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Stone 4e TB ch08 Notes PDF
Stone 4e TB ch08 Notes PDF
Testbank
to accompany
Managing Human
Resources, 4th Edition
by Raymond J. Stone
Prepared by
Andrew Zur, University of Melbourne
Chapter 8
Appraising and managing performance
Multiple choice questions - Factual
General Feedback:
Page 306. Learning Objective 1. Factual. Performance management is a means to try to see that
employees are performing in line with the strategic direction of the organisation.
2. Unions are critical of pay for performance systems and performance appraisals on the grounds
that:
a. performance can never be accurately measured and therefore difficult to reward objectively.
b. such systems discriminate and create inequities amongst the lowest paid and poorly organised
employees.
c. the industrial relations tribunals cannot intervene in these new forms of wage setting systems.
*d. this promotes a competitive culture, coerces higher output and promotes management by
control.
General Feedback:
Page 307. Learning Objective 1. Factual. Unions strongly oppose performance appraisals and
pay for performance because it focuses on individual behaviour and that is against the collective
thrust of unions.
3. One of the major weaknesses of the team approach to appraising performance is:
General Feedback:
Page 322. Learning Objective 2. Factual. When individual contribution to the team's result is
difficult to identify, this may offer the less conscientious group members the opportunity to
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 2
engage in 'social loafing'. This occurs when team members make less of an effort when they are
part of a group relying on the more diligent members to compensate for their laziness.
General Feedback:
Page 340. Learning Objective 4. Factual. It is vital that a manager carefully prepares for the
performance review discussion. This would include listing the key points to be discussed in the
interview. However, focussing on absences, reviewing the employee's performance with their
peers or ignoring past reviews is not appropriate.
5. Research by Jawahar and Williams found that managers who know they are rating employees
for administrative purposes only:
*a. are likely to be more lenient than when evaluating employment for research, feedback or
employment development purposes.
b. are likely to be more severe than when evaluating employment for research, feedback or
employment development purposes.
c. will rely more on the advice of the HR department than that of peers.
d. will rely less on the advice of the HR department than that of peers.
General Feedback:
Page 323. Learning Objective 3. Factual. The evidence suggests that when managers know they
are evaluating performance for a merit increase or a promotion then they are likely to be more
lenient and less accurate than when they are assessing performance for such reasons as employee
development.
6. In appraisal the problem that occurs when a supervisor's rating of a subordinate on one factor
biases the supervisor on all other factors is known as:
General Feedback:
Page 323. Learning Objective 3. Factual. The 'halo effect' occurs when a supervisor performance
appraisal rating on one factor influences the rating on other factors.
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 3
General Feedback:
Page 341. Learning Objective 5. Factual. Based on US legal precedent there are a number of
factors which would help organisations defend their appraisal systems: the system should be
developed using job analysis, it should be behaviour rather than trait-oriented, managers require
detailed instructions and training on how to manage the system, results must be communicated to
employees and there needs to be a provision for appeals.
a. peer appraisal.
b. probationary review.
*c. 360-degree feedback.
d. subordinate evaluation.
General Feedback:
Page 319. Learning Objective 2. Factual. 360-degree evaluations involve seeking feedback from
a range of sources including colleagues, superiors, customers and subordinates. This is popular in
organisations with teams, TQM and employee involvement programs.
a. Rater errors
b. Prejudice
*c. Poor management attitude
d. Leniency/strictness bias
General Feedback:
Page 322. Learning Objective 3. Factual. Unfortunately, when managers are not committed to
the performance appraisal system, it is likely to become a form-filling exercise and therefore
lacking in credibility and utility.
10. When managers give everyone an average or acceptable rating in performance evaluations,
this is known as:
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 4
General Feedback:
Page 323. Learning Objective 3. Factual. Central tendency is a common error that occurs when
each employee is incorrectly rated near the average of the middle of the scale.
11. The major types of performance appraisal include all of the following except:
a. ranking.
b. grading.
c. critical incidents.
*d. sliding scales.
General Feedback:
Page 327-29. Learning Objective 4. Factual. Sliding scales is not a performance appraisal
system.
General Feedback:
Page 318. Learning Objective 2. Applied. A sure indication of how effective managers are in
conducting appraisals of staff is to get their subordinates to evaluate their performance.
13. When a manager records occurrences or incidents of employee job behaviour which highlight
good or bad job performance they are using which method of performance appraisal?
General Feedback:
Page 330. Learning Objective 4. Factual. The critical incidents system is based on using
examples of employee behaviour that illustrate effective or ineffective performance in the job.
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 5
General Feedback:
Page 329. Learning Objective 4. Factual. This performance appraisal method combines elements
of traditional rating scales and the critical incident method.
15. A performance appraisal system which uses critical incidents to develop a list of desired
behaviours needed to successfully perform a specific job is:
General Feedback:
Page 330. Learning Objective 4. Factual. In the behaviour observation scale system employees
are evaluated by their managers on the basis of how often they demonstrate the desired
behaviours in the job.
16. When managers are asked to describe in their own words the employees' performance,
covering the quantity and quality of work performed, job know-how, human relations skills, etc.,
they are engaging in a type of appraisal system known as:
a. grading.
*b. essay description.
c. critical incidents.
d. assessment centres.
General Feedback:
Page 330. Learning Objective 4. Factual. The essay description is a written statement by a
manager describing an employee's strengths, weaknesses, past performance and future
development.
17. When a manager and subordinate mutually identify common goals, define the subordinate's
major areas of responsibility in terms of expected results, and use these measures in assessing the
subordinate's performance, they are most likely engaging in:
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c. critical incident.
*d. management by objectives.
General Feedback:
Page 331. Learning Objective 4. Factual. MBO involves setting specific measurable goals with
each employee and then periodically reviewing the progress made.
18. A survey of US managers found that one of the major managerial stressors was:
a. a lack of top managerial support for the decisions being made lower in the organisation.
b. poor attitudes by senior managers to occupational health and safety concerns.
c. the inability to reward individuals who had performed outstanding service for the organisation.
*d. the need for evaluating their staff members' performance.
General Feedback:
Page 315. Learning Objective 2. Factual. One of the tasks that managers dislike more than any
other is the need to evaluate the performance of their staff.
19. A study by the Australian Institute of Management in Western Australia found that the major
disincentive to productivity was attributable to:
a. employers clearly discriminating between superior and poor performers in the application of
rewards.
*b. everyone getting the same pay rise regardless of how hard they work.
c. employers linking rewards to the achievement or non-achievement of performance appraisal
objectives.
d. only outstanding performers receiving pay increases.
General Feedback:
Page 313. Learning Objective 2. Factual. To motivate improved performance, it is important that
employers discriminate between high achievers and poor performers and that those employees
who have contributed the most to the achievement of strategic objectives receive the highest pay
increases or bonuses. Paying everyone the same amount is demotivating to high achievers.
20. In which of the following countries, in the matter of performance appraisal, do employees
prefer a greater degree of ambiguity, do not want their weaknesses discussed and want appraisal
results kept secret?
a. China
b. North America
c. Australia
*d. Japan
General Feedback:
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Page 316. Learning Objective 2. Factual. Japanese employees are most concerned that details of
their performance not be publicised for fear of loss of face.
a. Teams
b. Colleagues
c. A group consisting of the supervisor, peers, subordinates and customers
*d. The immediate supervisor.
General Feedback:
Page 317. Learning Objective 2. Factual. In the vast majority of cases, the immediate supervisor
is the person responsible for the conduct of performance appraisals.
22. Which of the following is a problem associated with using self-evaluation in performance
appraisals?
a. Strictness
b. Central tendency
c. Commonality between self-ratings and ratings by the supervisor
*d. Leniency.
General Feedback:
Page 318. Learning Objective 2. Factual. Unfortunately, one of the disadvantages of employees
evaluating their own performance is that they tend to inflate their ratings.
23. The forced distribution scheme is a refinement of which performance appraisal system?
*a. Grading
b. Critical incidents
c. Graphic scales
d. Behaviourally anchored rating scales.
General Feedback:
Page 327. Learning Objective 3. Factual. Forced distribution is a refinement of the grading
system where a fixed percentage of employees are allocated to each grade, thereby overcoming
some of the problems associated with negative bias, leniency or central tendency.
24. For evaluating employees, those organisations employing total quality management (TQM)
concepts are increasingly using:
a. subordinate evaluation.
b. supervisor evaluation.
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 8
General Feedback:
Page 318. Learning Objective 2. Factual. One of the characteristics of TQM is its reliance on
some form of peer evaluation.
25. The performance management technique that evaluates organisational performance in the
four key areas of people, internal operations, customer satisfaction and financial is known as:
a. management by objectives.
b. SMART objectives.
*c. balanced scorecard.
d. behaviour observation scales.
General Feedback:
Page 331. Learning Objective 4. Factual. The balanced scorecard evaluates organisational
performance in four areas, with objectives and performance measures set for each area.
General Feedback:
Page 331. Learning Objective 4. Factual. Some organisations employ SMART objectives to
make management by objectives easier to understand.
27. Rapid change, tighter budgets, downsizing and restructuring, and pressures for greater
accountability are placing greater emphasis on:
a. employee selection.
*b. performance management.
c. participative management.
d. employee empowerment.
General Feedback:
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 9
Page 306. Learning Objective 1. Applied. Increasing competitiveness and economic pressures
means that there is a greater emphasis on performance management and translating overall
organisational strategic objectives into individual job objectives and performance standards.
28. The evaluation of organisational and employee performance permits managers to:
a. monitor the skills of employees and ensure they are regularly updated.
b. determine the need for organisational restructuring and process re-engineering.
*c. check that strategic business objectives are valid, are being successfully communicated
throughout the organisation and are being achieved.
d. ensure that rewards and benefits provided for employees are appropriate and equitable.
General Feedback:
Page 306. Learning Objective 1. Applied. Performance management enables managers to
evaluate whether organisational objectives have been adequately communicated and are being
translated into individual goals and performance.
29. An essential factor in determining the overall value of 360-degree feedback is:
a. the willingness of employees to give an open and honest assessment of their supervisors.
b. the extent to which HR managers are permitted to conduct the necessary interviews with all
staff.
*c. the follow up on the required training and development activities identified by the feedback.
d. how the results compare with benchmarks established in international studies of 360-degree
feedback.
General Feedback:
Page 319. Learning Objective 2. Applied. A measure of success of a 360-degree appraisal system
is the extent to which it initiates training and development activities identified by the feedback.
30. While research suggests that managers can discriminate between performing and non-
performing employees, the managers' ratings will not necessarily reflect their actual judgements
because:
a. the time and effort taken to complete the reviews causes managers to make mistakes in
assessment.
b. employees will put pressure onto managers to give them favourable appraisals.
c. they are keen to protect their own reputations with senior management levels.
*d. they often distort their evaluations when completing performance appraisal forms.
General Feedback:
Page 322. Learning Objective 3. Applied. The validity and accuracy of managers' ratings of their
subordinates may be adversely affected by a number of influences and it is important that they
are aware of this.
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31. All of the following except _________ should be primary objectives of performance
appraisal.
a. development
*b. judgement
c. feedback
d. reward.
General Feedback:
Page 314-15. Learning Objective 2. Applied. Performance appraisal shouldn't focus on judging
past behaviour but rather on examining how the employee can improve future performance, grow
and develop.
General Feedback:
Page 314. Learning Objective 2. Applied. A seniority payment is based on the number of years
served with the organisation and is thus unrelated to merit or performance.
General Feedback:
Page 318. Learning Objective 2. Applied. Upward appraisal may improve employee satisfaction
with the process as they can shed light on the strengths and weaknesses of their superior's
managerial performance.
a. ensure that employees are not subject to peer pressure to not participate.
b. provide constructive and timely feedback to those employees who have taken part.
c. allow employees plenty of time to complete the evaluation and to make amendments if
necessary.
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*d. ensure that everyone clearly understands who will see the results and what will be done with
the information.
General Feedback:
Page 319. Learning Objective 2. Applied. To implement upward appraisal effectively, it is
important that participants are informed as to who will view the results and that they are given
reassurances that some action will ensue.
35. Which of the following statements is NOT an advantage of 360-degree feedback systems?
General Feedback:
Page 321. Learning Objective 2. Applied. 360-degree appraisals have the disadvantage of being
time consuming and administratively complex.
36. One of the major problems with the ranking system for evaluating performance is that it:
General Feedback:
Page 327. Learning Objective 4. Applied. The ranking system can make it very difficult to
discriminate between those performers in the middle of the ranking and does not give any
indication as to why one performer is superior to another.
General Feedback:
Page 321. Learning Objective 2. Applied. Although multi-source evaluations are able to
effectively identify development needs, there is no guarantee that development plans will be
carried out.
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38. Performance review discussions can be stressful and unpleasant because managers:
General Feedback:
Page 315. Learning Objective 2. Applied. Unfortunately, both managers and subordinates can
find the performance review discussion very stressful and this in part may be due to inadequate
preparation by the reviewer.
39. Just before appraisal time an employee submits an outstanding piece of work. If the
supervisor is heavily influenced by this piece of work it is known as:
a. halo effect.
b. prejudice.
c. leniency/strictness bias.
*d. recency effect.
General Feedback:
Page 324. Learning Objective 3. Applied. The recency effect occurs when a manager's
perception of performance is distorted by recent events without sufficient reference to the rest of
the performance review period.
40. Many traditional performance appraisal systems place emphasis on subjective criteria such
as:
General Feedback:
Page 324. Learning Objective 3. Applied. A study by Nankervis and Leece found that
subjectivity was one of the most commonly reported difficulties with performance appraisals.
41. The performance criteria against which performance is measured is determined by:
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 13
General Feedback:
Page 326. Learning Objective 3. Applied. Although subjective criteria are best avoided in
performance appraisal, ultimately the criteria used will be guided by the culture of the
organisation and the type of job being assessed. Thus it is common for many organisations to use
a combination of subjective and objective criteria.
General Feedback:
Page 334. Learning Objective 4. Applied. An effective appraisal program should be dynamic;
that is, it should be setting new goals and emphasising employee growth and development. Static
appraisals focus on critiquing and judging past actions.
43. Which of the following statements about the role of goal-setting in performance appraisal is
LEAST likely to be correct?
a. The setting of specific goals is more likely to lead to higher performance than simply telling an
employee to 'do your best'.
*b. Goals that are perceived to be easy to achieve tend to result in better performance than goals
that are perceived as difficult.
c. Employee participation in goal-setting tends to lead to higher goals being set than when the
manager unilaterally sets the goals.
d. Frequent performance feedback results in higher performance.
General Feedback:
Page 336. Learning Objective 4. Applied. In fact, goals that are perceived to be difficult to
accomplish or require stretch tend to result in better performance than when goals are perceived
to be easy (as long as the goals have been mutually agreed upon).
General Feedback:
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 14
Page 310. Learning Objective 2. Applied. Where rewards linked to the performance appraisal
scheme are applied inconsistently or do not appear fair, then the credibility of the overall system
can be compromised.
45. Recent research suggests that when managers are required to account for their performance
appraisal ratings in person (as opposed to in writing):
General Feedback:
Page 316. Learning Objective 2. Applied. It has been suggested that when the manager and
subordinate meet face-to-face to discuss the performance review and the appraisal ratings, then it
is likely that the resultant ratings will more accurately reflect actual performance.
*a. Attendance
b. Attitude
c. Cooperation
d. Dependability
General Feedback:
Page 325. Learning Objective 3. Applied. Attendance is an objective performance indicator.
General Feedback:
Page 325. Learning Objective 3. Applied. Apparent universal application to all jobs and can use
the same evaluation sheet for all employees are advantages of the subjective performance
appraisal method.
48. In a 360-degree performance appraisal, identify an 'external customer' that the HR manager
seeks information from.
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 15
b. Employees
c. CEO
*d. Trade union officials
General Feedback:
Page 320. Learning Objective 2. Applied. University representative, professional association
representatives, suppliers of services, employer association representatives, trade union officials,
industrial tribunal representatives, and HRM counterparts are examples of 'external customers'.
49. In a 360-degree performance appraisal, identify an 'internal customer' that the HR manager
seeks information from.
a. University representatives
b. Suppliers of services
*c. CEO
d. Industrial tribunal representatives
General Feedback:
Page 320. Learning Objective 2. Applied. Union shop stewards, employees, subordinates, board
of directors, CEO, functional managers, and other managers are examples of 'internal customers'.
General Feedback:
Page 320. Learning Objective 2. Applied. Numeric feedback is perceived as more specific, easy
to read and helpful with clearly identifying strengths and weaknesses.
Essay questions
51. Critically discuss the role that job analysis has in the design of an effective performance
appraisal process.
Correct Answer:
Page 306-11. There is a close link between job analysis and the design of an effective
performance evaluation system. The job analysis will set the parameters of the position and the
person for the job in question and will result in a job description outlining the requirements of
the position and a job specification that will outline the requirements looked for in the person to
fill a position. A performance evaluation system can only be effective if it seeks to measure in an
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 16
objective manner the behaviours of the person in the job and it is the job description that will
determine what these expected responsibilities are against which performance can be measured.
52. Identify the characteristics of performance management and examine how this approach
differs from performance appraisal.
Correct Answer:
Page 306-9. There is often a lot of confusion about the difference between performance
management and performance appraisal and to many people they mean the same thing. However,
performance management is a much broader concept than performance appraisal and is
concerned more with strategic planning issues and is aimed at improving the performance of the
organisation as a whole and/or its major functional units. It may incorporate many of the major
HR functions. Performance appraisal on the other hand focuses on the individual and measures
that are used to assess how this individual is performing against a set of predetermined criteria.
In this sense performance appraisal is a subset of the performance management system.
53. Critically discuss the role of constructive feedback in the performance review discussion.
Correct Answer:
Page 315-16. The performance review discussion should be a positive experience for both the
appraiser and appraisee and not a stressful situation. The stressful outcomes are less likely to
occur if the appraiser has used an instrument in reviewing performance that gives an objective
assessment of job-related behaviour. In the discussion problems should be discussed as problems
not criticisms. Moreover, the appraiser must allow the person being evaluated to talk and to
express their views and feelings about the assessment under consideration. The feedback will be
more objective if performance improvement goals are jointly agreed-upon, and should focus on
only those things in the job which can be changed.
54. Discuss the importance of goal setting in employee motivation and performance
improvement.
Correct Answer:
Page 336-37. Employee motivation and performance are improved if the employee clearly
understands and is challenged by what is to be achieved. Research has indicated that the setting
of specific goals is more likely to lead to higher performance than simply telling employees in
general terms what is expected; goals that are perceived to be difficult to achieve tend to produce
better performance than easier to achieve goals; employee participation in goal setting has
positive effects; and frequent feedback on the achievement (or non-achievement) of goals results
in higher performance.
Correct Answer:
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 17
Page 311-16. There are four main objectives of an appraisal system. Firstly, it must be able to
differentiate between the performance of individuals. Those who are contributing to the
achievement of goals must be able to be distinguished from those who are not contributing.
Secondly, to encourage performance those who are achieving goals must be able to be rewarded
otherwise there will be no motivation to perform. Thirdly, a performance review should identify
those areas of activity where an employee could benefit from development. To this end reviews
need to be forward thinking and not only reflecting on the past. Finally, a critical goal of
appraisal is to provide meaningful and objective feedback on how well the employee is
performing and this is often achieved through a regular performance review interview.
56. Identify and discuss rater errors that arise in performance appraisal.
Correct Answer:
Page 323-25. Rater errors include the halo effect (a problem that occurs during performance
appraisal, when a supervisor's rating of a subordinate on one factor biases the rating of that
person on other factors), central tendency (occurs when every employee is incorrectly rated near
the average or middle of the scale), strictness bias (occurs when employees are rated lower than
their performance justifies), prejudice (where a manager demonstrates a positive or negative
bias), the recency effect (the use of most recent events to evaluate employee performance instead
of using a longer, more comprehensive time frame), and relationship effect (occurs where the
nature of the superior/subordinate relationship influences a performance rating).
© John Wiley & Sons Australia, Ltd 2013 Chapter 8 Appraising & managing performance 18