Chapter 7. Performance Management

Performance Appraisal (or PA)

is the formal structural system of measuring, evaluating, and influencing an employee's job-related attributes, behaviors, and outcomes.

One purpose of performance appraisals is to evaluate performance. That is, appraisal information is used as input for making several administrative decisions:

Salary increases or decreases Demotions Layoffs Promotions/transfers Terminations

Performance appraisal information is also used as an input for developmental purposes:

Identifying training needs Motivating employees to improve Providing feedback Counseling employees Spotting performance deficiencies Identifying and acknowledging strengths

Performance appraisals involve:

Making sure that the organization's goals are aligned with required jobs and KSAs. Setting work standards to clarify performance expectations. Creating measures and metrics that document the level and scope of these standards. Assessing the employee's actual performance relative to those standards. Providing feedback to the employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above standard.

Which of the following is a developmental purpose of obtaining performance appraisal information?

Promotions
Layoffs
Feedback
Salary increases

Answer: Feedback Information from performance appraisals can be used for developmental purposes: 1) identifying training needs 2) motivating employees to improve 3) providing feedback 4) counseling employees 5) spotting performance deficiencies 6) identifying and acknowledging strengths

True or False: Performance appraisals are an informal system for measuring and evaluating employees.

True or False: Performance appraisals are an informal system for measuring and evaluating employees.

True or False: Performance evaluation serves evaluation and development purposes, but it can also have a direct impact on strategic goals as well.

Answer: True When performance evaluation is used to serve evaluation and development purposes, it can have a direct impact on the strategic goals of the organization.

True or False: Standards for performance appraisals are set after all the employee appraisals are done.

Answer: False Performance appraisals attempt to determine how well an employee does a job in relation to a set of predetermined standards. The standards are set before the appraisals are completed, and then the employees are measured against them.

Performance appraisals involve all of the following except:

Setting work standards
Exactly predicting the employee's future performance
Making sure the organization's goals are aligned with required jobs and KSAs
Providing feedback
organization's goals are aligned with required jobs

Answer: Exactly predicting the employee's future performance Performance appraisals involve the following: 1) Making sure that the organization's goals are aligned with required jobs and KSAs 2) Setting work standards to clarify performance expectations 3) Creating measures and metrics that document the level and scope of these standards 4) Assessing the employee's actual performance relative to these standards 5) Providing feedback to the employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above standard Performance appraisals may set goals to help the employee's future performance, but the goal is not to predict exactly how the employee will perform.

"superior" or "rater"

are used to refer to the person doing the appraising

"subordinate" or "ratee"

are used to refer to the employee who is being appraised.

Management development

Performance appraisal provides a framework for future employee development by identifying and preparing individuals for increased responsibilities.

Performance measurement

Performance appraisal establishes the relative value of an individual's contribution to the company and helps evaluate individual accomplishments.

Feedback

Performance appraisal outlines what performance is expected from employees.

HR planning

Performance appraisal audits management talent and potential to evaluate the current supply of human resources for replacement planning.

Legal compliance

Performance appraisal helps establish the validity of employment decisions made on the basis of performance-based information. (Also helps to defend management actions such as demotions, transfers, or terminations.)

Communication

Performance appraisal provides a format for dialogue between superior and subordinate and improves the understanding of personal goals and careers.

Enhanced supervisory understanding of the job

Performance appraisal encourages superiors to be aware of what their subordinates are doing.

Which of the following terms refers to the person doing the appraising when discussing performance appraisal systems?

Superior
Ratee
Subordinate
Manager

Answer: Superior It's important to note that the terms supervisor and manager are generally not used in discussing performance appraisal systems, because the appraiser and the appraisee may both be managers or supervisors. Thus, the terms superior or rater are used to refer to the person doing the appraising, and the terms subordinate or ratee are used to refer to the employee who is being appraised.

When do 360-degree evaluations take place?

When the rater is a colleague
When the rater is a manager
When the rater is an outside contractor
When the rater is from the HR department

Answer: When the rater is a colleague 360-degree evaluations take place where the rater may be a colleague or subordinate to the person being appraised. 360-degree evaluations are meant to help the employee get a complete interpretation of their performance from those people who see them daily.

How do performance appraisals help in performance measurement? Performance appraisals:

Provide a framework for future employee development
Help establish the validity of employment decisions
Outline what performance is expected
Establish the relative value of an individual's contribution to the company

Answer: Establish the relative value of an individual's contribution to the company Performance appraisals establishes the relative value of an individual's contribution to the company and help evaluate individual accomplishments.

Performance appraisals have a positive impact on all of the following except...

Providing a framework for past employee development
Encouraging supervisors to be aware of what their employees are doing
Outlining what performance is expected
Improving productivity of the organization

Answer: Providing a framework for past employee development Performance appraisal provides a framework for future employee development, so it is helpful in management development. It also helps to improve the organization's productivity, as well as performance measurement, feedback (outlining what performance is expected), HR planning, legal compliance, and communication and enhanced supervisory understanding of the job (forcing supervisors to be aware of what their employees are doing).

Performance appraisal is directly influenced by several HR activities:

job analysis, selection and placement, compensation, and training and development.

Job Analysis

The foundation of performance appraisal (PA) is job analysis. If a formal job analysis has not been conducted to establish the validity of the PA form, and thus the job-relatedness of an evaluation criterion, the company may be accused of discrimination.

Selection and Placement

Many companies take the opportunity during performance appraisals to review and revise job descriptions. The job description should reflect the critical knowledge, skills, and abilities (KSAs) of the job. The employee and managers' discussion during a performance appraisal may result in an update to job tasks and functions on the formal job description. Those updates may create a need to change the selection steps or testing. Also, if performance appraisals for a particular job are finding gaps in recently hired employee success, managers may collaborate with the HR department to assess and identify root causes. If the feedback identifies a gap in job matching, the HR department may adjust the selection process.

Compensation

One purpose of PA is to motivate employees. PA can be used as a basis upon which to distribute compensation. A valid appraisal is necessary for an organization to provide contingent rewards (rewards based on performance). Furthermore, PA information can be used in the determination of pay levels as well as pay increments.

Training and Development

Because employee performance is determined by ability as well as motivation, training can significantly improve employee performance. To provide appropriate training, however, it is necessary to be aware of the employee's current performance level, including any unsatisfactory aspects. It is also necessary to know if undesirable performance is caused by a lack of ability or motivation or by the situation. In order to gain this knowledge, HR professionals must use performance appraisals. In conjunction with job analysis, performance appraisal is necessary for implementing effective pre-employment training programs. Thus, assessment of performance can also help the employee make a decision about changes in his or her career. If the employee finds out that, in spite of training and aptitudes, he or she is unable to deliver a satisfactory performance, a change in career may be sought. This can be done internally (through a transfer) or externally (change to another organization).

Which of the following comes after the performance appraisal?

Using the information from the evaluation for future planning
Setting expected performance standards
Establishing competencies
Knowing the job requirements that go along with the organization's strategy

Answer: Using the information from the evaluation for future planning Performance management begins with understanding the organization's strategy. The strategy dictates the important tasks that should be the focus of each unit and subsequently dictate the requirements for each employee's job. Once job requirements are known, competencies are established, expected performance standards are set, and the approach to evaluate the results and behaviors (performance appraisal) are then chosen, then the performance of employees or teams is reported back to top management, which uses that information for future strategic and operational planning.

What is the foundation of the performance appraisal (PA)?

Training and development
Compensation
Selection and placement
Job analysis

Answer: Job analysis The foundation of the performance appraisal (PA) is job analysis. If a formal job analysis has not been conducted to establish the validity of the PA form, then the company may be accused of discrimination.

How does performance appraisal (PA) help in the selection process?

It helps determine the applicants' goals
It establishes the validity of rewards
It motivates the applicants
It helps ensure the company job description is accurate

Answer: It helps ensure the company job description is accurate Many companies take the opportunity during performance appraisals to review and revise job descriptions. The employee and managers' discussion during a performance appraisal may result in an update to job tasks and functions on the formal job description. Those updates may create a need to change the selection steps or testing.

Performance appraisals can be used to determine which of the following types of compensation?

Pay levels
Contingent rewards
All of these
Pay increments

Answer: All of these One purpose of Performance Appraisals (PA) is to motivate employees. PA can be used as a basis upon which to distribute compensation. A valid appraisal is necessary for an organization to provide contingent rewards (rewards based on performance). Furthermore, PA information can be used in the determination of pay levels as well as pay increments.

True or False: If performance appraisals and job analysis are used together, the organization can hire anyone, and that person would be able to turn out a satisfactory performance.

Answer: False Used in conjunction with job analysis, performance appraisal is necessary for implementing effective pre-employment training programs. The assessment of performance can also help the employee make a decision about changes in his/her career. Providing the appropriate training can significantly improve employee performance, but if the employee finds out that, in spite of training and aptitudes, he/she is unable to deliver a satisfactory performance, a change in career may be sought. This can be done internally (through a transfer) or externally (change to another organization).

Which of the following is an advantage to using an employee's supervisor as the rater for the performance appraisal?

When they give punishments, the subordinate doesn't get frustrated because it is from someone close to them.
They are guaranteed to have the skills to give good feedback
The reward and punishment power they have makes the employee feel at ease
They are the most familiar with the subordinate's work

Answer: They are the most familiar with the subordinate's work An advantage to using the supervisor is that they are the most familiar with the job of the subordinate and with his/her performance. Some drawbacks are that because they have reward and punishment power, the subordinate may feel threatened; also without training the supervisor may not have the skills to give good feedback; and by giving punishments the supervisor may alienate the subordinate.

What is a disadvantage of self-appraisals?

Subordinates become less involved with the goals of the organization
They are subject to biases and distortions when used for evaluative purposes
Creates a hostile dialogue between the subordinate and the superior
Not very effective when focusing on goal commitment

Answer: They are subject to biases and distortions when used for evaluative purposes Self-appraisals are subject to systemic biases and distortions when used for evaluative purposes. On the other hand, self-appraisals are often effective tools for programs focusing on self-development, personal growth, and goal commitment. They also may help the subordinate become more involved and committed to the goals of the organization and can help clarify employee roles and reduce conflict. Another advantage is that self-appraisals can open dialogues regarding performance.

Which of the following types of employment would be best suited for using appraisal by customers?

Administrative
Construction
Restaurants
Factory workers

Answer: Restaurants Appraisal information can come from customers or clients of the job incumbents, especially for workers who have direct contact with the customers. Car dealerships and restaurants are two such industries where this may be beneficial.

When would peer appraisals be appropriate to use?

When the culture is highly participatory
When there is a low level of trust among subordinates
When the culture is highly competitive
When the organizational reward system is based on performance

Answer: When the culture is highly participatory Peer appraisals appear to be useful predictors of performance. However, the validity of peer appraisals is reduced somewhat if the organizational reward system is based on performance and is highly competitive, or if there is a low level of trust among subordinates. On the other hand, peer-appraisal can be very useful when teamwork and participation are part of the organizational culture.

Which of the following appraisal methods is the most objective?

Appraisal by customers
Self-appraisal
Computer monitoring
Peer appraisal

Answer: Computer monitoring With advances in technology, many organizations are now gathering performance data through computers. Although this method is fast and objective, it has raised a number of ethical issues such as an employee's right to privacy. Nevertheless, many organizations have found such data to be a critical part of performance appraisals.

Straight Ranking Method

a superior lists the subordinates in order from best to worst, usually on the basis of overall performance. Incumbents can also be ranked with regard to their performance on specific duties, such as attendance, record of meeting deadlines, quality of reports, etc. This type of ranking is useful in small organizations. However, as the number of incumbents increases, it becomes difficult to discern differences in the performance of all incumbents--particularly those incumbents that are "average."

Alternative Ranking Method

Alternative ranking normally takes place in several steps. The first step is to put the best subordinate at the head of the list and the worst subordinate at the bottom, usually on the basis of overall performance. The superior then selects the best and worst from the remaining subordinates. The middle position on the list is the last to be filled. Alternative ranking approaches can be used quite efficiently not only by a single supervisor, but by the subordinates themselves.

Paired Comparison Method

The paired comparison method involves comparing each employee to another incumbent, two at a time on a single standard, to determine which is better. A rank order can be obtained by counting the number of times each individual is selected as the better of a pair. The subordinate with the most favorable comparisons is thus ranked in the first place. The subordinate with the second-greatest number of favorable comparisons is ranked second, and so on. An advantage to this approach over is that it overcomes the problem of an "elevation set." That is, it forces the assessor to compare the performance of each incumbent to all other incumbents, one by one.

Forced Distribution Method

The forced distribution method was designed to overcome a frequent complaint leveled against the various ranking methods, namely, that the methods give each employee a unique rank and does not allow for two (or more) incumbents' performances to be very close to each other. However, in many instances it is very hard to differentiate between two employees. The forced distribution method overcomes this problem and incorporates several factors or dimensions (rather than a single factor) into the ranking process. The term "forced distribution" is used because the superior must assign only a certain proportion of subordinates to each of several categories with respect to each other. A common forced distribution scale may be divided into five categories, with a fixed percentage of all subordinates in the group falling within each of these categories. Many universities in North America that use a letter-grade system (A, B, C, etc.), rather than percentages (i.e., a grade mark out of 100), use forced distribution. Typically, the distribution follows a normal "bell-shaped" pattern.

Narrative Essay Method

One of the simplest forms for evaluating employees is the narrative essay. Using this form, the rater can describe the employee's strengths and weaknesses and suggest methods for improving performance. Certainly, if the essay is unstructured, the evaluation will often vary in length and detail. As a result, comparisons within a department, or across departments, can be difficult. Another limitation to the narrative essay is the fact that the essay only provides qualitative data and not quantitative data. Including behavior criteria on the form, such as critical incidents, behavioral checklist and forced-choice forms, can significantly enrich the appraisal.

Conventional Rating Method

Conventional rating (also called graphic rating scales or Likert scales) is the most widely used form of performance evaluation. Conventional forms vary in the number of performance dimensions they measure. The term performance is used advisedly here because many conventional forms use personality characteristics or traits, rather than actual behaviors, as indicators of performance. Frequently-used traits include aggressiveness, independence, maturity, and a sense of responsibility, to name a few. Many conventional forms also use output indicators such as quantity and quality of performance. Conventional forms vary in the number of traits and output indicators they incorporate. They also vary in the range of choices for each dimension and the extent to which each dimension is described. Conventional forms are used extensively because they are relatively easy to develop and permit quantitative results that allow comparisons across employees and departments. Because the rater has complete control in the use of the forms, conventional forms are subject to errors including leniency, strictness, central tendency, and halo effect. (These terms will be covered in subsequent sections.) Often separate traits or factors are grouped together and the rater is given only one box to check. Another drawback is that the descriptive words often used in such scales may have different meanings to different raters. Terms such as motivation, cooperation and social skills are all subject to various interpretations, and raters may certainly benefit from clear definitions.

Which of the following is the simplest method of performance appraisal method?

Paired comparisons
Narrative essay
Straight ranking
Alternative ranking

Answer: Straight ranking Perhaps the most simple method of performance appraisal is the straight ranking method. In the straight ranking method, a superior lists the subordinates in order, from best to worst, usually on the basis of overall performance. However, as the number of incumbents increases, it becomes difficult to discern differences in the performance of all incumbents - particularly those incumbents who are "average."

Which method allows two or more incumbents' performances to be ranked together?

Paired comparisons
Forced distribution
Alternative ranking
Straight ranking

Answer: Forced distribution The forced distribution method was designed to overcome a frequent complaint against other ranking methods in which employees are given a unique rank, and not allowing for two (or more) incumbents' performances to be very close to each other. The forced distribution method overcomes this problem and incorporates several factors, or dimensions, into the ranking process. A common forced distribution scale may be divided into five categories, with a fixed percentage of all subordinates in the group falling within each of these categories. Typically, the distribution follows a normal "bell-shaped" pattern.

An advantage to this type of performance evaluation method is that each incumbent gets compared to every other incumbent, one by one. Which type of performance evaluation method is it?

Forced distribution
Straight ranking
Alternative ranking
Paired comparison

Answer: Paired comparison The paired comparison method involves comparing each employee to every other incumbent, two at a time on a single standard, to determine which is better. A rank order can be obtained by counting the number of times each individual is selected as the better of a pair. An advantage to this approach, over traditional ratings, is that it overcomes the problem of an "elevation set." That is, it forces the assessor to compare the performance of each incumbent to all other incumbents, one by one.

True or False: The first step in alternative ranking is when a superior lists the subordinates in order, from best to worst, usually on the basis of overall performance.

Answer: True Alternative ranking normally takes place in several steps. The first step is to put the best subordinate at the top of the list and the worst subordinate at the bottom, usually on the basis of overall performance. The superior then selects the next best and worst from the remaining subordinates, and so on. The middle position on the list is the last to be filled.

Why are conventional rating forms used extensively?

The descriptive words used have the same meanings to different raters
The forms are very objective and the rater has little control over the form
They allow comparisons across employees and departments
Conventional forms are not subject to errors

Answer: They allow comparisons across employees and departments Conventional forms are used extensively because they are relatively easy to develop and permit quantitative results that allow comparisons across employees and departments. But because the rater has complete control in the use of the forms, conventional forms are subject to several errors. Often separate traits or factors are grouped together and the rater is given only one box to check. Frequently-used descriptive words can be subject to different meanings to different raters.

Halo and Horn Error

The most common error committed by raters occurs when superiors rate employees on several dimensions of performance, but allow one measure to influence all other dimensions. Also known as the halo effect, this occurs because supervisors allow one positive characteristic (or behavior) of the employee to overshadow all other characteristics (or behaviors) of the employee. The opposite of the halo error is referred to as a horn error. A horn error occurs when a poor rating in one area unjustly affects ratings in other job performance areas, resulting in a poor overall appraisal.

Error of Leniency

Another common—and often intentional—error is called leniency. Leniency occurs when, to avoid conflict, a manager rates subordinates higher than they should be rated. This is especially likely to happen when there are no organizational sanctions against high ratings, when rewards are not part of a fixed and limited pot, and when organizational calibration of ratings does not occur.

Error of Strictness

At the opposite extreme of the spectrum is a situation where raters give unfavorable ratings, regardless of the performance level of employees. Also known as error of strictness, this error may occur when either inexperienced raters, raters who are attempting to impress their own superiors by their strict standards, or raters who are trying to "settle accounts" with employees, are involved in the evaluation process.

Central Tendency Bias

Rather than using extremes in ratings, there is a tendency on the part of many raters to "play it safe" and evaluate employees as average, even when performance varies. This bias is referred to as the error of central tendency. Raters with a large span of control and little opportunity to observe behavior are likely to rate the majority of incumbents in the middle of the scale rather than too high or too low. Central tendency may also be a byproduct of the rating method. For example, the various ranking formats, and more particularly the forced distribution, require that most employees be rated average

Primary and Recency Effects

Because the typical appraisal period is six months to a year, it is too difficult to retain in memory all performance-related behaviors of the incumbents. As a cognitive shortcut, raters may fall prey to the primary effect and/or the recency effect. When special attention is paid to the first information logged or remembered, it is referred to as the primary bias or effect. In the process, raters will use initial information to categorize a ratee as either a good or poor performer. Subsequently, information that supports the initial judgments is accumulated, and contradictory information is ignored. Conversely, a rater may not pay attention to an employee's performance during the appraisal period. As a result, when the appraisal interview draws near, the rater may search for information cues about the value of performance. Unfortunately, recent behaviors or outputs are salient, so recent behaviors are then weighted more heavily than they should be. Called the recency error, this bias can have serious consequences for a ratee who performs well for six months or a year, but then makes a serious or costly mistake in the last week or two preceding the appraisal. Incumbents and managers can minimize these errors by documenting ongoing critical events. While time-consuming to complete, these files ensure that information for the entire appraisal period is incorporated into judgments.

Contrast Effects

A contrast effect occurs when the evaluation or observation of one subordinate's performance is affected unjustly by an earlier evaluation or observation of another employee's performance. When compared to weak employees, an average employee will appear outstanding; when evaluated against outstanding employees, an average employee will be perceived as a low performer. As with other errors, the solution is to have specific performance criteria established prior to the evaluation period.

Spillover Effects

The spillover effect occurs when past performance appraisal ratings, whether good or bad, are allowed to unjustly influence correct ratings. It happens most often when new managers are being briefed on current employees by departing managers. Thus the information provided, which is already biased, is being carried on. One solution to the problem is to avoid examining past appraisal records/information prior to conducting the assessment. Past records, on the other hand, can be consulted in conjunction with current appraisal for the purpose of detecting trends and for giving feedback to the incumbent.

Similarity Error

A similarity error (also known as the "like me" bias) occurs when raters evaluate more positively those whom they perceive to be similar to themselves. The implicit assumption underlying this error is that they themselves are (or have been) "model" employees and thus subordinate similarity will most likely reflect good performance.

When does a contrast effect occur in performance appraisals?

When raters assign higher rating to those whom they feel are similar to themselves
When the appraisal is based on only recent events
When past performance appraisal ratings are allowed to influence current ratings
When one subordinate's performance is unjustly affected by an earlier evaluation of another employee

Answer: When one subordinate's performance is unjustly affected by an earlier evaluation of another employee A contrast effect occurs when the evaluation or observation of one subordinate's performance is affected unjustly by an earlier evaluation or observation of another employee's performance. When compared to weak employees, an average employee will appear outstanding; when compared to an outstanding employee, the average employee will appear weak. The solution is to have specific performance criteria established prior to the evaluation.

Which of the following statements is true?

Halo effect occurs when a supervisor allows one positive characteristic of an employee to overshadow all others
Horn effect occurs when all areas are poor, but the overall appraisal is high
Halo effect occurs when a poor rating in one area affects all other areas resulting in a poor overall appraisal
Horn effect occurs when a supervisor does not allow one characteristic of an employee to overshadow all others

Answer: Halo effect occurs when a supervisor allows one positive characteristic of an employee to overshadow all others The most common error committed by raters occurs when superiors are rating an employee on several dimensions of performance, but allow one measure to influence all other dimensions. This is known as the halo effect. The opposite of the halo error is referred to as a horn error. A horn error occurs when a poor rating in one area unjustly affects ratings in other job performance areas, resulting in a poor overall appraisal.

When is the error of leniency most likely to happen?

When there are no sanctions against high ratings
When raters are trying to impress supervisors by showing how strict they are
When raters have a large span of control and little opportunity to observe
When the employee is perceived to be similar to the rater

Answer: When there are no sanctions against high ratings The error of leniency is often intentional and occurs most often when, to avoid conflict, a manager rates subordinates higher than they should be rated. This is most likely to occur when there are no organizational sanctions against high ratings, when rewards are not part of a fixed and limited pot, and when dimensional ratings are not required.

What is a way to minimize the errors caused by primary or recency effects?

Trying to remember what has happened throughout the rating period
Documenting ongoing critical events
Weighing more heavily the events that have occurred recently
Weighing more heavily the events that occurred at the beginning of the rating period.

Answer: Documenting ongoing critical events Incumbents and managers can minimize the two errors (primary and recency errors) by documenting ongoing critical events. While time-consuming to complete, these files ensure that information for the entire appraisal period is incorporated into judgments.

What is the implicit assumption the rater makes when they make the "similarity error" in performance evaluations?

Past behavior is similar to what they will do in the future
Employees who follow rules exactly are the best employees
All employees are alike
That the rater is a "model" employee

Answer: That the rater is a "model" employee A similarity error occurs when raters evaluate more positively those whom they perceive to be similar to themselves. The implicit assumption underlying this error is that they (the rater) is (or has been) a "model" employee, and thus those subordinates whom these raters consider similar to themselves will most likely be perceived as reflecting good performance.

True or False: Performance appraisals are often not problematic because supervisors and incumbents often view the process similarly.

Answer: False One reason that performance appraisals are problematic is that supervisors and incumbents often view the process from different perspectives.

What does it mean to account for performance in a self-serving manner?

Seeing the causes of poor performance as one's own lack of motivation
Seeing the causes of good performance as attributed to external factors
Seeing the causes of good performance as attributed to one's own ability
Seeing the causes of poor performance as one's own lack of ability

Answer: Seeing the causes of good performance as attributed to one's own ability The problem of seeing performance evaluations from a different perspective for the supervisor and the incumbent is accentuated by the tendency to account for performance in a self-serving manner. To protect one's ego, an incumbent is likely to attribute the causes of poor performance to external factors and attribute successful performance to one's motivation and ability. Supervisors may respond similarly.

How can organizations help improve performance evaluations and help it so that employees don't block ways to improve their performance if they are assessed negatively?

Wait until the employee states that they want to work on their performance
Have two appraisal interviews, one for evaluation and one for development
Get working on the development of the lacking performance right away
Have one good interview that focuses on their evaluation as well as development

Answer: Have two appraisal interviews, one for evaluation and one for development For problem-solving to be effective, subordinates have to be open and superiors have to play the role of helper, not judge or prosecutor. Thus, if organizations want to serve both the evaluation and development purposes effectively, there should be two appraisal interviews. One interview can focus on evaluation and the other, at a different time of the year, can focus on development.

What does EAP stand for?

Employee action program
Employee assessment policies
Employee assessment program
Employee assistance program

Answer: Employee assistance program EAP stands for employee assistance programs. These are designed specifically to assist employees with personal problems that hinder their job performance and attendance. One way for an organization to support employees is to provide employee assistance programs.

Which of the following EAPs could be categorized as "beneficial to the employee"?

Resolving management problems
Improving quality of life
Improving productivity
Limiting liability

Answer: Improving quality of life The advantages of EAPs can be categorized as either "beneficial to the employee" (such as reducing health risks, promoting wellness, and improving quality of life) or "beneficial to the organization" (such as improving productivity and profits, resolving management problems, and limiting employer liability). Some advantages apply to both parties (such as improving employee morale and helping troubled employees).

True or False: The more objective the performance appraisal (PA) approach, the more vulnerable it is to legal challenges.

Answer: False In general, the more subjective the PA approach, the more it is vulnerable to legal challenges. As there are no solid facts to back up the appraisal.

Which of the following is not a purpose of performance appraisals?

To further develop individuals
To inform incumbents where they stand based on an evaluation
To guide individuals to perform better
To inform incumbents where they stand based on subjective thinking

Answer: To inform incumbents where they stand based on subjective thinking An effective performance appraisal system depends upon several components of appraisal, but it generally serves two purposes: 1) performance appraisals use evaluation to inform incumbents where they stand 2) performance appraisals are used to further develop and guide individuals to perform better

True or False: Well thought-out plans for performance appraisal will guarantee their consistent application of them in the organization.

Answer: False Despite the most well thought-out plans for performance appraisal, HR professionals are often frustrated by the failure of line managers to consistently apply and use them.

All of the following are reasons why completing assessments of the performance appraisal system are important except...

To make changes to fit modern models, even if they are not needed
To make sure all legal considerations are observed
To increase its effectiveness
To see how well the development process is being met

Answer: To make changes to fit modern models, even if they are not needed The assessment of an organization's entire performance appraisal system can increase its effectiveness. Such assessments are necessary to help determine how well the evaluation and development processes are being met and whether all legal considerations are being observed. Changes should be made only when what is being used is either not working or is not legally compliant.

True or False: Revising current appraisal methods and including more effective strategies help set a better basis upon which to make compensation and training decisions.

Answer: True On the basis of assessments of an organization's entire performance appraisal system, revisions in current appraisal methods can be made and more effective strategies for improving performance can be developed and implemented. Once completed, an organization has a much better basis upon which to make other HR decisions, particularly those associated with compensation and training and development.

What is the formal structural system of measuring, evaluating, and influencing an employee's job-related attributes, behaviors, and outcomes?

KSAs (knowledge, skills, and abilities)
Training
Performance appraisal
Validity
Development
The ADDIE model

Answer: Performance appraisal The performance appraisal (or PA) is the formal structural system of measuring, evaluating, and influencing an employee's job-related attributes, behaviors, and outcomes.

Which of the following is an evaluation decision made using performance appraisal information?

Salary increases or decreases
Counseling employees
Providing feedback
Motivating employees to improve

Answer: Salary increases or decreases One purpose of performance appraisals is to evaluate performance. That is, appraisal information is used as input for making several administrative decisions: Salary increases or decreases Demotions Layoffs Promotions/transfers Terminations

How do performance appraisals help the company be legally compliant?

Outlines the expected performance
Provides a format for dialogue between superior and subordinate
Helps establish the validity of employment decisions.
Audits management talent to evaluate the current supply of human resources

Answer: Helps establish the validity of employment decisions. Legal Compliance-- Performance appraisal helps establish the validity of employment decisions made on the basis of performance-based information (also helps to defend management actions such as demotions, transfers, or terminations).

Which of the following influence the performance appraisal process?

All of these
Training and development
None of these
Compensation
Selection and placement
Job analysis

Answer: All of these Performance appraisal is directly influenced by several HR activities: job analysis, selection and placement, compensation, and training and development.

Before beginning performance management, all of the following must occur except...

Establishment of competencies
Understanding the organization's strategy
Evaluation of the results
Establishment of performance standards

Answer: Evaluation of the results Performance management begins with understanding the organization's strategy. The strategy dictates the important tasks that should be the focus of each unit (or department) and subsequently dictate the requirements for each employee's job. Once job requirements are known, competencies are established; expected performance standards are set; and the approach to evaluate the results and behaviors (performance management) are chosen.

Which of the following is how performance appraisals influence training and development?

Determines pay levels and pay increments
Helps understand the reason behind undesirable performance
It helps ensure only candidates that will perform well are included in the pool of applicants
Sets the foundation for job analysis

Answer: Helps understand the reason behind undesirable performance To provide appropriate training, it is necessary to be aware of the employee's current level of performance and any unsatisfactory aspects of performance. It is also necessary to know if the undesirable performance is caused by a lack of ability or motivation or by the situation. To gain this knowledge, HR professionals must use performance appraisals.

There are many ways to gather data on an individual. In choosing the performance appraisal method, when should the relevance of each source be considered?

Any of the methods work the same
After
During
Before

Answer: Before Sources for performance appraisals can include supervisors, peers, subordinates, self-appraisal, customers, and computer monitoring. While many of these can be used to gather data on an individual, the relevance of each source should be considered prior to choosing the performance appraisal method.

Which of the following is an advantage to using appraisal by subordinates?

Subordinates won't evaluate their superiors solely based on personality
Subordinates won't inflate the evaluation of their superiors
Subordinates may evaluate their superiors solely based on their own needs
Subordinates may help the superiors understand what they can do to improve

Answer: Subordinates may help the superiors understand what they can do to improve Appraisals by subordinates can help the superior understand, from the perspective of the subordinate, if the learning experience can be improved and can help superiors be more aware of their impact on their subordinates. Sometimes, however, subordinates may evaluate their superiors solely on the basis of personality or in respect of their own needs rather than those of the organization. Finally, subordinates may inflate the evaluation of their superiors, particularly if they feel threatened by them and have no anonymity.

Why can appraisals by supervisors be effective?

They can alienate the employee if the employee does not perform well
Even without training they will give good feedback
They are most familiar with the job of the subordinate
They have reward and punishment power

Answer: They are most familiar with the job of the subordinate It is assumed that the supervisor is the one who is most familiar with the job of the subordinate and with his/her performance. While appraisals by supervisors can be effective, there can also be drawbacks, such as the supervisor having reward and punishment power that may cause the subordinate to feel threatened. The supervisor may also not be able to give good feedback without proper training. Another drawback is that if the supervisor must dole out punishment, they may alienate the subordinate.

Which of the following methods of performance appraisals use qualitative instead of quantitative data?

Paired comparisons
Narrative essay
Forced distribution method
Alternative ranking

Answer: Narrative essay One of the simplest forms for evaluating employees is the narrative essay. The rater can describe the employee's strengths and weaknesses and suggest methods for improving performance. However, if the essay is unstructured, comparisons within a department or across departments, can be difficult. The essay only provides qualitative data and not quantitative data. Including behavior criteria on the form, such as critical incidents, a behavioral checklist, and forced-choice forms can significantly enrich the appraisal.

True or False: Ranking approaches used as the performance appraisal method may be used efficiently by the subordinates as well as supervisors for ranking themselves.

Answer: True Alternative ranking approaches can be used quite efficiently not only by a single supervisor, but by the subordinates themselves.

Which of the following forms of performance evaluation is the most widely used?

Conventional rating
Straight rating
Forced distribution method
Narrative essay

Answer: Conventional rating The conventional rating is the most widely used form of performance evaluation. Conventional forms vary in the number of dimensions of performance they measure. Many use personality traits and characteristics such as aggressiveness, independence, maturity, etc. Many use output indicators such as quantity and quality of performance as well. They vary in the number of traits and output indicators they incorporate and also vary in the range of choices for each dimension. Conventional forms are used extensively because they are relatively easy to develop, and permit quantitative results that allow comparisons across employees and departments. However, they can be subject to several errors including leniency, strictness, and central tendency. Several traits or factors can also be grouped together, and they would be subject to various interpretations with different raters.

Which of the following causes more errors to occur when trying to conduct an accurate performance evaluation?

When performance criteria are unclear
When there are incentives for accurate evaluations
When job duties are stated clearly
When performance criteria are clearly stated

Answer: When performance criteria are unclear When performance criteria are not clearly specified and there are no incentives associated with conducting an accurate performance evaluation, a variety of errors may occur.

Which of the following is the definition of what a central tendency bias error is when evaluating the performance of employees?

When managers rate employees based on what has happened recently
When managers rate the majority of incumbents in the middle of the pack
When managers give unfavorable ratings regardless of the performance, to impress others with their strictness
When managers rate subordinates higher than they should be rated, in order to avoid conflict

Answer: When managers rate the majority of incumbents in the middle of the pack Rather than using extremes in ratings, there is a tendency on the part of many raters to "play it safe" and evaluate employees as average, even when performance varies. This bias is referred to as the error of central tendency. Raters with a large span of control and little opportunity to observe behavior are likely to rate the majority of incumbents in the middle of the scale rather than too high or too low.

Which of the following effects occurs when past performance appraisal ratings, whether good or bad, are allowed to unjustly influence current/correct ratings?

Similarity effect
Spillover effect
Contrast effect
Recency effect

Answer: Spillover effect The spillover effect occurs when past performance appraisal ratings, whether good or bad, are allowed to unjustly influence correct ratings. It happens most often when new managers are being briefed on current employees by departing managers and the biased information is then passed on. One solution is to avoid examining past appraisal information. Another solution is to use past records in conjunction with current appraisals for the purpose of detecting trends and giving feedback to the incumbent.

When it comes to performance appraisals, supervisors and incumbents often see the process from different perspectives. Which of the following is usually a factor seen from the perspective of the supervisor?

The employee's ability
Lack of cooperation from other co-workers
The lack of support for the employee
Problems with machinery

Answer: The employee's ability One reason that performance appraisals are problematic is that supervisors and incumbents likely view the process from different perspectives. For the incumbent, the focus is outward, keying on the environmental factors (the supervisor, lack of support, lack of cooperation among co-workers, problems with machinery, etc.) that impinge on his or her performance. The supervisor's focus, on the other hand, is on the incumbent and the displayed motivation and ability.

Which of the following will not help ensure effective performance evaluations?

Making sure objective judgments are used
Letting subordinates review their appraisals
Using subjective criteria
Conducting evaluations on all employees

Answer: Using subjective criteria To ensure effective performance evaluations, the organization and the HR department must conduct evaluations on all employees, and make sure that only objective judgments are used. When possible, subordinates should have the opportunity to review their appraisals and records. Subjective criteria can have biases and can lead to legal problems.

An effective performance appraisal system generally serves which purposes? (Select all that apply)

To future develop and guide individuals to perform better
To cause line managers to apply and use the plans from HR
To inform incumbents where they stand
To recruit well-trained individuals

Answer: To inform incumbents where they stand; To future develop and guide individuals to perform better An effective performance appraisal system depends on several components of appraisal, but it generally serves two purposes: 1) to inform incumbents where they stand, and 2) to further develop and guide individuals to perform better.

Chapter 7. Performance Management - Subjecto.com

Chapter 7. Performance Management

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Performance Appraisal (or PA)

is the formal structural system of measuring, evaluating, and influencing an employee’s job-related attributes, behaviors, and outcomes.

One purpose of performance appraisals is to evaluate performance. That is, appraisal information is used as input for making several administrative decisions:

Salary increases or decreases Demotions Layoffs Promotions/transfers Terminations

Performance appraisal information is also used as an input for developmental purposes:

Identifying training needs Motivating employees to improve Providing feedback Counseling employees Spotting performance deficiencies Identifying and acknowledging strengths

Performance appraisals involve:

Making sure that the organization’s goals are aligned with required jobs and KSAs. Setting work standards to clarify performance expectations. Creating measures and metrics that document the level and scope of these standards. Assessing the employee’s actual performance relative to those standards. Providing feedback to the employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above standard.

Which of the following is a developmental purpose of obtaining performance appraisal information?

Promotions
Layoffs
Feedback
Salary increases

Answer: Feedback Information from performance appraisals can be used for developmental purposes: 1) identifying training needs 2) motivating employees to improve 3) providing feedback 4) counseling employees 5) spotting performance deficiencies 6) identifying and acknowledging strengths

True or False: Performance appraisals are an informal system for measuring and evaluating employees.

True or False: Performance appraisals are an informal system for measuring and evaluating employees.

True or False: Performance evaluation serves evaluation and development purposes, but it can also have a direct impact on strategic goals as well.

Answer: True When performance evaluation is used to serve evaluation and development purposes, it can have a direct impact on the strategic goals of the organization.

True or False: Standards for performance appraisals are set after all the employee appraisals are done.

Answer: False Performance appraisals attempt to determine how well an employee does a job in relation to a set of predetermined standards. The standards are set before the appraisals are completed, and then the employees are measured against them.

Performance appraisals involve all of the following except:

Setting work standards
Exactly predicting the employee’s future performance
Making sure the organization’s goals are aligned with required jobs and KSAs
Providing feedback
organization’s goals are aligned with required jobs

Answer: Exactly predicting the employee’s future performance Performance appraisals involve the following: 1) Making sure that the organization’s goals are aligned with required jobs and KSAs 2) Setting work standards to clarify performance expectations 3) Creating measures and metrics that document the level and scope of these standards 4) Assessing the employee’s actual performance relative to these standards 5) Providing feedback to the employee with the aim of motivating that person to eliminate performance deficiencies or to continue to perform above standard Performance appraisals may set goals to help the employee’s future performance, but the goal is not to predict exactly how the employee will perform.

"superior" or "rater"

are used to refer to the person doing the appraising

"subordinate" or "ratee"

are used to refer to the employee who is being appraised.

Management development

Performance appraisal provides a framework for future employee development by identifying and preparing individuals for increased responsibilities.

Performance measurement

Performance appraisal establishes the relative value of an individual’s contribution to the company and helps evaluate individual accomplishments.

Feedback

Performance appraisal outlines what performance is expected from employees.

HR planning

Performance appraisal audits management talent and potential to evaluate the current supply of human resources for replacement planning.

Legal compliance

Performance appraisal helps establish the validity of employment decisions made on the basis of performance-based information. (Also helps to defend management actions such as demotions, transfers, or terminations.)

Communication

Performance appraisal provides a format for dialogue between superior and subordinate and improves the understanding of personal goals and careers.

Enhanced supervisory understanding of the job

Performance appraisal encourages superiors to be aware of what their subordinates are doing.

Which of the following terms refers to the person doing the appraising when discussing performance appraisal systems?

Superior
Ratee
Subordinate
Manager

Answer: Superior It’s important to note that the terms supervisor and manager are generally not used in discussing performance appraisal systems, because the appraiser and the appraisee may both be managers or supervisors. Thus, the terms superior or rater are used to refer to the person doing the appraising, and the terms subordinate or ratee are used to refer to the employee who is being appraised.

When do 360-degree evaluations take place?

When the rater is a colleague
When the rater is a manager
When the rater is an outside contractor
When the rater is from the HR department

Answer: When the rater is a colleague 360-degree evaluations take place where the rater may be a colleague or subordinate to the person being appraised. 360-degree evaluations are meant to help the employee get a complete interpretation of their performance from those people who see them daily.

How do performance appraisals help in performance measurement? Performance appraisals:

Provide a framework for future employee development
Help establish the validity of employment decisions
Outline what performance is expected
Establish the relative value of an individual’s contribution to the company

Answer: Establish the relative value of an individual’s contribution to the company Performance appraisals establishes the relative value of an individual’s contribution to the company and help evaluate individual accomplishments.

Performance appraisals have a positive impact on all of the following except…

Providing a framework for past employee development
Encouraging supervisors to be aware of what their employees are doing
Outlining what performance is expected
Improving productivity of the organization

Answer: Providing a framework for past employee development Performance appraisal provides a framework for future employee development, so it is helpful in management development. It also helps to improve the organization’s productivity, as well as performance measurement, feedback (outlining what performance is expected), HR planning, legal compliance, and communication and enhanced supervisory understanding of the job (forcing supervisors to be aware of what their employees are doing).

Performance appraisal is directly influenced by several HR activities:

job analysis, selection and placement, compensation, and training and development.

Job Analysis

The foundation of performance appraisal (PA) is job analysis. If a formal job analysis has not been conducted to establish the validity of the PA form, and thus the job-relatedness of an evaluation criterion, the company may be accused of discrimination.

Selection and Placement

Many companies take the opportunity during performance appraisals to review and revise job descriptions. The job description should reflect the critical knowledge, skills, and abilities (KSAs) of the job. The employee and managers’ discussion during a performance appraisal may result in an update to job tasks and functions on the formal job description. Those updates may create a need to change the selection steps or testing. Also, if performance appraisals for a particular job are finding gaps in recently hired employee success, managers may collaborate with the HR department to assess and identify root causes. If the feedback identifies a gap in job matching, the HR department may adjust the selection process.

Compensation

One purpose of PA is to motivate employees. PA can be used as a basis upon which to distribute compensation. A valid appraisal is necessary for an organization to provide contingent rewards (rewards based on performance). Furthermore, PA information can be used in the determination of pay levels as well as pay increments.

Training and Development

Because employee performance is determined by ability as well as motivation, training can significantly improve employee performance. To provide appropriate training, however, it is necessary to be aware of the employee’s current performance level, including any unsatisfactory aspects. It is also necessary to know if undesirable performance is caused by a lack of ability or motivation or by the situation. In order to gain this knowledge, HR professionals must use performance appraisals. In conjunction with job analysis, performance appraisal is necessary for implementing effective pre-employment training programs. Thus, assessment of performance can also help the employee make a decision about changes in his or her career. If the employee finds out that, in spite of training and aptitudes, he or she is unable to deliver a satisfactory performance, a change in career may be sought. This can be done internally (through a transfer) or externally (change to another organization).

Which of the following comes after the performance appraisal?

Using the information from the evaluation for future planning
Setting expected performance standards
Establishing competencies
Knowing the job requirements that go along with the organization’s strategy

Answer: Using the information from the evaluation for future planning Performance management begins with understanding the organization’s strategy. The strategy dictates the important tasks that should be the focus of each unit and subsequently dictate the requirements for each employee’s job. Once job requirements are known, competencies are established, expected performance standards are set, and the approach to evaluate the results and behaviors (performance appraisal) are then chosen, then the performance of employees or teams is reported back to top management, which uses that information for future strategic and operational planning.

What is the foundation of the performance appraisal (PA)?

Training and development
Compensation
Selection and placement
Job analysis

Answer: Job analysis The foundation of the performance appraisal (PA) is job analysis. If a formal job analysis has not been conducted to establish the validity of the PA form, then the company may be accused of discrimination.

How does performance appraisal (PA) help in the selection process?

It helps determine the applicants’ goals
It establishes the validity of rewards
It motivates the applicants
It helps ensure the company job description is accurate

Answer: It helps ensure the company job description is accurate Many companies take the opportunity during performance appraisals to review and revise job descriptions. The employee and managers’ discussion during a performance appraisal may result in an update to job tasks and functions on the formal job description. Those updates may create a need to change the selection steps or testing.

Performance appraisals can be used to determine which of the following types of compensation?

Pay levels
Contingent rewards
All of these
Pay increments

Answer: All of these One purpose of Performance Appraisals (PA) is to motivate employees. PA can be used as a basis upon which to distribute compensation. A valid appraisal is necessary for an organization to provide contingent rewards (rewards based on performance). Furthermore, PA information can be used in the determination of pay levels as well as pay increments.

True or False: If performance appraisals and job analysis are used together, the organization can hire anyone, and that person would be able to turn out a satisfactory performance.

Answer: False Used in conjunction with job analysis, performance appraisal is necessary for implementing effective pre-employment training programs. The assessment of performance can also help the employee make a decision about changes in his/her career. Providing the appropriate training can significantly improve employee performance, but if the employee finds out that, in spite of training and aptitudes, he/she is unable to deliver a satisfactory performance, a change in career may be sought. This can be done internally (through a transfer) or externally (change to another organization).

Which of the following is an advantage to using an employee’s supervisor as the rater for the performance appraisal?

When they give punishments, the subordinate doesn’t get frustrated because it is from someone close to them.
They are guaranteed to have the skills to give good feedback
The reward and punishment power they have makes the employee feel at ease
They are the most familiar with the subordinate’s work

Answer: They are the most familiar with the subordinate’s work An advantage to using the supervisor is that they are the most familiar with the job of the subordinate and with his/her performance. Some drawbacks are that because they have reward and punishment power, the subordinate may feel threatened; also without training the supervisor may not have the skills to give good feedback; and by giving punishments the supervisor may alienate the subordinate.

What is a disadvantage of self-appraisals?

Subordinates become less involved with the goals of the organization
They are subject to biases and distortions when used for evaluative purposes
Creates a hostile dialogue between the subordinate and the superior
Not very effective when focusing on goal commitment

Answer: They are subject to biases and distortions when used for evaluative purposes Self-appraisals are subject to systemic biases and distortions when used for evaluative purposes. On the other hand, self-appraisals are often effective tools for programs focusing on self-development, personal growth, and goal commitment. They also may help the subordinate become more involved and committed to the goals of the organization and can help clarify employee roles and reduce conflict. Another advantage is that self-appraisals can open dialogues regarding performance.

Which of the following types of employment would be best suited for using appraisal by customers?

Administrative
Construction
Restaurants
Factory workers

Answer: Restaurants Appraisal information can come from customers or clients of the job incumbents, especially for workers who have direct contact with the customers. Car dealerships and restaurants are two such industries where this may be beneficial.

When would peer appraisals be appropriate to use?

When the culture is highly participatory
When there is a low level of trust among subordinates
When the culture is highly competitive
When the organizational reward system is based on performance

Answer: When the culture is highly participatory Peer appraisals appear to be useful predictors of performance. However, the validity of peer appraisals is reduced somewhat if the organizational reward system is based on performance and is highly competitive, or if there is a low level of trust among subordinates. On the other hand, peer-appraisal can be very useful when teamwork and participation are part of the organizational culture.

Which of the following appraisal methods is the most objective?

Appraisal by customers
Self-appraisal
Computer monitoring
Peer appraisal

Answer: Computer monitoring With advances in technology, many organizations are now gathering performance data through computers. Although this method is fast and objective, it has raised a number of ethical issues such as an employee’s right to privacy. Nevertheless, many organizations have found such data to be a critical part of performance appraisals.

Straight Ranking Method

a superior lists the subordinates in order from best to worst, usually on the basis of overall performance. Incumbents can also be ranked with regard to their performance on specific duties, such as attendance, record of meeting deadlines, quality of reports, etc. This type of ranking is useful in small organizations. However, as the number of incumbents increases, it becomes difficult to discern differences in the performance of all incumbents–particularly those incumbents that are "average."

Alternative Ranking Method

Alternative ranking normally takes place in several steps. The first step is to put the best subordinate at the head of the list and the worst subordinate at the bottom, usually on the basis of overall performance. The superior then selects the best and worst from the remaining subordinates. The middle position on the list is the last to be filled. Alternative ranking approaches can be used quite efficiently not only by a single supervisor, but by the subordinates themselves.

Paired Comparison Method

The paired comparison method involves comparing each employee to another incumbent, two at a time on a single standard, to determine which is better. A rank order can be obtained by counting the number of times each individual is selected as the better of a pair. The subordinate with the most favorable comparisons is thus ranked in the first place. The subordinate with the second-greatest number of favorable comparisons is ranked second, and so on. An advantage to this approach over is that it overcomes the problem of an "elevation set." That is, it forces the assessor to compare the performance of each incumbent to all other incumbents, one by one.

Forced Distribution Method

The forced distribution method was designed to overcome a frequent complaint leveled against the various ranking methods, namely, that the methods give each employee a unique rank and does not allow for two (or more) incumbents’ performances to be very close to each other. However, in many instances it is very hard to differentiate between two employees. The forced distribution method overcomes this problem and incorporates several factors or dimensions (rather than a single factor) into the ranking process. The term "forced distribution" is used because the superior must assign only a certain proportion of subordinates to each of several categories with respect to each other. A common forced distribution scale may be divided into five categories, with a fixed percentage of all subordinates in the group falling within each of these categories. Many universities in North America that use a letter-grade system (A, B, C, etc.), rather than percentages (i.e., a grade mark out of 100), use forced distribution. Typically, the distribution follows a normal "bell-shaped" pattern.

Narrative Essay Method

One of the simplest forms for evaluating employees is the narrative essay. Using this form, the rater can describe the employee’s strengths and weaknesses and suggest methods for improving performance. Certainly, if the essay is unstructured, the evaluation will often vary in length and detail. As a result, comparisons within a department, or across departments, can be difficult. Another limitation to the narrative essay is the fact that the essay only provides qualitative data and not quantitative data. Including behavior criteria on the form, such as critical incidents, behavioral checklist and forced-choice forms, can significantly enrich the appraisal.

Conventional Rating Method

Conventional rating (also called graphic rating scales or Likert scales) is the most widely used form of performance evaluation. Conventional forms vary in the number of performance dimensions they measure. The term performance is used advisedly here because many conventional forms use personality characteristics or traits, rather than actual behaviors, as indicators of performance. Frequently-used traits include aggressiveness, independence, maturity, and a sense of responsibility, to name a few. Many conventional forms also use output indicators such as quantity and quality of performance. Conventional forms vary in the number of traits and output indicators they incorporate. They also vary in the range of choices for each dimension and the extent to which each dimension is described. Conventional forms are used extensively because they are relatively easy to develop and permit quantitative results that allow comparisons across employees and departments. Because the rater has complete control in the use of the forms, conventional forms are subject to errors including leniency, strictness, central tendency, and halo effect. (These terms will be covered in subsequent sections.) Often separate traits or factors are grouped together and the rater is given only one box to check. Another drawback is that the descriptive words often used in such scales may have different meanings to different raters. Terms such as motivation, cooperation and social skills are all subject to various interpretations, and raters may certainly benefit from clear definitions.

Which of the following is the simplest method of performance appraisal method?

Paired comparisons
Narrative essay
Straight ranking
Alternative ranking

Answer: Straight ranking Perhaps the most simple method of performance appraisal is the straight ranking method. In the straight ranking method, a superior lists the subordinates in order, from best to worst, usually on the basis of overall performance. However, as the number of incumbents increases, it becomes difficult to discern differences in the performance of all incumbents – particularly those incumbents who are "average."

Which method allows two or more incumbents’ performances to be ranked together?

Paired comparisons
Forced distribution
Alternative ranking
Straight ranking

Answer: Forced distribution The forced distribution method was designed to overcome a frequent complaint against other ranking methods in which employees are given a unique rank, and not allowing for two (or more) incumbents’ performances to be very close to each other. The forced distribution method overcomes this problem and incorporates several factors, or dimensions, into the ranking process. A common forced distribution scale may be divided into five categories, with a fixed percentage of all subordinates in the group falling within each of these categories. Typically, the distribution follows a normal "bell-shaped" pattern.

An advantage to this type of performance evaluation method is that each incumbent gets compared to every other incumbent, one by one. Which type of performance evaluation method is it?

Forced distribution
Straight ranking
Alternative ranking
Paired comparison

Answer: Paired comparison The paired comparison method involves comparing each employee to every other incumbent, two at a time on a single standard, to determine which is better. A rank order can be obtained by counting the number of times each individual is selected as the better of a pair. An advantage to this approach, over traditional ratings, is that it overcomes the problem of an "elevation set." That is, it forces the assessor to compare the performance of each incumbent to all other incumbents, one by one.

True or False: The first step in alternative ranking is when a superior lists the subordinates in order, from best to worst, usually on the basis of overall performance.

Answer: True Alternative ranking normally takes place in several steps. The first step is to put the best subordinate at the top of the list and the worst subordinate at the bottom, usually on the basis of overall performance. The superior then selects the next best and worst from the remaining subordinates, and so on. The middle position on the list is the last to be filled.

Why are conventional rating forms used extensively?

The descriptive words used have the same meanings to different raters
The forms are very objective and the rater has little control over the form
They allow comparisons across employees and departments
Conventional forms are not subject to errors

Answer: They allow comparisons across employees and departments Conventional forms are used extensively because they are relatively easy to develop and permit quantitative results that allow comparisons across employees and departments. But because the rater has complete control in the use of the forms, conventional forms are subject to several errors. Often separate traits or factors are grouped together and the rater is given only one box to check. Frequently-used descriptive words can be subject to different meanings to different raters.

Halo and Horn Error

The most common error committed by raters occurs when superiors rate employees on several dimensions of performance, but allow one measure to influence all other dimensions. Also known as the halo effect, this occurs because supervisors allow one positive characteristic (or behavior) of the employee to overshadow all other characteristics (or behaviors) of the employee. The opposite of the halo error is referred to as a horn error. A horn error occurs when a poor rating in one area unjustly affects ratings in other job performance areas, resulting in a poor overall appraisal.

Error of Leniency

Another common—and often intentional—error is called leniency. Leniency occurs when, to avoid conflict, a manager rates subordinates higher than they should be rated. This is especially likely to happen when there are no organizational sanctions against high ratings, when rewards are not part of a fixed and limited pot, and when organizational calibration of ratings does not occur.

Error of Strictness

At the opposite extreme of the spectrum is a situation where raters give unfavorable ratings, regardless of the performance level of employees. Also known as error of strictness, this error may occur when either inexperienced raters, raters who are attempting to impress their own superiors by their strict standards, or raters who are trying to "settle accounts" with employees, are involved in the evaluation process.

Central Tendency Bias

Rather than using extremes in ratings, there is a tendency on the part of many raters to "play it safe" and evaluate employees as average, even when performance varies. This bias is referred to as the error of central tendency. Raters with a large span of control and little opportunity to observe behavior are likely to rate the majority of incumbents in the middle of the scale rather than too high or too low. Central tendency may also be a byproduct of the rating method. For example, the various ranking formats, and more particularly the forced distribution, require that most employees be rated average

Primary and Recency Effects

Because the typical appraisal period is six months to a year, it is too difficult to retain in memory all performance-related behaviors of the incumbents. As a cognitive shortcut, raters may fall prey to the primary effect and/or the recency effect. When special attention is paid to the first information logged or remembered, it is referred to as the primary bias or effect. In the process, raters will use initial information to categorize a ratee as either a good or poor performer. Subsequently, information that supports the initial judgments is accumulated, and contradictory information is ignored. Conversely, a rater may not pay attention to an employee’s performance during the appraisal period. As a result, when the appraisal interview draws near, the rater may search for information cues about the value of performance. Unfortunately, recent behaviors or outputs are salient, so recent behaviors are then weighted more heavily than they should be. Called the recency error, this bias can have serious consequences for a ratee who performs well for six months or a year, but then makes a serious or costly mistake in the last week or two preceding the appraisal. Incumbents and managers can minimize these errors by documenting ongoing critical events. While time-consuming to complete, these files ensure that information for the entire appraisal period is incorporated into judgments.

Contrast Effects

A contrast effect occurs when the evaluation or observation of one subordinate’s performance is affected unjustly by an earlier evaluation or observation of another employee’s performance. When compared to weak employees, an average employee will appear outstanding; when evaluated against outstanding employees, an average employee will be perceived as a low performer. As with other errors, the solution is to have specific performance criteria established prior to the evaluation period.

Spillover Effects

The spillover effect occurs when past performance appraisal ratings, whether good or bad, are allowed to unjustly influence correct ratings. It happens most often when new managers are being briefed on current employees by departing managers. Thus the information provided, which is already biased, is being carried on. One solution to the problem is to avoid examining past appraisal records/information prior to conducting the assessment. Past records, on the other hand, can be consulted in conjunction with current appraisal for the purpose of detecting trends and for giving feedback to the incumbent.

Similarity Error

A similarity error (also known as the "like me" bias) occurs when raters evaluate more positively those whom they perceive to be similar to themselves. The implicit assumption underlying this error is that they themselves are (or have been) "model" employees and thus subordinate similarity will most likely reflect good performance.

When does a contrast effect occur in performance appraisals?

When raters assign higher rating to those whom they feel are similar to themselves
When the appraisal is based on only recent events
When past performance appraisal ratings are allowed to influence current ratings
When one subordinate’s performance is unjustly affected by an earlier evaluation of another employee

Answer: When one subordinate’s performance is unjustly affected by an earlier evaluation of another employee A contrast effect occurs when the evaluation or observation of one subordinate’s performance is affected unjustly by an earlier evaluation or observation of another employee’s performance. When compared to weak employees, an average employee will appear outstanding; when compared to an outstanding employee, the average employee will appear weak. The solution is to have specific performance criteria established prior to the evaluation.

Which of the following statements is true?

Halo effect occurs when a supervisor allows one positive characteristic of an employee to overshadow all others
Horn effect occurs when all areas are poor, but the overall appraisal is high
Halo effect occurs when a poor rating in one area affects all other areas resulting in a poor overall appraisal
Horn effect occurs when a supervisor does not allow one characteristic of an employee to overshadow all others

Answer: Halo effect occurs when a supervisor allows one positive characteristic of an employee to overshadow all others The most common error committed by raters occurs when superiors are rating an employee on several dimensions of performance, but allow one measure to influence all other dimensions. This is known as the halo effect. The opposite of the halo error is referred to as a horn error. A horn error occurs when a poor rating in one area unjustly affects ratings in other job performance areas, resulting in a poor overall appraisal.

When is the error of leniency most likely to happen?

When there are no sanctions against high ratings
When raters are trying to impress supervisors by showing how strict they are
When raters have a large span of control and little opportunity to observe
When the employee is perceived to be similar to the rater

Answer: When there are no sanctions against high ratings The error of leniency is often intentional and occurs most often when, to avoid conflict, a manager rates subordinates higher than they should be rated. This is most likely to occur when there are no organizational sanctions against high ratings, when rewards are not part of a fixed and limited pot, and when dimensional ratings are not required.

What is a way to minimize the errors caused by primary or recency effects?

Trying to remember what has happened throughout the rating period
Documenting ongoing critical events
Weighing more heavily the events that have occurred recently
Weighing more heavily the events that occurred at the beginning of the rating period.

Answer: Documenting ongoing critical events Incumbents and managers can minimize the two errors (primary and recency errors) by documenting ongoing critical events. While time-consuming to complete, these files ensure that information for the entire appraisal period is incorporated into judgments.

What is the implicit assumption the rater makes when they make the "similarity error" in performance evaluations?

Past behavior is similar to what they will do in the future
Employees who follow rules exactly are the best employees
All employees are alike
That the rater is a "model" employee

Answer: That the rater is a "model" employee A similarity error occurs when raters evaluate more positively those whom they perceive to be similar to themselves. The implicit assumption underlying this error is that they (the rater) is (or has been) a "model" employee, and thus those subordinates whom these raters consider similar to themselves will most likely be perceived as reflecting good performance.

True or False: Performance appraisals are often not problematic because supervisors and incumbents often view the process similarly.

Answer: False One reason that performance appraisals are problematic is that supervisors and incumbents often view the process from different perspectives.

What does it mean to account for performance in a self-serving manner?

Seeing the causes of poor performance as one’s own lack of motivation
Seeing the causes of good performance as attributed to external factors
Seeing the causes of good performance as attributed to one’s own ability
Seeing the causes of poor performance as one’s own lack of ability

Answer: Seeing the causes of good performance as attributed to one’s own ability The problem of seeing performance evaluations from a different perspective for the supervisor and the incumbent is accentuated by the tendency to account for performance in a self-serving manner. To protect one’s ego, an incumbent is likely to attribute the causes of poor performance to external factors and attribute successful performance to one’s motivation and ability. Supervisors may respond similarly.

How can organizations help improve performance evaluations and help it so that employees don’t block ways to improve their performance if they are assessed negatively?

Wait until the employee states that they want to work on their performance
Have two appraisal interviews, one for evaluation and one for development
Get working on the development of the lacking performance right away
Have one good interview that focuses on their evaluation as well as development

Answer: Have two appraisal interviews, one for evaluation and one for development For problem-solving to be effective, subordinates have to be open and superiors have to play the role of helper, not judge or prosecutor. Thus, if organizations want to serve both the evaluation and development purposes effectively, there should be two appraisal interviews. One interview can focus on evaluation and the other, at a different time of the year, can focus on development.

What does EAP stand for?

Employee action program
Employee assessment policies
Employee assessment program
Employee assistance program

Answer: Employee assistance program EAP stands for employee assistance programs. These are designed specifically to assist employees with personal problems that hinder their job performance and attendance. One way for an organization to support employees is to provide employee assistance programs.

Which of the following EAPs could be categorized as "beneficial to the employee"?

Resolving management problems
Improving quality of life
Improving productivity
Limiting liability

Answer: Improving quality of life The advantages of EAPs can be categorized as either "beneficial to the employee" (such as reducing health risks, promoting wellness, and improving quality of life) or "beneficial to the organization" (such as improving productivity and profits, resolving management problems, and limiting employer liability). Some advantages apply to both parties (such as improving employee morale and helping troubled employees).

True or False: The more objective the performance appraisal (PA) approach, the more vulnerable it is to legal challenges.

Answer: False In general, the more subjective the PA approach, the more it is vulnerable to legal challenges. As there are no solid facts to back up the appraisal.

Which of the following is not a purpose of performance appraisals?

To further develop individuals
To inform incumbents where they stand based on an evaluation
To guide individuals to perform better
To inform incumbents where they stand based on subjective thinking

Answer: To inform incumbents where they stand based on subjective thinking An effective performance appraisal system depends upon several components of appraisal, but it generally serves two purposes: 1) performance appraisals use evaluation to inform incumbents where they stand 2) performance appraisals are used to further develop and guide individuals to perform better

True or False: Well thought-out plans for performance appraisal will guarantee their consistent application of them in the organization.

Answer: False Despite the most well thought-out plans for performance appraisal, HR professionals are often frustrated by the failure of line managers to consistently apply and use them.

All of the following are reasons why completing assessments of the performance appraisal system are important except…

To make changes to fit modern models, even if they are not needed
To make sure all legal considerations are observed
To increase its effectiveness
To see how well the development process is being met

Answer: To make changes to fit modern models, even if they are not needed The assessment of an organization’s entire performance appraisal system can increase its effectiveness. Such assessments are necessary to help determine how well the evaluation and development processes are being met and whether all legal considerations are being observed. Changes should be made only when what is being used is either not working or is not legally compliant.

True or False: Revising current appraisal methods and including more effective strategies help set a better basis upon which to make compensation and training decisions.

Answer: True On the basis of assessments of an organization’s entire performance appraisal system, revisions in current appraisal methods can be made and more effective strategies for improving performance can be developed and implemented. Once completed, an organization has a much better basis upon which to make other HR decisions, particularly those associated with compensation and training and development.

What is the formal structural system of measuring, evaluating, and influencing an employee’s job-related attributes, behaviors, and outcomes?

KSAs (knowledge, skills, and abilities)
Training
Performance appraisal
Validity
Development
The ADDIE model

Answer: Performance appraisal The performance appraisal (or PA) is the formal structural system of measuring, evaluating, and influencing an employee’s job-related attributes, behaviors, and outcomes.

Which of the following is an evaluation decision made using performance appraisal information?

Salary increases or decreases
Counseling employees
Providing feedback
Motivating employees to improve

Answer: Salary increases or decreases One purpose of performance appraisals is to evaluate performance. That is, appraisal information is used as input for making several administrative decisions: Salary increases or decreases Demotions Layoffs Promotions/transfers Terminations

How do performance appraisals help the company be legally compliant?

Outlines the expected performance
Provides a format for dialogue between superior and subordinate
Helps establish the validity of employment decisions.
Audits management talent to evaluate the current supply of human resources

Answer: Helps establish the validity of employment decisions. Legal Compliance– Performance appraisal helps establish the validity of employment decisions made on the basis of performance-based information (also helps to defend management actions such as demotions, transfers, or terminations).

Which of the following influence the performance appraisal process?

All of these
Training and development
None of these
Compensation
Selection and placement
Job analysis

Answer: All of these Performance appraisal is directly influenced by several HR activities: job analysis, selection and placement, compensation, and training and development.

Before beginning performance management, all of the following must occur except…

Establishment of competencies
Understanding the organization’s strategy
Evaluation of the results
Establishment of performance standards

Answer: Evaluation of the results Performance management begins with understanding the organization’s strategy. The strategy dictates the important tasks that should be the focus of each unit (or department) and subsequently dictate the requirements for each employee’s job. Once job requirements are known, competencies are established; expected performance standards are set; and the approach to evaluate the results and behaviors (performance management) are chosen.

Which of the following is how performance appraisals influence training and development?

Determines pay levels and pay increments
Helps understand the reason behind undesirable performance
It helps ensure only candidates that will perform well are included in the pool of applicants
Sets the foundation for job analysis

Answer: Helps understand the reason behind undesirable performance To provide appropriate training, it is necessary to be aware of the employee’s current level of performance and any unsatisfactory aspects of performance. It is also necessary to know if the undesirable performance is caused by a lack of ability or motivation or by the situation. To gain this knowledge, HR professionals must use performance appraisals.

There are many ways to gather data on an individual. In choosing the performance appraisal method, when should the relevance of each source be considered?

Any of the methods work the same
After
During
Before

Answer: Before Sources for performance appraisals can include supervisors, peers, subordinates, self-appraisal, customers, and computer monitoring. While many of these can be used to gather data on an individual, the relevance of each source should be considered prior to choosing the performance appraisal method.

Which of the following is an advantage to using appraisal by subordinates?

Subordinates won’t evaluate their superiors solely based on personality
Subordinates won’t inflate the evaluation of their superiors
Subordinates may evaluate their superiors solely based on their own needs
Subordinates may help the superiors understand what they can do to improve

Answer: Subordinates may help the superiors understand what they can do to improve Appraisals by subordinates can help the superior understand, from the perspective of the subordinate, if the learning experience can be improved and can help superiors be more aware of their impact on their subordinates. Sometimes, however, subordinates may evaluate their superiors solely on the basis of personality or in respect of their own needs rather than those of the organization. Finally, subordinates may inflate the evaluation of their superiors, particularly if they feel threatened by them and have no anonymity.

Why can appraisals by supervisors be effective?

They can alienate the employee if the employee does not perform well
Even without training they will give good feedback
They are most familiar with the job of the subordinate
They have reward and punishment power

Answer: They are most familiar with the job of the subordinate It is assumed that the supervisor is the one who is most familiar with the job of the subordinate and with his/her performance. While appraisals by supervisors can be effective, there can also be drawbacks, such as the supervisor having reward and punishment power that may cause the subordinate to feel threatened. The supervisor may also not be able to give good feedback without proper training. Another drawback is that if the supervisor must dole out punishment, they may alienate the subordinate.

Which of the following methods of performance appraisals use qualitative instead of quantitative data?

Paired comparisons
Narrative essay
Forced distribution method
Alternative ranking

Answer: Narrative essay One of the simplest forms for evaluating employees is the narrative essay. The rater can describe the employee’s strengths and weaknesses and suggest methods for improving performance. However, if the essay is unstructured, comparisons within a department or across departments, can be difficult. The essay only provides qualitative data and not quantitative data. Including behavior criteria on the form, such as critical incidents, a behavioral checklist, and forced-choice forms can significantly enrich the appraisal.

True or False: Ranking approaches used as the performance appraisal method may be used efficiently by the subordinates as well as supervisors for ranking themselves.

Answer: True Alternative ranking approaches can be used quite efficiently not only by a single supervisor, but by the subordinates themselves.

Which of the following forms of performance evaluation is the most widely used?

Conventional rating
Straight rating
Forced distribution method
Narrative essay

Answer: Conventional rating The conventional rating is the most widely used form of performance evaluation. Conventional forms vary in the number of dimensions of performance they measure. Many use personality traits and characteristics such as aggressiveness, independence, maturity, etc. Many use output indicators such as quantity and quality of performance as well. They vary in the number of traits and output indicators they incorporate and also vary in the range of choices for each dimension. Conventional forms are used extensively because they are relatively easy to develop, and permit quantitative results that allow comparisons across employees and departments. However, they can be subject to several errors including leniency, strictness, and central tendency. Several traits or factors can also be grouped together, and they would be subject to various interpretations with different raters.

Which of the following causes more errors to occur when trying to conduct an accurate performance evaluation?

When performance criteria are unclear
When there are incentives for accurate evaluations
When job duties are stated clearly
When performance criteria are clearly stated

Answer: When performance criteria are unclear When performance criteria are not clearly specified and there are no incentives associated with conducting an accurate performance evaluation, a variety of errors may occur.

Which of the following is the definition of what a central tendency bias error is when evaluating the performance of employees?

When managers rate employees based on what has happened recently
When managers rate the majority of incumbents in the middle of the pack
When managers give unfavorable ratings regardless of the performance, to impress others with their strictness
When managers rate subordinates higher than they should be rated, in order to avoid conflict

Answer: When managers rate the majority of incumbents in the middle of the pack Rather than using extremes in ratings, there is a tendency on the part of many raters to "play it safe" and evaluate employees as average, even when performance varies. This bias is referred to as the error of central tendency. Raters with a large span of control and little opportunity to observe behavior are likely to rate the majority of incumbents in the middle of the scale rather than too high or too low.

Which of the following effects occurs when past performance appraisal ratings, whether good or bad, are allowed to unjustly influence current/correct ratings?

Similarity effect
Spillover effect
Contrast effect
Recency effect

Answer: Spillover effect The spillover effect occurs when past performance appraisal ratings, whether good or bad, are allowed to unjustly influence correct ratings. It happens most often when new managers are being briefed on current employees by departing managers and the biased information is then passed on. One solution is to avoid examining past appraisal information. Another solution is to use past records in conjunction with current appraisals for the purpose of detecting trends and giving feedback to the incumbent.

When it comes to performance appraisals, supervisors and incumbents often see the process from different perspectives. Which of the following is usually a factor seen from the perspective of the supervisor?

The employee’s ability
Lack of cooperation from other co-workers
The lack of support for the employee
Problems with machinery

Answer: The employee’s ability One reason that performance appraisals are problematic is that supervisors and incumbents likely view the process from different perspectives. For the incumbent, the focus is outward, keying on the environmental factors (the supervisor, lack of support, lack of cooperation among co-workers, problems with machinery, etc.) that impinge on his or her performance. The supervisor’s focus, on the other hand, is on the incumbent and the displayed motivation and ability.

Which of the following will not help ensure effective performance evaluations?

Making sure objective judgments are used
Letting subordinates review their appraisals
Using subjective criteria
Conducting evaluations on all employees

Answer: Using subjective criteria To ensure effective performance evaluations, the organization and the HR department must conduct evaluations on all employees, and make sure that only objective judgments are used. When possible, subordinates should have the opportunity to review their appraisals and records. Subjective criteria can have biases and can lead to legal problems.

An effective performance appraisal system generally serves which purposes? (Select all that apply)

To future develop and guide individuals to perform better
To cause line managers to apply and use the plans from HR
To inform incumbents where they stand
To recruit well-trained individuals

Answer: To inform incumbents where they stand; To future develop and guide individuals to perform better An effective performance appraisal system depends on several components of appraisal, but it generally serves two purposes: 1) to inform incumbents where they stand, and 2) to further develop and guide individuals to perform better.

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