rating scale. Distributional
errors make it difficult to compare employees rated by the same person. The error is called central
tendency when the rater puts everyone near the middle of the scale. In this scenario, Clayton commits a
distributional error.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management
 
61. Roberto, a manager at Z-Cart Inc., is asked by his manager to rate his subordinates' performance. He
needs to rate 30 employees on a scale that ranges from 1 to 10. He rates 25 employees with a score of 8.
In doing so, Roberto commits a rating error. In the context of types of rating errors, Roberto's mistake is
called _____. 
 

A.  central tendency

B.  halo error
C.  horns error
D.  leniency
E.  statistical error

Raters make distributional errors when they tend to use only one part of a rating scale. The error is
called leniency when the reviewer rates everyone near the top, strictness when the rater favors lower
rankings. In this scenario, Roberto commits a leniency error.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management
 
62. Jacinta, a production manager at Alphonso Inc., needs to evaluate the performance of her employees.
She asks her subordinate, June, to carry out this job. June uses a rating scale, which ranges from 1 to 10,
to rate 50 employees. She gives a score of 3 to 39 employees. In doing so, June commits the _____
error. 
 

A.  mean inclination

B.  strictness
C.  central tendency
D.  halo effect
E.  statistical error

Raters make distributional errors when they tend to use only one part of a rating scale. The error is
called strictness when the rater favors lower rankings. In this scenario, June commits a strictness error.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management
 
63. When an employee evaluates his or her manager low on all performance criteria due to dissatisfaction
with the manager's disposition, the employee has most likely committed a(n) _____. 
 

A.  error based on similarity

B.  halo error
C.  central tendency
D.  horns error
E.  contrast error

Raters often let their opinion of one quality color their opinion of others. When the bias involves
negative ratings, it is called the horns error.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
64. Name the rating error that leads employees to believe that no aspect of their performance needs
improvement. 
 

A.  Contrast error

B.  Halo error
C.  Horn error
D.  Strictness error
E.  Central tendency error

Raters often let their opinion of one quality color their opinion of others. When the bias is in a favorable
direction, this is called the halo error. A halo error can mistakenly tell employees they don't need to
improve in any area.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
65. Under which of the following circumstances is appraisal politics most likely to occur? 
 

A.  When top executives forbid distorted ratings

B.  When the goals of rating are compatible with one another
C.  When performance appraisal results are directly linked to developmental programs
D.  When senior employees tell newcomers stories about distorted ratings
E.  When performance appraisal is not directly linked to highly desirable rewards

Appraisal politics are most likely to occur when raters are accountable to the employee being rated, the
goals of rating are not compatible with one another, performance appraisal is directly linked to highly
desirable rewards, top executives tolerate or ignore distorted ratings, and senior employees tell
newcomers company "folklore" that includes stories about distorted ratings.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
66. Paula, the CEO of Gester Inc., wants to carry out the first company-wide performance appraisal.
However, she needs to make sure that the information obtained for performance appraisal is free of bias,
and that the managers have provided information about subordinates without any personal needs
influencing the information. Which of the following options will be assist Paula in obtaining her
objective? 
 

A.  Paula must focus on obtaining information only from supervisors of employees being appraised
because managers have incentives for giving accurate information.
B.  Paula must occasionally work alongside the employees to ensure that they are working diligently.
C.  Paula must personally question all the managers who appraise their subordinates in the performance
appraisal as this will ensure integrity of information.
D.  Paula must devise a policy that focuses on confidentiality of appraisal information once it is
gathered from different sources because this will ensure security of information.
E.  Paula must hold calibration meetings because they hold managers accountable for the appraisal
information they provide about their subordinates.

Organizations can minimize appraisal politics by establishing an appraisal system that is fair. One
technique is to hold a calibration meeting, a gathering at which managers discuss employee performance
ratings and provide evidence supporting their ratings with the goal of eliminating the influence of rating
errors.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management
 
67. Identify a way in which an organization can promote fairness and reduce political behavior in the
appraisal system. 
 

A.  Use different performance standards to evaluate different employees.

B.  Train managers to use the appraisal process.
C.  Discourage employees from discussing their weaknesses.
D.  Require that managers give feedback once a year during annual appraisal.
E.  Encourage managers to recognize accomplishments that only employees have identified.

Organizations can minimize appraisal politics by establishing an appraisal system that is fair. One
technique is to hold a calibration meeting. The organization can also help managers give accurate and
fair appraisals by training them to use the appraisal process, encouraging them to recognize
accomplishments that the employees themselves have not identified, and fostering a climate of openness
in which employees feel they can be honest about their weaknesses.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
 Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
68. Which of the following approaches to performance feedback is generally most effective? 
 

A.  Problem-solving
B.  Tell-and-sell
C.  Tell-and-listen
D.  Tell-and-train
E.  Listen-and-sell

In the "problem-solving" approach, managers and employees work together to solve performance
problems in an atmosphere of respect and encouragement. Research demonstrates that the problem-
solving approach is superior as compared to other methods.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 1 Easy
Topic: Giving Performance Feedback
 
69. The _____ approach to performance feedback is used by most managers. 
 

A.  problem-solving
B.  tell-and-sell
C.  tell-and-listen
D.  tell-and-train
E.  listen-and-sell

Most managers rely on the tell-and-sell approach during the feedback session. In the "tell-and-sell"
approach, managers tell the employees their ratings and then justify those ratings.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 1 Easy
Topic: Giving Performance Feedback
 
70. How can managers improve employee satisfaction with the feedback process? 
 

A.  By keeping the feedback session short and concentrating on only the positive aspects of
performance
B.  By using the tell-and-sell approach during the feedback session
C.  By avoiding decisions about following up on goals as these tend to intimidate the employee
D.  By letting employees voice their opinions and discuss performance goals during the feedback
process
E.  By focusing on the employee's personality

Managers can improve employee satisfaction with the feedback process by letting employees voice their
opinions and discuss performance goals.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 2 Medium
Topic: Giving Performance Feedback
 
71. Roxanne, a new employee at Fenz Pharmaceuticals, has demonstrated low productivity for a long
period. Her manager evaluates her performance and finds that she requires more training to improve her
productivity. In the context of improving employee's performance, Roxanne lacks _____. 
 

A.  required motivation

B.  necessary abilities
C.  accountability
D.  ethical values
E.  integrity

In this scenario, Roxanne lacks the necessary abilities to perform her job because her manager finds that
she needs more training to improve her productivity. When a motivated employee lacks knowledge,
skills, or abilities in some area, the manager may offer coaching, training, and more detailed feedback.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 3 Hard
Topic: Finding Solutions to Performance Problems
 
72. Jim, a sales manager at Elexon Inc., finds that Bill, a salesman, lacks motivation to perform well in his
job. In the context of finding solutions to performance problems, which of the following is the right way
to deal with this situation? 
 

A.  Jim must reduce Bill's pay to punish him.

B.  Jim must warn Bill that he will be demoted if his performance continues to be poor.
C.  Jim must ask Bill to learn from salespeople who perform better than he does.
D.  Jim must counsel Bill to help him understand the factors that are affecting his motivation.
E.  Jim must ask Bill to take a vacation to think about what is causing his lack of motivation.

Managers with an unmotivated employee can explore ways to demonstrate that the employee is being
treated fairly and rewarded adequately. The solution may be as simple as more positive feedback
(praise). Employees may need a referral for counseling or help with stress management. In this scenario,
Jim must counsel Bill to help him understand the factors that are affecting his motivation.

 
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 3 Hard
Topic: Finding Solutions to Performance Problems
 
73. Mathew was an employee at Bolton Inc., and he was dismissed for poor performance. He filed a lawsuit
against Bolton Inc. on the grounds of unjust dismissal. Which of the following is likely to be a reason
for Mathew's claim? 
 

A.  Mathew's manager was uninterested in the specific feedback provided by him.
B.  Mathew was dismissed after he complained to senior management about his manager's unethical
practices.
C.  Mathew's manager did not think he had the skills required for the job.
D.  Mathew's manager refused to restructure the job to fit Mathew's capabilities.
E.  Mathew was not given rewards by his manager when he did not perform his tasks efficiently.

With regard to lawsuits filed on the grounds of unjust dismissal, the usual claim is that the person was
dismissed for reasons besides the ones that the employer states. In this type of situation, courts generally
focus on the employer's performance management system, looking to see whether the firing could have
been based on poor performance. To defend itself, the employer would need a performance
management system that provides evidence to support its employment decisions.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-09 Discuss legal and ethical issues that affect performance management.
Level of Difficulty: 3 Hard
Topic: Legal and Ethical Issues in Performance Management
 
74. How can an organization protect itself against discrimination and unjust dismissal lawsuits? 
 

A.  The organization should provide for a review of all top performance ratings by senior managers.
B.  Performance measures should evaluate personal traits.
C.  Requirements for job success should be clearly communicated to employees.
D.  The organization should use a single rater to rate all the employees.
E.  The organization should dismiss poor performers.

To protect against discrimination or unjust dismissal lawsuits, it is important to have a legally defensible
performance management system. Such a system would be based on valid job analyses, with the
requirements for job success clearly communicated to employees.

 
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-09 Discuss legal and ethical issues that affect performance management.
Level of Difficulty: 2 Medium
Topic: Legal and Ethical Issues in Performance Management
 
75. Gary, the CEO of Zansofel Inc., believes in providing employees with a flexible and open environment
to enhance their skills and growth in the company. In the context of performance management and
ethical issues associated with it, which of the following would Gary most likely oppose and why? 
 

A.  He would oppose calibration meetings because they question the integrity of performance appraisal
information provided by managers.
B.  He would oppose 360-degree appraisal because it gathers information from colleagues and
subordinates, which can make the employees self-conscious.
C.  He would be against having a legally defensible performance management system because it
focuses on scrutinizing employees who file a case against the company.
D.  He would be against electronic monitoring systems because they make the employees feel like
robots and that they are being watched.
E.  He would be against top management carrying out performance appraisal of employees because it
may lead to appraisal politics.

In this scenario, Gary would oppose electronic monitoring systems. Although electronic monitoring can
improve productivity, it also generates privacy concerns. Critics point out that an employer should not
monitor employees when it has no reason to believe anything is wrong. They complain that monitoring
systems threaten to make the workplace an electronic sweatshop in which employees are treated as
robots, robbing them of dignity.

 
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-09 Discuss legal and ethical issues that affect performance management.
Level of Difficulty: 3 Hard
Topic: Legal and Ethical Issues in Performance Management
 
 
Essay Questions
 

76. Discuss the steps involved in the performance management process. 

 

The first two steps of the process involve identifying what the company is trying to accomplish (its
goals or objectives) and developing employee goals and actions to achieve these outcomes. Typically
the outcomes benefit customers, the employee's peers or team members, and the organization itself. The
goals, behaviors, and activities should be measurable and become part of the employee's job description.
Step three in the process—organizational support—involves providing employees with training,
necessary resources and tools, and ongoing feedback between the employee and manager, which
focuses on accomplishments as well as issues and challenges that influence performance. For effective
performance management, both the manager and the employee have to value feedback and exchange it
on a regular basis—not just once or twice a year. Also, the manager needs to make time to provide
ongoing feedback to the employee and learn how to give and receive it.
Step four involves evaluating performance; that is, when the manager and employee discuss and
compare targeted goals and supporting behavior with actual results. This step includes the annual formal
performance review.
The final steps of the performance management process involve both the employee and manager
identifying what the employee can do to capitalize on performance strengths and address weaknesses
(step 5) and providing consequences for achieving (or failing to achieve) performance outcomes (such
as pay increases, bonuses, or action plans) (step 6). This includes identifying training needs; adjusting
the type or frequency of feedback the manager provides to the employee; clarifying, adjusting, or
modifying performance outcomes; and discussing behaviors or activities that need improvement.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 2 Medium
Topic: The Process of Performance Management
 
77. Discuss the various purposes of performance management systems. 
 

Organizations establish performance management systems to meet three broad purposes: strategic,
administrative, and developmental.
Strategic purpose: It means effective performance management helps the organization achieve its
business objectives. It does this by helping to link employees' behavior with the organization's goals.
Performance management starts with defining what the organization expects from each employee. It
measures each employee's performance to identify where those expectations are and are not being met.
This enables the organization to take corrective action, such as training, incentives, and discipline.
Administrative purpose: This refers to the ways in which organizations use the system to provide
information for day-to-day decisions about salary, benefits, and recognition programs. Performance
management can also support decision making related to employee retention, termination for poor
behavior, and hiring or layoffs. Because performance management supports these administrative
decisions, the information in a performance appraisal can have a great impact on the future of individual
employees. Managers recognize this, which is the reason they may feel uncomfortable conducting
performance appraisals when the appraisal information is negative and, therefore, likely to lead to a
layoff, disappointing pay increase, or other negative outcome.
Developmental purpose: It serves as a basis for developing employees' knowledge and skills. Even
employees who are meeting expectations can become more valuable when they hear and discuss
performance feedback. Effective performance feedback makes employees aware of their strengths and
areas in which they can improve. For performance feedback to serve a developmental purpose,
managers should adjust their approach to the level of performance. For a high-performing employee, the
manager should open up a conversation about the employee's ambitions and the organization's
developmental opportunities, so the employee sees an inviting career path. Employees who are falling
short in some areas will require an effort to uncover the source of poor performance. Even among
employees meeting standards, managers should identify areas for future growth.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-02 Discuss the purposes of performance management systems.
Level of Difficulty: 2 Medium
Topic: Purposes of Performance Management
 
78. Briefly describe the five criteria that measure the effectiveness of a performance management system. 
 

Performance measures should fit with the organization's strategy by supporting its goals and culture.
Performance measures should be valid, so they measure all the relevant aspects of performance and do
not measure irrelevant aspects of performance. These measures should also provide interrater and test-
retest reliability, so that appraisals are consistent among raters and over time. Performance measurement
systems should be acceptable to the people who use them or receive feedback from them. Finally, a
performance measure should specifically tell employees what is expected of them and how they can
meet those expectations.

 
AACSB: Analytical Thinking
 Blooms: Understand
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 2 Medium
Topic: Criteria for Effective Performance Management
 
79. Distinguish between behavioral observation scales (BOS) and behaviorally anchored rating scales
(BARS). 
 

While a behaviorally anchored rating scale (BARS) discards a large number of the behaviors that
exemplify effective or ineffective performance, a behavioral observation scale (BOS) uses many of
them to specifically define all the behaviors that are necessary for effective performance.
Also, rather than assessing which behavior best reflects an individual's performance, BOS requires
managers to rate the frequency with which the employee has exhibited each behavior during the rating
period.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance
 
80. List the advantages and disadvantages of using managers, peers, subordinates, self, and customers as
sources of performance information. 
 

(1) Managers: Advantages: Supervisors have extensive knowledge of the job requirements and the
opportunity to observe their employees; they have an incentive to provide accurate and helpful feedback
since their own success depends so much on their employees' performance; and when managers try to
observe employee behavior or discuss performance issues in the feedback session, their feedback can
improve performance and employees tend to perceive the appraisal as accurate. Disadvantages: In some
jobs, the supervisor may not have enough opportunity to observe the employee performing job duties.
(2) Peers: Advantages: Peers are an excellent source of information about performance where the
supervisor does not often observe the employee, such as law enforcement and sales; peers have expert
knowledge of job requirements; and they bring a different perspective to the evaluation and can provide
an extremely valid assessment of performance. Disadvantages: Friendships have the potential to bias
ratings, although research has provided little evidence that this is a problem; and peers are
uncomfortable rating themselves and others for administrative decision-making purposes.
(3) Subordinates: Advantages: For evaluating the performance of managers, subordinates are an
especially valuable source of information, as they often have the best chance to see how well a manager
treats employees. Disadvantages: Subordinates may be reluctant to say negative things about the person
to whom they report; when required to identify themselves, subordinates tend to give managers higher
ratings; and given the power employees have in this type of evaluation, managers tend to emphasize
employee satisfaction, even at the expense of productivity.
(4) Self: Advantages: No one has a greater chance to observe the employee's behavior than the
employee himself or herself, and it is useful to get employees thinking about their performance before
the feedback session. Disadvantages: Individuals have a tendency to inflate assessments of their
performance, especially when used for administrative decisions; people tend to blame outside
circumstances for their failures while taking a large part of the credit for their successes; and self-
appraisals are not appropriate for administrative decision-making.
(5) Customers: Advantages: Services are often produced and consumed on the spot, so the customer is
often the only person who directly observes the service performance and may be the best source of
performance information. Using customer evaluations of employee performance is appropriate in two
situations. The first is when an employee's job requires direct service to the customer or linking the
customer to other services within the organization. Second, customer evaluations are appropriate when
the organization is interested in gathering information to determine what products and services the
customer wants. Disadvantages: Customer surveys are expensive, and as a result, many organizations
limit the information gathering to short periods of once a year.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 2 Medium
Topic: Sources of Performance Information
 
81. Describe the types of rating errors that influence performance evaluation, and explain the ways in which
they can be minimized. 
 

Several kinds of errors and biases commonly influence performance measurements. People observe
behavior often without a practical way of knowing all the relevant circumstances and outcomes, so they
necessarily interpret what they see. A common tendency is to give higher evaluations to people we
consider similar to ourselves. If the rater compares an individual, not against an objective standard, but
against other employees, contrast errors occur.
When a rater uses only a part of the rating scale, it is called a distributional error. Giving all employees
ratings at the high end of the scale is called leniency. Rating everyone at the low end of the scale is
called strictness. Rating all employees at or near the middle is called central tendency.
Raters often let their opinion of one quality color their opinion of others. The halo error refers to rating
employees positively in all areas because of strong performance observed in one area. The horns error
refers to rating employees negatively in all areas because of weak performance observed in one area.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
82. Briefly describe a calibration meeting. 
 

Political behavior occurs in every organization. Organizations can minimize appraisal politics by
establishing an appraisal system that is fair. One technique is to hold a calibration meeting, a gathering
at which managers discuss employee performance ratings and provide evidence supporting their ratings
with the goal of eliminating the influence of rating errors. As they discuss ratings and the ways they
arrive at ratings, managers may identify undervalued employees, notice whether they are much harsher
or more lenient than other managers, and help each other focus on how well ratings are associated with
relevant performance outcomes.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management
 
83. List the ways in which a performance feedback session can be improved. 
 

Possible answers include:

(1) Managers can take any of the three approaches during the feedback session: tell-and-sell, tell-and-
listen, or problem solving. Most managers use the tell-and-sell approach. The most effective approach is
usually the problem-solving approach.
(2) Make feedback a common practice—Feedback should be timely so employees understand what
behaviors and performance outcomes it relates to. This means feedback should not be limited to formal
appraisals.
(3) Let employees voice their opinions and discuss performance goals.
(4) Focus on problem solving.
(5) Talk about behavior and results, not about personalities—Especially when feedback is about
negative performance, it is essential for the manager's words to distinguish between the person and his
or her behavior. Do not use words like, "You're not motivated," instead, talk about results: "You did not
meet the deadline that you agreed to."
(6) Keep criticism to a minimum.
(7) Agree to specific goals and a follow-up meeting.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 2 Medium
Topic: Giving Performance Feedback
 
84. Suggest the different means by which an employee's unsatisfactory performance can be improved. 
 

The most effective way to improve performance varies according to the employee's ability and
motivation. In general, when employees have high levels of ability and motivation, they perform at or
above standards. But when they lack ability, motivation, or both, corrective action is needed. The type
of action called for depends on what the employee lacks. For an employee who is motivated but lacks
ability, the manager should provide coaching and training, give detailed feedback about performance,
and consider restructuring the job. For an employee who has the ability but lacks motivation, the
manager should investigate whether outside problems are a distraction and if so, refer the employee for
counseling. If the problem has to do with the employee's not feeling appreciated or rewarded, the
manager should try to deliver more praise and evaluate whether additional pay and other rewards are
appropriate. For an employee lacking both ability and motivation, the manager should consider whether
the employee is a good fit for the position. Specific feedback or withholding rewards may spur
improvement, or the employee may have to be demoted or terminated. As a rule, employees who
combine high ability with high motivation are solid performers. Managers should by no means ignore
these employees on the grounds of leaving well enough alone. Rather, such employees are likely to
appreciate opportunities for further development. Rewards and direct feedback help to maintain these
employees' high motivation levels.

 
AACSB: Analytical Thinking
Blooms: Remember
Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 2 Medium
Topic: Finding Solutions to Performance Problems
 
85. Identify the measures that a company should take to ensure a legally defensible performance
management system. 
 

1) The system should be based on valid job analyses, with the requirements clearly communicated to
employees.
2) Performance management should evaluate behaviors or results, not traits.
3) The organization should use multiple raters and train raters in how to use the system.
4) The organization should provide for a review of all performance ratings by upper-level managers and
set up a system for employees to appeal when they believe they were evaluated unfairly.
5) Along with feedback, the system should include a process for coaching or training employees to help
them improve, rather than simply dismissing poor performers.

 
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-09 Discuss legal and ethical issues that affect performance management.
Level of Difficulty: 2 Medium
Topic: Legal and Ethical Issues in Performance Management