CHAPTER 8—PERFORMANCE MANAGEMENT AND THE EMPLOYEE
APPRAISAL PROCESS
TRUE/FALSE
1. Managers need to constantly engage in a dialogue with their subordinates.
2. Most performance appraisals focus on long-term improvement, rather than short-term achievements.
3. In general, performance appraisal can be classified as either administrative or developmental.
4. The federal government began evaluating employees in 1842.
5. Developmental purposes for performance appraisal include identifying strengths and weaknesses and
improving communication.
6. Developmental purposes for performance appraisal include evaluating goal achievement and validating
selection criteria.
7. Developmental purposes for performance appraisal include evaluating training programs and
determining promotion candidates.
8. Experts advise companies to discontinue appraising their employees during an economic downturn if
they cannot afford to give them raises.
9. Developmental approaches to performance appraisal recognize that a manager’s purpose is to improve
job behaviors, not just to evaluate past performance.
10. Studies have shown employees who earn performance-based pay are more satisfied.
11. Performance appraisal programs can be used for many purposes, including layoff decisions, retention
and termination of employees.
12. The annual or semi-annual performance appraisal should be an extension of day-to–day supervision.
13. Organizational politics can introduce bias into even the most fairly administered performance
appraisals.
14. Managers may deflate performance ratings to make themselves look good as managers.
15. Employee performance avoidance rarely starts on day one of the new job.
16. Criterion deficiency occurs when performance standards focus on a single criterion to the exclusion of
other important but less quantifiable performance dimensions.
17. Criterion deficiency occurs when performance standards have not been properly established and
communicated to the employee.
18. Criterion contamination occurs when correlations between two raters of an employee are inconsistent.
19. Criterion contamination occurs when factors outside an employee’s control influence his or her
performance.
20. According to a Supreme Court ruling, performance appraisals are subject to the same validity criteria
as selection procedures.
21. The HR department rarely has the primary responsibility for overseeing and coordinating a firm’s
appraisal program.
22. Employees should be given a written copy of their job standards in advance of appraisals.
23. An appeals process is only necessary for administrative appraisals.
24. In most instances, one person can easily observe and evaluate an employee’s performance.
25. Criterion deficiency refers to the extent to which the standards of an appraisal relate to the strategic
objectives of the organization in which they are applied.
26. Self-appraisal works well when supervisors and subordinates jointly establish future performance
goals or employee development plans.
27. Self-appraisals should be used primarily for administrative purposes.
28. Subordinate appraisals are useful for ratings on dimensions such as leadership, coordination of team
efforts, and interest in subordinates.
29. Subordinate appraisals should be used primarily for developmental purposes.
30. One disadvantage of peer appraisals is the belief that they contain more biases and furnish less valid
information than appraisals by superiors.
31. One reason that managers may not want co-workers (peers) to rate each other is that they do not want
to give up control of the appraisal process.
32. With peer appraisals, confidentiality in handling the review form is not a problem.
33. Team appraisals are conceptually just a collection of the individual appraisals of a work unit.
34. A team appraisal approach is well suited for a company advocating a total-quality management
philosophy.
35. Internal customers can provide valuable performance information for both developmental and
administrative purposes.
36. 360-degree systems are purely developmental.
37. Reliability refers to the stability or consistency of a standard.
38. Distributional errors in performance appraisal include central tendency, contrast, and strictness.
39. An error of central tendency is a performance-rating error in which all employees are more or less
rated as average.
40. Requiring raters to use a forced distribution reduces the chance of leniency or strictness errors.
41. Having appraisals reviewed by a supervisor’s supervisor creates unnecessary redundancy and may
actually result in greater legal liability.
42. A recency error is an error in which the appraisal is based largely upon the employee’s most recent
behavior as opposed to their behavior throughout the entire appraisal period.
43. Contrast errors are most likely when raters are required to rank employees in order from the best to the
poorest.
44. Similar-to-me error occurs when appraisers inflate the evaluations of people with whom they have
something in common.
45. Similar-to-me error, like contrast, results in less than accurate performance ratings, but would not be
considered discriminatory.
46. Feedback training for raters should include communicating effectively, diagnosing causes of
performance problems, and setting goals.
47. It is unrealistic to presume that one person can fully observe and evaluate an employee’s performance.
48. Results-oriented approaches have become more popular because it focuses on the measurable
contributions that employees make to the organization.
49. One of the potential drawbacks of a trait-oriented performance appraisal is that traits can be biased and
subjective.
50. Graphic rating scales include sets of statements between which the rater must choose, such as “works
hard” vs. “works quickly.”
51. Mixed standard rating scales rate on the degree to which an employee possesses a trait or
characteristic.
52. One of the benefits of the forced-choice method is the relatively small cost of establishing and
maintaining its validity.
53. The forced-choice method of appraisal is less effective as a tool for developing employees.
54. A major drawback of the essay method is that composing an essay that attempts to cover all of an
employee’s essential characteristics is very time-consuming.
55. The effectiveness of the essay method is affected by the rater’s writing skills.
56. Behavioral methods describe actions and outcomes that should be exhibited on the job.
57. One major advantage of a behaviorally anchored rating scale is that it is possible to use a scale
developed for one job to appraise individuals in another, unrelated job.
58. Results appraisals give employees more responsibility for outcomes and discretion over how to
accomplish them.
59. Behavior observation scales have the rater check statements they believe are characteristic of the
employee.
60. Measurable and quantifiable performance objectives are requirements for a successful MBO program.
61. The balanced scorecard approach integrates four categories: financial, customer, processes, and
outcomes.
62. The balanced scorecard approach translates broad goals into increasingly specific goals, so that
individuals can see how their performance relates to the overall performance of the firm.
63. The best appraisal method to use depends upon the purpose of the appraisal.
64. Dividing the appraisal interview into two sessions, one for the performance review and the other for
the employee’s growth plans, is a good strategy to improve communication between the parties.
65. Three types of appraisal interviews are tell-and-sell, tell-and-listen, and problem-solving.
66. The problem-solving interview method requires the appraiser to possess the ability to persuade an
employee to change in a prescribed manner.
67. Self-assessment is useful to ensure the employee knows against what criteria he or she is evaluated,
eliminating surprises.
68. Because the appraisal interview is for developmental purposes, the interviewer rather than the
employee should spend majority of the time talking.
69. Since praise is a powerful motivator, appraisers should alternate positive and negative statements
during a performance appraisal interview.
70. Expressing appreciation for work the employee has done well is strongly related to employee
satisfaction with the appraisal feedback.
71. Appraisal discussions should focus on the employee rather than on his or her behaviors.
72. Feedback is most useful when it is immediate and general in nature.
73. Performance is a function of ability, environment, and motivation.
74. A diagnosis of poor employee performance should focus on the three interactive elements of skill,
motivation, and external conditions.
75. Self-appraisals are often best used for administrative decisions rather than developmental purposes.
76. The “horn error” is the opposite of the “halo effect.”
77. Research has consistently shown that managers often attribute poor performance to characteristics of
the individuals.
MULTIPLE CHOICE
1. A(n) ____, one in which all employees of a company are reviewed at the same time of year rather than
on the anniversary dates they were hired.
a.
Justinian review system
b.
focal performance appraisal
c.
annuity appraisal system
d.
non-bifurcated appraisal system
2. The federal government began evaluating employees in 1842, when Congress passed a law mandating
yearly performance review for:
a.
departmental clerks
b.
military personnel
c.
postal employees
d.
all federal employees
3. A problem with performance appraisal includes:
a.
it tends to be objective and consistent
b.
it identifies weaknesses of employees as well as strengths
c.
it tends to focus on short-term objectives rather than long-term learning
d.
it tends to be a bottom-up process
4. One study showed that organizations with strong performance management systems are
____ more likely to outperform their competitors in the areas of revenue growth, productivity,
profitability, and market value.
a.
10-15 percent
b.
20-30 percent
c.
40-50 percent
d.
80-90 percent
5. The two primary purposes of performance appraisals are:
a.
informative and developmental.
b.
managerial and administrative.
c.
managerial and informative.
d.
administrative and developmental.
6. Administrative purposes of performance appraisal include all of the following except:
a.
determining promotion candidates
b.
evaluating training programs
c.
documenting personnel decisions
d.
providing performance feedback
7. In _____, for example, the Supreme Court ruled that performance appraisals were subject to the same
validity criteria as selection procedures.
a.
Albemarle Paper Co. v. Moody
b.
California Board of Regents v. Bakke
c.
Brito v. Zia
d.
Griggs v. Duke Power Co.
8. Developmental purposes of performance appraisal include all of the following except:
a.
recognizing individual performance
b.
validating selection procedures
c.
improving communication
d.
identifying strengths and weaknesses
9. All of the following are reasons why performance appraisal programs fail except:
a.
Managers lack information on an employee’s actual performance.
b.
There is too much employee input into the development of the appraisal program.
c.
Performance standards are unclear.
d.
Managers lack adequate appraisal skills.
10. In _____ the U.S. Supreme Court found that employees had been ranked against a vague standard,
open to each supervisor’s own interpretation.
a.
California Board of Regents v. Bakke
b.
Griggs v. Duke Power Co.
c.
Albemarle Paper Co. v. Moody
d.
Brito v. Zia
11. Goal setting has been shown to improve employee performance, typically ranging from _____.
a.
10 to 25 percent
b.
30 to 50 percent
c.
60 to 75 percent
d.
90 to 100 percent
12. If a manager rates an employee higher than he or she deserves in order to look good as a manager in
the eyes of his or her own superiors, this is an example of:
a.
criterion deficiency
b.
organizational politics
c.
criterion contamination
d.
administrative appraisal purpose
13. Which of the following is NOT an advantage of the trait method of appraisals?
a.
Are inexpensive to develop
b.
Use meaningful dimensions
c.
High potential for rating errors
d.
Are easy to use
14. The strategic relevance of performance appraisals refers to:
a.
the extent to which standards relate to the overall objectives of the organization.
b.
the extent to which standards capture the entire range of an employee’s responsibilities.
c.
the extent to which individuals tend to maintain a certain level of performance over time.
d.
the extent to which factors outside the employee’s control can influence performance.
15. Freedom from criterion deficiency of performance appraisals refers to the extent to which:
a.
standards relate to the overall objectives of the organization.
b.
standards capture the entire range of an employee’s responsibilities.
c.
individuals tend to maintain a certain level of performance over time.
d.
factors outside the employee’s control can influence performance.
16. If the performance evaluations that salespeople receive are based solely on sales revenue to the
exclusion of other important factors, the instrument suffers from:
a.
criterion contamination.
b.
lack of reliability.
c.
criterion deficiency.
d.
relevance.
17. Which of the following is NOT a frequently cited reason as to why performance appraisal systems
may not be effective?
a.
adequate preparation on the part of management
b.
the halo effect
c.
organizational politics
d.
unclear performance standards
18. If a performance standard is found to be stable or consistent over time, it is said to be:
a.
free from contamination.
b.
relevant.
c.
reliable.
d.
valid.
19. Reliability in performance appraisal is measured by:
a.
correlating two sets of ratings made by different raters
b.
correlating the ratings of an employee at two different points in time
c.
linking performance standards to organizational goals
d.
quantifiable performance standards
20. Performance appraisals must meet legal requirements because:
a.
of the Griggs v. Duke Power Co decision
b.
of the specificity of performance standards
c.
of organizational politics
d.
they are used as a basis for HRM actions and decisions
21. The courts have found that:
a.
vague performance standards can be acceptable when clearly written.
b.
organizations should have carefully defined and measurable performance standards.
c.
while performance standards should be somewhat specific, there should be room for
individual interpretation.
d.
descriptions of traits such as attitude and cooperation are acceptable performance
standards.
22. In light of recent court rulings, HR managers suggest that performance appraisals should meet all of
the following legal guidelines except:
a.
performance appraisals must be job-related.
b.
employees must be given a written copy of their job standards in advance of the appraisal.
c.
performance appraisal should rarely be tied to compensation decisions.
d.
supervisors should be trained to use the appraisal form correctly.
23. In most instances, who is in the best position to perform the function of appraising an employee’s
performance?
a.
someone from the HR department
b.
the employee’s supervisor
c.
the employee
d.
co-workers
24. When the manager and the employee jointly establish future performance goals for each employee,
which appraisal source is useful?
a.
team appraisal
b.
peer appraisal
c.
subordinate appraisal
d.
self-appraisal
25. Performance dimensions of leadership, communication, and coordination of team efforts may best be
appraised by:
a.
manager/supervisor
b.
peers
c.
subordinates
d.
self
26. Managers tend to be more open to the idea of ____ when the information is used for developmental
purposes.
a.
team appraisal
b.
superior appraisal
c.
subordinate appraisal
d.
self-appraisal
27. Self-appraisals are best for:
a.
administrative purposes.
b.
developmental purposes.
c.
promotional purposes.
d.
regulatory purposes.
28. One advantage of peer appraisals is that:
a.
peers are less politically motivated than supervisors.
b.
peers may furnish more accurate and valid information than supervisors.
c.
peers may work harder to help other employees improve performance.
d.
peers are often partially responsible for the performance of other co-workers.