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Chapter 10 Managing Employees' Performance Answer Key

True / False Questions

1. Performance management requires knowing what activities and outputs are desired, observing

whether they occur, and providing feedback to help employees meet expectations.

TRUE

Performance management is the process through which managers ensure that employees'

activities and outputs contribute to the organization's goals. This process requires knowing
what activities and outputs are desired, observing whether they occur, and providing feedback
to help employees meet expectations. In the course of providing feedback, managers and

employees may identify performance problems and establish ways to resolve those problems.

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Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management

10-1
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2. Performance management systems are established to meet three broad purposes of the
organization: strategic, administrative, and developmental.

TRUE

Organizations establish performance management systems to meet three broad purposes:


strategic, administrative, and developmental.

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Learning Objective: 10-02 Discuss the purposes of performance management systems.
Level of Difficulty: 1 Easy
Topic: Purposes of Performance Management

3. In a performance appraisal, the term validity refers to whether the appraisal measures all

aspects of performance, both relevant and irrelevant.

FALSE

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

all the relevant aspects of performance and omits irrelevant aspects of performance.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management

10-2
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4. The paired-comparison method measures the consistency of results over time.

FALSE

Test-retest reliability refers to consistency of results over time. If a performance measure lacks

test-retest reliability, determining whether an employee's performance has truly changed over
time will be impossible.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management

5. In the simple ranking method of performance measurement, managers rank employees in their

group from the highest performer to the poorest performer.

TRUE

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

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

10-3
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6. The paired-comparison method involves comparing each employee with each other employee
to establish rankings.

TRUE

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

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

7. While rating attributes of individuals, measurement of attributes is rarely linked to the

organization's strategy.

TRUE

While rating attributes of individuals, measurement of attributes is rarely linked to the


organization's strategy.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance
Topic: Rating Individuals

10-4
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8. To rate employee behaviors, an organization begins by defining which behaviors are associated
with the employee's personality traits.

FALSE

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

of the identified behaviors that help the organization to achieve its goals.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

9. The critical-incident method requires managers to keep a record of specific examples of the
employee acting in ways that are either effective or ineffective.

TRUE

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

effective or ineffective.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

10-5
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10. A disadvantage of behaviorally anchored rating scales (BARS) is that it can bias a manager's
memory.

TRUE

Although behaviorally anchored rating scales (BARS) can improve interrater reliability, this
method can bias the manager's memory. The statements used as anchors can help managers

remember similar behaviors, at the expense of other critical incidents.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

11. Compared to a behavioral observation scale (BOS), a behaviorally anchored rating scale (BARS)
makes it easier for providing feedback, maintaining objectivity, and suggesting training needs.

FALSE

Compared to a behaviorally anchored rating scale (BARS) and graphic rating scales, managers
and employees have said they prefer a behavioral observation scale (BOS) for ease of use,

providing feedback, maintaining objectivity, and suggesting training needs.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

10-6
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12. Organizational behavior modification (OBM) is a plan for managing the behavior of employees
through an informal system of feedback and reinforcement.

FALSE

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


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

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

13. Behavioral approaches to performance measurement, such as organizational behavior

modification and rating scales, tend to be biased.

FALSE

Behavioral methods can generate specific feedback, along with guidance in areas requiring
improvements. As a result, these methods tend to be valid. The people to be measured often

help in developing the measures, so acceptance tends to be high as well. When raters are well

trained, reliability also tends to be high.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance

10-7
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14. Management by objectives (MBO) links employee performance with the organization's strategic
goals.

TRUE

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

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

15. Traditional performance management differs from total quality management (TQM) in that it

assesses both individual performance and the system within which the individual works.

FALSE

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

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

10-8
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16. Using an employee's manager for feedback is very useful because their own success depends
so much on their employees' performance.

TRUE

An advantage of using managers to evaluate performance is that they have an incentive to


provide accurate and helpful feedback because their own success depends so much on their

employees' performance.

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Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 2 Medium
Topic: Sources of Performance Information

17. Peer reviews are an excellent source of information about performance in a job where the
supervisor does not often observe the employee.

TRUE

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

in reviews to be used for employee development.

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Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 1 Easy
Topic: Sources of Performance Information

10-9
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18. Self-appraisals are appropriate as the basis for administrative decisions.

FALSE

Social psychologists have found that, in general, people tend to blame outside circumstances

for their failures while taking a large part of the credit for their successes. Supervisors can soften
this tendency by providing frequent feedback, but because people tend to perceive situations

this way, self-appraisals are not appropriate as the basis for administrative decisions.

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Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 1 Easy
Topic: Sources of Performance Information

19. In order to minimize distributional errors, raters should use only one part of the rating scale.

FALSE

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

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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-10
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20. Appraisal politics are most likely to occur when a performance appraisal is directly linked to
highly desirable rewards.

TRUE

Appraisal politics are most likely to occur when raters are accountable to the employee being
rated, the goals of rating are not compatible with one another, performance appraisal is directly

linked to highly desirable rewards, top executives tolerate or ignore distorted ratings, and
senior employees tell newcomers company "folklore" that includes stories about distorted
ratings.

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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 1 Easy
Topic: Errors in Performance Management

21. In a "tell-and-sell" approach, managers tell the employees their ratings and then justify those

ratings.

TRUE

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

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Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 1 Easy
Topic: Giving Performance Feedback

10-11
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22. The content of feedback is more effective when it is directed toward personalities.

FALSE

The content of feedback should emphasize behavior, not personalities. For example, "You did

not meet the deadline" can open a conversation about what needs to change, but "You're not
motivated" may make the employee feel defensive and angry.

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Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 2 Medium
Topic: Giving Performance Feedback

23. The improvement of an employee's performance varies according to the employee's ability and

level of motivation.

TRUE

The most effective way to improve performance varies according to the employee's ability and
motivation. In general, when employees have high levels of ability and motivation, they perform

at or above standards. But when they lack ability, motivation, or both, corrective action is

needed.

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Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 1 Easy
Topic: Finding Solutions to Performance Problems

10-12
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24. Lawsuits filed against performance management usually involve charges of discrimination or
unjust dismissal.

TRUE

Since performance measures play a central role in decisions about pay, promotions, and
discipline, employment-related lawsuits often challenge an organization's performance

management system. Lawsuits related to performance management usually involve charges of


discrimination or unjust dismissal.

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

25. The requirements for job success are clearly communicated to employees to protect against

lawsuits.

TRUE

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

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

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

10-13
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Multiple Choice Questions

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

A. Quality analysis

B. Administrative planning

C. Project management

D. Strategic planning

E. Performance management

The process through which managers ensure that employees' activities and outputs contribute
to the organization's goals is known as performance management. Effective performance
management can tell top performers that they are valued, encourage communication between

managers and their employees, establish uniform standards for evaluating employees, and help

the organization identify its strongest and weakest performers.

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Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management

10-14
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27. Which of the following statements is true of effective performance management?

A. It can tell top performers they are valued.

B. It can evaluate employees without establishing standards.

C. It averts communication between managers and their employees.

D. It uses just one person as a source of information.

E. It does not affect employees who meet expectations.

Effective performance management can tell top performers they are valued, encourage
communication between managers and their employees, establish consistent standards for

evaluating employees, and help the organization identify its strongest and weakest employees.
To meet these objectives, companies must think of effective performance management as a

process, not an event.

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Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 2 Medium
Topic: The Process of Performance Management

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28. Which of the following is the first step in performance management process?

A. Evaluating performance

B. Developing employee goals, behavior, and actions to achieve outcomes

C. Providing consequences for performance results

D. Defining performance outcomes for company division and department

E. Identifying improvements needed

Organizations establish performance management systems to meet three broad purposes:


strategic, administrative, and developmental. The first step in the performance management

process is defining performance outcomes for company division and department.

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Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management

29. Which of the following is the last step in performance management process?

A. Defining performance outcomes for company division and department

B. Identifying improvements needed

C. Developing employee goals, behavior, and actions to achieve outcomes

D. Evaluating performance

E. Providing consequences for performance results

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

AACSB: Analytical Thinking

10-16
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Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 1 Easy
Topic: The Process of Performance Management

30. "Performance management serves as a basis for improving employees' knowledge and skills."
This statement corresponds to which of the following purposes of performance management?

A. Developmental purpose

B. Administrative purpose

C. Investigative purpose

D. Strategic purpose

E. Executive purpose

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


corresponds to improving employees' knowledge and skills. Giving timely performance

feedback can help even the employees who are meeting the company's expectations.

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Learning Objective: 10-02 Discuss the purposes of performance management systems.
Level of Difficulty: 2 Medium
Topic: Purposes of Performance Management

10-17
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31. In the context of effectiveness of performance management, _____ means the extent to which a
measurement tool actually measures what it is intended to measure.

A. validity

B. dependability

C. acceptability

D. reliability

E. specificity

Validity is the extent to which a measurement tool actually measures what it is intended to

measure. In the case of performance appraisal, validity refers to whether the appraisal measures
all the relevant aspects of performance and omits irrelevant aspects of performance.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management

10-18
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32. In the context of validity in performance appraisal, information that is gathered but irrelevant is
called _____.

A. feedback

B. knowledge

C. concatenation

D. adjunct

E. contamination

In the context of validity in performance appraisal, information that is gathered but irrelevant is

called contamination. This irrelevant information is often omitted in performance appraisal.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
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Topic: Criteria for Effective Performance Management

10-19
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33. Crimson Inc. is conducting their annual performance review process for employees. The
company uses a tool that measures entrepreneurial behavior and found there was a lot of
irrelevant information that was also gathered. The irrelevant information gathered from the

results is termed _____.

A. deficiency

B. validity

C. contamination

D. specificity

E. reliability

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

is gathered but irrelevant is "contamination."

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
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Topic: Criteria for Effective Performance Management

10-20
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34. Lily, a manager at Pyramid Inc., uses a rating tool to evaluate the performance of her
subordinates. However, she finds that the scale she used did not yield consistent results and
could not determine if a change had taken place in the performance of the employees. Which

of the following was lacking in the rating scale?

A. Validity

B. Acceptability

C. Reliability

D. Transparency

E. Specificity

With regard to a performance measure, reliability describes the consistency of the results that
the performance measure will deliver. If a performance measure lacks test-retest reliability,

determining whether an employee's performance has truly changed over time will be

impossible.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
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Topic: Criteria for Effective Performance Management

10-21
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35. Charles, the HR manager at Telcare Inc., establishes a performance management system for his
company. He wants to check the consistency of results over time. In the context of criteria for
determining the effectiveness of performance measures, Charles is trying to check the _____ of

the performance management system.

A. validity

B. test-retest reliability

C. specificity

D. interrater reliability

E. acceptability

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

time will be impossible. In this case, Charles is trying to check the test-retest reliability of the

performance management system.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 3 Hard
Topic: Criteria for Effective Performance Management

10-22
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36. In the context of performance management, which of the following terms refers to a measure
that obtains consistency of results over time?

A. Validity

B. Interrater reliability

C. Acceptability

D. Test-retest reliability

E. Specificity

Test-retest reliability refers to consistency of results over time. If a performance measure lacks

test-retest reliability, determining whether an employee's performance has truly changed over
time will be impossible.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 1 Easy
Topic: Criteria for Effective Performance Management

10-23
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37. Which of the following helps performance management meet the goals of supporting strategy
and developing employees?

A. Strategic fit

B. Specific feedback

C. Overall opinion

D. Employee orientation

E. Generalized instruction

Specific feedback refers to telling employees what is expected of them and how they can meet

those expectations. Being specific helps performance management meet the goals of
supporting strategy and developing employees.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 2 Medium
Topic: Criteria for Effective Performance Management

10-24
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38. Bill and Nancy, managers at Sanzen Inc., want to the check the consistency of results for an
employee on a scale of 1 to 10. This will help them evaluate his performance. In the context of
criteria for effective performance management, Bill and Nancy are testing the _____.

A. validity

B. test-retest reliability

C. specificity

D. interrater reliability

E. accountability

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

employee for consistency of results.

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Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 3 Hard
Topic: Criteria for Effective Performance Management

10-25
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39. Donna, a supervisor at Cenate Inc., wants to compare her subordinate John's performance with
other employees to assess their effectiveness. Which of the following methods for measuring
performance is best suited for this task?

A. Simple ranking

B. Mixed-standards scale

C. Critical-incident method

D. Graphic rating scale

E. Organizational behavior modification

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

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance

10-26
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40. Salman, a production manager at Telecal Inc., needs to measure the performance of 10
subordinates. He writes their names on a paper and circles Karim's name as the best-
performing employee of the group. He then circles Dillon's name as the worst employee of the

group. He rates the remaining employees as second best, second worst, and so on. In the
context of methods of performance measurement, Salman is using the _____ method.

A. forced-distribution

B. alternation ranking

C. graphic rating

D. mixed-standard

E. critical-incident

Alternation ranking method is a variation of simple ranking method. In this method, the

manager works from a list of employees. First, the manager decides which employee is best and

crosses that person's name off the list. From the remaining names, the manager selects the
worst employee and crosses off that name. The process continues with the manager selecting

the second best, second worst, third best, and so on, until all the employees have been ranked.

In this scenario, Salman is using the alternation ranking method.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

10-27
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41. Margaret, a production manager at Falcon Inc., needs to measure the performance of 12 of her
subordinates. She divides the number of employees into categories like exceptional, above
average, average, and below average. She assigns a certain percentage of employees to each

category to determine the quality of their performances. In the context of methods for
measuring performance, Margaret is using the _____ method.

A. alternation ranking

B. rating attribute

C. mixed-standard

D. paired-comparison

E. forced-distribution

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

set of categories. A manager completing the performance appraisal would rate 5% of his or her

employees as exceptional, 25% as exceeding standards, and so on. A forced-distribution


approach works best if the members of a group really do vary this much in terms of their

performance. It overcomes the temptation to rate everyone high in order to avoid conflict. In

this scenario, Margaret is using the forced-distribution method.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

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42. Joseph, a supervisor at H2O Chemicals Inc., needs to assess the behavior of 25 people, who
constitute a large group of his subordinates. Which of the following must Joseph ideally do to
assess the behavior of his subordinates and why?

A. Joseph must use a behavioral observation scale because it is relatively easier than other
methods of assessing behavior and providing feedback.

B. Joseph must use an organizational behavior modification approach because it is often


preferred by managers for its simplicity.

C. Joseph must use a behaviorally anchored rating scale because it is good for large groups.

D. Joseph must use a critical-incident method to individually assess each employee because

this method requires less documentation.

E. Joseph must use behaviorism because it helps in predicting behavior of an employee based

on his past experiences.

Behavioral observation scale (BOS) is easier than graphic rating scales and other types of
behavioral assessment methods. It is often preferred by managers and employees for its ease

of use, providing feedback, maintaining objectivity, and suggesting training needs.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

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43. Payne Corp. wants to assess the performance of its employees. It uses a questionnaire that has
a high fit with strategy, high validity, high reliability, moderate acceptability, and very high
specificity. Which of the following approaches to employee performance is being focused on by

this questionnaire?

A. Results

B. Quality

C. Behavioral

D. Comparative

E. Attribute

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

Table 10.1.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance

10-30
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44. In the context of methods for measuring performance, alternation ranking is a variation of _____
ranking.

A. simple

B. distributed

C. paired

D. attribute

E. scalar

Alternation ranking is a variation of simple ranking. In this method, the manager decides which

employee is best and crosses that person's name off the list. From the remaining names, the
manager selects the worst employee and crosses off that name. The process continues with the

manager selecting the second best, second worst, third best, and so on, until all employees

have been ranked.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

10-31
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45. Janet, a production manager, thinks management by objectives is a good way to measure
performance results of employees in an organization. However, her colleague, Ferdinand,
disagrees with her. Whose argument is correct and why?

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

B. Janet is right because managers and employees have to set their own goals independently.

C. Ferdinand is right because management by objectives can have negative consequences on


productivity.

D. Janet is right because results-oriented performance measurement is relatively easy to link to

the organization's goals.

E. Ferdinand is right because management by objectives focuses only on individual goals.

In this scenario, Janet is right because results-oriented performance measurement is relatively

easy to link to the organization's goals. Also, measuring results is often acceptable to both

employees and managers.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

10-32
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46. Paul is a manager at Firefly Corp., and he uses a rating approach to evaluate his employees. He
considers one employee at a time and circles a number or a word to signify the degree to
which that employee demonstrates a particular trait in the scale. Which of the following

approaches is Paul using to assess his employees?

A. Mixed-standard scale

B. Critical-incident approach

C. Graphic rating scale

D. Behavioral observation scale

E. Behaviorally anchored rating scale

The graphic rating scale method lists traits and provides a rating scale for each trait. The
employer uses the scale to indicate the extent to which the employee being rated displays the

traits. The rating scale may provide points to a circle (as on a scale going from 1 for poor to 5

for excellent), or it may provide a line representing a range of scores, with the manager marking
a place along the line.

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47. The _____ method of performance measurement uses several statements describing each trait
to produce a final score for that trait.

A. behaviorally anchored rating scale

B. mixed-standard scale

C. behavioral observation scale

D. graphic rating scale

E. behavior-response scale

The method of performance measurement that uses several statements describing each trait to

produce a final score for that trait is known as the mixed-standard scale.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 1 Easy
Topic: Methods for Measuring Performance

10-34
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48. Identify a true statement about the mixed-standard scale.

A. It is intended to define performance dimensions specifically using statements of behavior

that describe different levels of performance.

B. It uses several statements describing each trait to produce a final score for that trait.

C. It may use 15 behaviors to define levels of performance.

D. It lists traits and provides a rating scale for each trait.

E. It involves comparing each employee with each other employee to establish rankings.

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

that trait.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance

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49. The _____ performance management method requires managers to rate the frequency with
which an employee has exhibited a behavior during a rating period.

A. behaviorally anchored rating scale

B. behavioral observation scale

C. graphic rating scale

D. mixed-standard scale

E. forced-distribution scale

A behavioral observation scale (BOS) asks the manager to rate the frequency with which the

employee has exhibited the behavior during the rating period. These ratings are averaged to
compute an overall performance rating.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance

10-36
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50. James was recently made the manager of his department at Patches Inc., and he has to
evaluate his subordinates' behavior in the next two weeks. He is unsure if he should use the
behaviorally anchored rating scale (BARS) or the behavioral observation scale (BOS) to assess

their behavior. Which of the following characteristics of the two would help James decide the
scale that would be most appropriate for him to use?

A. A BARS asks the manager to rate the frequency with which the employee has exhibited the

behavior during the rating period.

B. A BOS discards many items in creating the rating scale.

C. A BOS uses many instances to specify the behaviors necessary for effective performance.

D. A BARS is represented by ease of use and maintains objectivity efficiently.

E. A BARS requires a large amount of information as compared to BOS.

While a behaviorally anchored rating scale (BARS) discards many examples in creating the

rating scale, a behavioral observation scale (BOS) uses many of them to define all behaviors
necessary for effective performance. A BOS asks the manager to rate the frequency with which

the employee has exhibited the behavior during the rating period.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 3 Hard
Topic: Methods for Measuring Performance

10-37
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51. Identify the statement that accurately characterizes behavioral approaches to performance
measurement.

A. They link the company's goals to the specific behavior required to achieve those goals.

B. They work well for complex jobs.

C. They provide little feedback on areas of improvement.

D. They have a low degree of validity and reliability.

E. They have a low degree of acceptability.

Behavioral approaches such as organizational behavior modification and rating scales can link

the company's goals to the specific behavior required to achieve those goals. Behavioral
methods can generate specific feedback, along with guidance in areas requiring improvements.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
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Topic: Methods for Measuring Performance

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52. Ray, the CEO of Textiles Inc., believes the goals of the company must be divided into smaller
departmental and individual goals, and the accomplishment of these smaller goals will result in
accomplishment of the bigger goals of the company. In the context of measuring performance

results, Ray's belief can be best justified using _____.

A. total quality management

B. the behavioral observational scale method

C. the critical-incident method

D. statistical quality control

E. management by objectives

Management by objectives is a system in which people at each level of the organization set
goals in a process that flows from top to bottom, so employees at all levels are contributing to

the organization's overall goals. These goals become the standards for evaluating each

employee's performance. In this scenario, Ray's belief can be best justified using management
by objectives.

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Topic: Methods for Measuring Performance

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53. Which of the following is an advantage of using the results-oriented performance
measurement?

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

B. They are relatively easy to link to the organization's goals.

C. They are generally more subjective than other kinds of performance measurement.

D. They are highly acceptable to employees, but not to managers.

E. They tend to be highly valid.

In general, evaluation of results can be less subjective than other kinds of performance

measurement. This makes measuring results highly acceptable to employees and managers
alike. Results-oriented performance measurement is also relatively easy to link to the

organization's goals.

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Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance

10-40
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54. Barry, a supervisor at Yenzen Hotels Inc., thinks self-appraisal is a valid measure of performance
appraisal. However, his colleague Vincent disagrees. Whose argument is most likely to be
correct and why?

A. Vincent is right because there are no disagreements between a manager and an employee
when self-appraisal is used.

B. Barry is right because self-rating is the most preferred source of performance appraisal
information.

C. Vincent is right because employees have a tendency to inflate their self-assessments.

D. Barry is right because self-appraisals serve as an ideal basis for administrative decisions.

E. Vincent is right because self-appraisals are important for a 360-degree performance


appraisal.

In this scenario, Vincent is right because employees have a tendency to inflate assessments of

their performance. Especially if the ratings will be used for administrative decisions,
exaggerating one's contributions has practical benefits.

AACSB: Reflective Thinking


Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information

10-41
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55. Fernando, a production manager at Wind Chimes Inc., thinks subordinates are unreliable
sources of performance appraisal information for evaluating the performance of managers.
However, Jose, the sales manager, thinks subordinates act as good sources of performance

appraisal information. Whose argument is most likely to be correct and why?

A. Jose is right because subordinates often have reliable information about a manager's
behavior toward employees.

B. Fernando is right because subordinates are often willing to say negative things about the

person to whom they report.

C. Jose is right because when feedback forms need subordinates' names on them, the

subordinates tend to give lower ratings to the manager.

D. Fernando is right because when managers receive ratings from their subordinates, the
employees have less power.

E. Jose is right because subordinate evaluations are most appropriate for strategic purposes.

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

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Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information

10-42
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56. James, the production manager of Zenfax Inc., thinks performance appraisal information from
peers is a less reliable source than other sources of information. However, Ron, a sales manager
in the company, thinks peers give valuable information for appraisal. Whose argument is most

likely to be correct and why?

A. James is right because information from peers does not add value to the assessment of
performance.

B. Ron is right because peers are comfortable rating employees for decisions that may affect

themselves.

C. James is right because peers fail to meet the expectations of bringing a different perspective

to the evaluation.

D. Ron is right because peers have expert knowledge of job requirements.

E. James is right because peers may not have enough opportunity to observe an employee in
day-to-day activities.

An employee's peers act as excellent sources of information because they have expert
knowledge of job requirements. They also bring a different perspective to the evaluation and

can provide extremely valid assessments of performance. In this scenario, Ron is right because

he thinks peers provide valuable information for appraisal.

AACSB: Reflective Thinking


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Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information

10-43
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57. Lydia, a supervisor at Sansen Inc., needs to appraise the performance of her subordinate,
Charlie. In the context of performance information, which of the following is the least biased
source of information for appraisal and why?

A. Peers are the least biased source of information for appraisal because they often
understand an employee better than superiors.

B. Managers are the least biased source of information for appraisal because their success
depends on the employee's productivity.

C. Customers are the least biased source of information for appraisal because employees are
often directly in contact with them.

D. A subordinate is the least biased source of information for appraisal because the power

relationships motivate a subordinate to provide honest information.

E. The employee himself because there is generally better agreement between an employee
and his or her supervisor.

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

on their subordinates' performance.

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Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 3 Hard
Topic: Sources of Performance Information

10-44
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58. For which of the following purposes is it most appropriate to use performance results when
making subordinate evaluations of performance?

A. Administrative

B. Investigative

C. Strategic

D. Developmental

E. Executive

When managers receive ratings from their subordinates, the employees have more power, so

managers tend to emphasize employee satisfaction, even at the expense of productivity.


Therefore, subordinate evaluations are most appropriate for developmental purposes.

AACSB: Analytical Thinking


Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 1 Easy
Topic: Sources of Performance Information

10-45
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59. Jonathan, a supervisor, needs to assess his subordinate's performance. He uses a method that
compares one employee with another. In doing so, he rates an exceptional employee as an
average performer by mistake. Jonathan's manager tells him that he can avoid this type of error

if he uses an assessment method that compares an employee with an objective standard rather
than another employee. In the context of types of rating errors, Jonathan commits the _____
error.

A. horns

B. contrast

C. leniency

D. halo

E. distributional

If a rater compares an individual, not against an objective standard, but against other

employees, contrast errors occur. A competent performer who works with exceptional people
may be rated lower than competent, simply because of the contrast. In this scenario, Jonathan

commits a contrast error.

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Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management

10-46
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60. Clayton, a supervisor, needs to rate the performance of 20 subordinates. He uses a rating scale
to rate them on a scale of 1 to 10. He rates 18 employees at 5, which leads to central tendency.
In the context of types of rating errors, Clayton commits the _____ error.

A. distributional

B. contrast

C. horns

D. statistical

E. halo

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

error is called central tendency when the rater puts everyone near the middle of the scale. In

this scenario, Clayton commits a distributional error.

AACSB: Knowledge Application


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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management

10-47
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61. Roberto, a manager at Z-Cart Inc., is asked by his manager to rate his subordinates'
performance. He needs to rate 30 employees on a scale that ranges from 1 to 10. He rates 25
employees with a score of 8. In doing so, Roberto commits a rating error. In the context of

types of rating errors, Roberto's mistake is called _____.

A. central tendency

B. halo error

C. horns error

D. leniency

E. statistical error

Raters make distributional errors when they tend to use only one part of a rating scale. The
error is called leniency when the reviewer rates everyone near the top, strictness when the rater

favors lower rankings. In this scenario, Roberto commits a leniency error.

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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management

10-48
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62. Jacinta, a production manager at Alphonso Inc., needs to evaluate the performance of her
employees. She asks her subordinate, June, to carry out this job. June uses a rating scale, which
ranges from 1 to 10, to rate 50 employees. She gives a score of 3 to 39 employees. In doing so,

June commits the _____ error.

A. mean inclination

B. strictness

C. central tendency

D. halo effect

E. statistical error

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

strictness error.

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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management

10-49
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63. When an employee evaluates his or her manager low on all performance criteria due to
dissatisfaction with the manager's disposition, the employee has most likely committed a(n)
_____.

A. error based on similarity

B. halo error

C. central tendency

D. horns error

E. contrast error

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

AACSB: Analytical Thinking


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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-50
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64. Name the rating error that leads employees to believe that no aspect of their performance
needs improvement.

A. Contrast error

B. Halo error

C. Horn error

D. Strictness error

E. Central tendency error

Raters often let their opinion of one quality color their opinion of others. When the bias is in a

favorable direction, this is called the halo error. A halo error can mistakenly tell employees they
don't need to improve in any area.

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Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-51
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65. Under which of the following circumstances is appraisal politics most likely to occur?

A. When top executives forbid distorted ratings

B. When the goals of rating are compatible with one another

C. When performance appraisal results are directly linked to developmental programs

D. When senior employees tell newcomers stories about distorted ratings

E. When performance appraisal is not directly linked to highly desirable rewards

Appraisal politics are most likely to occur when raters are accountable to the employee being
rated, the goals of rating are not compatible with one another, performance appraisal is directly

linked to highly desirable rewards, top executives tolerate or ignore distorted ratings, and
senior employees tell newcomers company "folklore" that includes stories about distorted

ratings.

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Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-52
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66. Paula, the CEO of Gester Inc., wants to carry out the first company-wide performance appraisal.
However, she needs to make sure that the information obtained for performance appraisal is
free of bias, and that the managers have provided information about subordinates without any

personal needs influencing the information. Which of the following options will be assist Paula
in obtaining her objective?

A. Paula must focus on obtaining information only from supervisors of employees being

appraised because managers have incentives for giving accurate information.

B. Paula must occasionally work alongside the employees to ensure that they are working

diligently.

C. Paula must personally question all the managers who appraise their subordinates in the

performance appraisal as this will ensure integrity of information.

D. Paula must devise a policy that focuses on confidentiality of appraisal information once it is

gathered from different sources because this will ensure security of information.

E. Paula must hold calibration meetings because they hold managers accountable for the
appraisal information they provide about their subordinates.

Organizations can minimize appraisal politics by establishing an appraisal system that is fair.

One technique is to hold a calibration meeting, a gathering at which managers discuss


employee performance ratings and provide evidence supporting their ratings with the goal of

eliminating the influence of rating errors.

AACSB: Reflective Thinking


Accessibility: Keyboard Navigation
Blooms: Analyze
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 3 Hard
Topic: Errors in Performance Management

10-53
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67. Identify a way in which an organization can promote fairness and reduce political behavior in
the appraisal system.

A. Use different performance standards to evaluate different employees.

B. Train managers to use the appraisal process.

C. Discourage employees from discussing their weaknesses.

D. Require that managers give feedback once a year during annual appraisal.

E. Encourage managers to recognize accomplishments that only employees have identified.

Organizations can minimize appraisal politics by establishing an appraisal system that is fair.

One technique is to hold a calibration meeting. The organization can also help managers give
accurate and fair appraisals by training them to use the appraisal process, encouraging them to

recognize accomplishments that the employees themselves have not identified, and fostering a

climate of openness in which employees feel they can be honest about their weaknesses.

AACSB: Analytical Thinking


Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-54
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68. Which of the following approaches to performance feedback is generally most effective?

A. Problem-solving

B. Tell-and-sell

C. Tell-and-listen

D. Tell-and-train

E. Listen-and-sell

In the "problem-solving" approach, managers and employees work together to solve


performance problems in an atmosphere of respect and encouragement. Research

demonstrates that the problem-solving approach is superior as compared to other methods.

AACSB: Analytical Thinking


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Blooms: Remember
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 1 Easy
Topic: Giving Performance Feedback

69. The _____ approach to performance feedback is used by most managers.

A. problem-solving

B. tell-and-sell

C. tell-and-listen

D. tell-and-train

E. listen-and-sell

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

AACSB: Analytical Thinking

10-55
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Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 1 Easy
Topic: Giving Performance Feedback

70. How can managers improve employee satisfaction with the feedback process?

A. By keeping the feedback session short and concentrating on only the positive aspects of

performance

B. By using the tell-and-sell approach during the feedback session

C. By avoiding decisions about following up on goals as these tend to intimidate the employee

D. By letting employees voice their opinions and discuss performance goals during the
feedback process

E. By focusing on the employee's personality

Managers can improve employee satisfaction with the feedback process by letting employees

voice their opinions and discuss performance goals.

AACSB: Analytical Thinking


Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 2 Medium
Topic: Giving Performance Feedback

10-56
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71. Roxanne, a new employee at Fenz Pharmaceuticals, has demonstrated low productivity for a
long period. Her manager evaluates her performance and finds that she requires more training
to improve her productivity. In the context of improving employee's performance, Roxanne

lacks _____.

A. required motivation

B. necessary abilities

C. accountability

D. ethical values

E. integrity

In this scenario, Roxanne lacks the necessary abilities to perform her job because her manager
finds that she needs more training to improve her productivity. When a motivated employee

lacks knowledge, skills, or abilities in some area, the manager may offer coaching, training, and

more detailed feedback.

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Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 3 Hard
Topic: Finding Solutions to Performance Problems

10-57
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72. Jim, a sales manager at Elexon Inc., finds that Bill, a salesman, lacks motivation to perform well
in his job. In the context of finding solutions to performance problems, which of the following is
the right way to deal with this situation?

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

B. Jim must warn Bill that he will be demoted if his performance continues to be poor.

C. Jim must ask Bill to learn from salespeople who perform better than he does.

D. Jim must counsel Bill to help him understand the factors that are affecting his motivation.

E. Jim must ask Bill to take a vacation to think about what is causing his lack of motivation.

Managers with an unmotivated employee can explore ways to demonstrate that the employee
is being treated fairly and rewarded adequately. The solution may be as simple as more positive

feedback (praise). Employees may need a referral for counseling or help with stress

management. In this scenario, Jim must counsel Bill to help him understand the factors that are

affecting his motivation.

AACSB: Knowledge Application


Accessibility: Keyboard Navigation
Blooms: Apply
Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 3 Hard
Topic: Finding Solutions to Performance Problems

10-58
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73. Mathew was an employee at Bolton Inc., and he was dismissed for poor performance. He filed a
lawsuit against Bolton Inc. on the grounds of unjust dismissal. Which of the following is likely to
be a reason for Mathew's claim?

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

B. Mathew was dismissed after he complained to senior management about his manager's
unethical practices.

C. Mathew's manager did not think he had the skills required for the job.

D. Mathew's manager refused to restructure the job to fit Mathew's capabilities.

E. Mathew was not given rewards by his manager when he did not perform his tasks

efficiently.

With regard to lawsuits filed on the grounds of unjust dismissal, the usual claim is that the

person was dismissed for reasons besides the ones that the employer states. In this type of

situation, courts generally focus on the employer's performance management system, looking
to see whether the firing could have been based on poor performance. To defend itself, the

employer would need a performance management system that provides evidence to support

its employment decisions.

AACSB: Reflective Thinking


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

10-59
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McGraw-Hill Education.
74. How can an organization protect itself against discrimination and unjust dismissal lawsuits?

A. The organization should provide for a review of all top performance ratings by senior

managers.

B. Performance measures should evaluate personal traits.

C. Requirements for job success should be clearly communicated to employees.

D. The organization should use a single rater to rate all the employees.

E. The organization should dismiss poor performers.

To protect against discrimination or unjust dismissal lawsuits, it is important to have a legally

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

AACSB: Analytical Thinking


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

10-60
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75. Gary, the CEO of Zansofel Inc., believes in providing employees with a flexible and open
environment to enhance their skills and growth in the company. In the context of performance
management and ethical issues associated with it, which of the following would Gary most likely

oppose and why?

A. He would oppose calibration meetings because they question the integrity of performance
appraisal information provided by managers.

B. He would oppose 360-degree appraisal because it gathers information from colleagues and

subordinates, which can make the employees self-conscious.

C. He would be against having a legally defensible performance management system because

it focuses on scrutinizing employees who file a case against the company.

D. He would be against electronic monitoring systems because they make the employees feel
like robots and that they are being watched.

E. He would be against top management carrying out performance appraisal of employees

because it may lead to appraisal politics.

In this scenario, Gary would oppose electronic monitoring systems. Although electronic

monitoring can improve productivity, it also generates privacy concerns. Critics point out that

an employer should not monitor employees when it has no reason to believe anything is
wrong. They complain that monitoring systems threaten to make the workplace an electronic

sweatshop in which employees are treated as robots, robbing them of dignity.

AACSB: Reflective Thinking


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

10-61
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McGraw-Hill Education.
Essay Questions

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

The first two steps of the process involve identifying what the company is trying to accomplish
(its goals or objectives) and developing employee goals and actions to achieve these outcomes.

Typically the outcomes benefit customers, the employee's peers or team members, and the
organization itself. The goals, behaviors, and activities should be measurable and become part
of the employee's job description.

Step three in the process—organizational support—involves providing employees with training,


necessary resources and tools, and ongoing feedback between the employee and manager,

which focuses on accomplishments as well as issues and challenges that influence performance.
For effective performance management, both the manager and the employee have to value

feedback and exchange it on a regular basis—not just once or twice a year. Also, the manager

needs to make time to provide ongoing feedback to the employee and learn how to give and
receive it.
Step four involves evaluating performance; that is, when the manager and employee discuss
and compare targeted goals and supporting behavior with actual results. This step includes the

annual formal performance review.

The final steps of the performance management process involve both the employee and
manager identifying what the employee can do to capitalize on performance strengths and
address weaknesses (step 5) and providing consequences for achieving (or failing to achieve)

performance outcomes (such as pay increases, bonuses, or action plans) (step 6). This includes

identifying training needs; adjusting the type or frequency of feedback the manager provides to
the employee; clarifying, adjusting, or modifying performance outcomes; and discussing

behaviors or activities that need improvement.

AACSB: Analytical Thinking


Blooms: Understand

10-62
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McGraw-Hill Education.
Learning Objective: 10-01 Identify the activities involved in performance management.
Level of Difficulty: 2 Medium
Topic: The Process of Performance Management

10-63
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McGraw-Hill Education.
77. Discuss the various purposes of performance management systems.

Organizations establish performance management systems to meet three broad purposes:


strategic, administrative, and developmental.
Strategic purpose: It means effective performance management helps the organization achieve
its business objectives. It does this by helping to link employees' behavior with the

organization's goals. Performance management starts with defining what the organization
expects from each employee. It measures each employee's performance to identify where those
expectations are and are not being met. This enables the organization to take corrective action,

such as training, incentives, and discipline.

Administrative purpose: This refers to the ways in which organizations use the system to
provide information for day-to-day decisions about salary, benefits, and recognition programs.
Performance management can also support decision making related to employee retention,

termination for poor behavior, and hiring or layoffs. Because performance management

supports these administrative decisions, the information in a performance appraisal can have a
great impact on the future of individual employees. Managers recognize this, which is the

reason they may feel uncomfortable conducting performance appraisals when the appraisal
information is negative and, therefore, likely to lead to a layoff, disappointing pay increase, or

other negative outcome.


Developmental purpose: It serves as a basis for developing employees' knowledge and skills.

Even employees who are meeting expectations can become more valuable when they hear and
discuss performance feedback. Effective performance feedback makes employees aware of their

strengths and areas in which they can improve. For performance feedback to serve a
developmental purpose, managers should adjust their approach to the level of performance.

For a high-performing employee, the manager should open up a conversation about the

employee's ambitions and the organization's developmental opportunities, so the employee


sees an inviting career path. Employees who are falling short in some areas will require an effort
to uncover the source of poor performance. Even among employees meeting standards,

managers should identify areas for future growth.

10-64
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McGraw-Hill Education.
AACSB: Analytical Thinking
Blooms: Understand
Learning Objective: 10-02 Discuss the purposes of performance management systems.
Level of Difficulty: 2 Medium
Topic: Purposes of Performance Management

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

Performance measures should fit with the organization's strategy by supporting its goals and

culture. Performance measures should be valid, so they measure all the relevant aspects of
performance and do not measure irrelevant aspects of performance. These measures should

also provide interrater and test-retest reliability, so that appraisals are consistent among raters
and over time. Performance measurement systems should be acceptable to the people who use

them or receive feedback from them. Finally, a performance measure should specifically tell
employees what is expected of them and how they can meet those expectations.

AACSB: Analytical Thinking


Blooms: Understand
Learning Objective: 10-03 Define five criteria for measuring the effectiveness of a performance management system.
Level of Difficulty: 2 Medium
Topic: Criteria for Effective Performance Management

10-65
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McGraw-Hill Education.
79. Distinguish between behavioral observation scales (BOS) and behaviorally anchored rating
scales (BARS).

While a behaviorally anchored rating scale (BARS) discards a large number of the behaviors that
exemplify effective or ineffective performance, a behavioral observation scale (BOS) uses many
of them to specifically define all the behaviors that are necessary for effective performance.

Also, rather than assessing which behavior best reflects an individual's performance, BOS
requires managers to rate the frequency with which the employee has exhibited each behavior
during the rating period.

AACSB: Analytical Thinking


Blooms: Understand
Learning Objective: 10-04 Compare the major methods for measuring performance.
Level of Difficulty: 2 Medium
Topic: Methods for Measuring Performance

10-66
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McGraw-Hill Education.
80. List the advantages and disadvantages of using managers, peers, subordinates, self, and
customers as sources of performance information.

(1) Managers: Advantages: Supervisors have extensive knowledge of the job requirements and
the opportunity to observe their employees; they have an incentive to provide accurate and
helpful feedback since their own success depends so much on their employees' performance;

and when managers try to observe employee behavior or discuss performance issues in the
feedback session, their feedback can improve performance and employees tend to perceive the
appraisal as accurate. Disadvantages: In some jobs, the supervisor may not have enough

opportunity to observe the employee performing job duties.

(2) Peers: Advantages: Peers are an excellent source of information about performance where
the supervisor does not often observe the employee, such as law enforcement and sales; peers
have expert knowledge of job requirements; and they bring a different perspective to the

evaluation and can provide an extremely valid assessment of performance. Disadvantages:

Friendships have the potential to bias ratings, although research has provided little evidence
that this is a problem; and peers are uncomfortable rating themselves and others for

administrative decision-making purposes.


(3) Subordinates: Advantages: For evaluating the performance of managers, subordinates are

an especially valuable source of information, as they often have the best chance to see how well
a manager treats employees. Disadvantages: Subordinates may be reluctant to say negative

things about the person to whom they report; when required to identify themselves,
subordinates tend to give managers higher ratings; and given the power employees have in this

type of evaluation, managers tend to emphasize employee satisfaction, even at the expense of
productivity.

(4) Self: Advantages: No one has a greater chance to observe the employee's behavior than the

employee himself or herself, and it is useful to get employees thinking about their performance
before the feedback session. Disadvantages: Individuals have a tendency to inflate assessments
of their performance, especially when used for administrative decisions; people tend to blame

outside circumstances for their failures while taking a large part of the credit for their successes;
and self-appraisals are not appropriate for administrative decision-making.
(5) Customers: Advantages: Services are often produced and consumed on the spot, so the

10-67
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customer is often the only person who directly observes the service performance and may be

the best source of performance information. Using customer evaluations of employee


performance is appropriate in two situations. The first is when an employee's job requires direct
service to the customer or linking the customer to other services within the organization.

Second, customer evaluations are appropriate when the organization is interested in gathering
information to determine what products and services the customer wants. Disadvantages:
Customer surveys are expensive, and as a result, many organizations limit the information
gathering to short periods of once a year.

AACSB: Analytical Thinking


Blooms: Understand
Learning Objective: 10-05 Describe major sources of performance information in terms of their advantages and disadvantages.
Level of Difficulty: 2 Medium
Topic: Sources of Performance Information

10-68
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McGraw-Hill Education.
81. Describe the types of rating errors that influence performance evaluation, and explain the ways
in which they can be minimized.

Several kinds of errors and biases commonly influence performance measurements. People
observe behavior often without a practical way of knowing all the relevant circumstances and
outcomes, so they necessarily interpret what they see. A common tendency is to give higher

evaluations to people we consider similar to ourselves. If the rater compares an individual, not
against an objective standard, but against other employees, contrast errors occur.
When a rater uses only a part of the rating scale, it is called a distributional error. Giving all

employees ratings at the high end of the scale is called leniency. Rating everyone at the low

end of the scale is called strictness. Rating all employees at or near the middle is called central
tendency.
Raters often let their opinion of one quality color their opinion of others. The halo error refers

to rating employees positively in all areas because of strong performance observed in one area.

The horns error refers to rating employees negatively in all areas because of weak performance
observed in one area.

AACSB: Analytical Thinking


Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-69
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McGraw-Hill Education.
82. Briefly describe a calibration meeting.

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

discuss ratings and the ways they arrive at ratings, managers may identify undervalued
employees, notice whether they are much harsher or more lenient than other managers, and
help each other focus on how well ratings are associated with relevant performance outcomes.

AACSB: Analytical Thinking


Blooms: Understand
Learning Objective: 10-06 Define types of rating errors, and explain how to minimize them.
Level of Difficulty: 2 Medium
Topic: Errors in Performance Management

10-70
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McGraw-Hill Education.
83. List the ways in which a performance feedback session can be improved.

Possible answers include:

(1) Managers can take any of the three approaches during the feedback session: tell-and-sell,
tell-and-listen, or problem solving. Most managers use the tell-and-sell approach. The most
effective approach is usually the problem-solving approach.

(2) Make feedback a common practice—Feedback should be timely so employees understand


what behaviors and performance outcomes it relates to. This means feedback should not be
limited to formal appraisals.

(3) Let employees voice their opinions and discuss performance goals.
(4) Focus on problem solving.
(5) Talk about behavior and results, not about personalities—Especially when feedback is about
negative performance, it is essential for the manager's words to distinguish between the person

and his or her behavior. Do not use words like, "You're not motivated," instead, talk about
results: "You did not meet the deadline that you agreed to."

(6) Keep criticism to a minimum.


(7) Agree to specific goals and a follow-up meeting.

AACSB: Analytical Thinking


Blooms: Understand
Learning Objective: 10-07 Explain how to provide performance feedback effectively.
Level of Difficulty: 2 Medium
Topic: Giving Performance Feedback

10-71
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McGraw-Hill Education.
84. Suggest the different means by which an employee's unsatisfactory performance can be
improved.

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

needed. The type of action called for depends on what the employee lacks. For an employee
who is motivated but lacks ability, the manager should provide coaching and training, give
detailed feedback about performance, and consider restructuring the job. For an employee who

has the ability but lacks motivation, the manager should investigate whether outside problems

are a distraction and if so, refer the employee for counseling. If the problem has to do with the
employee's not feeling appreciated or rewarded, the manager should try to deliver more praise
and evaluate whether additional pay and other rewards are appropriate. For an employee

lacking both ability and motivation, the manager should consider whether the employee is a

good fit for the position. Specific feedback or withholding rewards may spur improvement, or
the employee may have to be demoted or terminated. As a rule, employees who combine high

ability with high motivation are solid performers. Managers should by no means ignore these
employees on the grounds of leaving well enough alone. Rather, such employees are likely to

appreciate opportunities for further development. Rewards and direct feedback help to
maintain these employees' high motivation levels.

AACSB: Analytical Thinking


Blooms: Remember
Learning Objective: 10-08 Summarize ways to produce improvement in unsatisfactory performance.
Level of Difficulty: 2 Medium
Topic: Finding Solutions to Performance Problems

10-72
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McGraw-Hill Education.
85. Identify the measures that a company should take to ensure a legally defensible performance
management system.

1) The system should be based on valid job analyses, with the requirements clearly
communicated to employees.
2) Performance management should evaluate behaviors or results, not traits.

3) The organization should use multiple raters and train raters in how to use the system.
4) The organization should provide for a review of all performance ratings by upper-level
managers and set up a system for employees to appeal when they believe they were evaluated

unfairly.

5) Along with feedback, the system should include a process for coaching or training
employees to help them improve, rather than simply dismissing poor performers.

AACSB: Analytical Thinking


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

10-73
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.