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Master of Business Administration-MBA Semester IV

Subject Code – MU0007
Subject Name – Performance Management and Appraisal
2 Credits
(Book ID: B0934)
Assignment Set- 1 (30 Marks)
Note: Each question carries 10 Marks. Answer all the questions.

Q.1 Define Performance Management? Explain the principles of developing a

performance management plan. Pg.8,9,11 unit 1
Performance Management: The larger process of defining what employees should be
doing, ongoing communication during the year, linking of individual performance to
organization needs, and evaluation of appraising the performance.

Principles of developing a performance management plan

Development of a performance management plan should be consistent with the following


· Performance Management is considered a process, not an event. It follows good

management practice in which continual coaching, feedback and communication are
integral to success.

· The Performance Management Plan is primarily a communication tool to ensure mutual

understanding of work responsibilities, priorities and performance expectations.

· Elements for discussion and evaluation should be job specific – not generalized
personality traits. The major duties and responsibilities of the specific job should be
defined and communicated as the first step in the process.

· Performance standards for each major duty/ responsibility should be defined and

· Employee involvement is encouraged in identifying major duties and defining

performance standards.

· Professional development should be an important component of the plan.

· The formal evaluation period should be long enough to allow for full performance and
to establish a history such that evaluations are fair and meaningful. One year is a common
evaluation period.

· Documentation of performance will occur as often as needed to record the continuum of

dialogue between supervisor and employee.
· If formal ratings are included, they should reflect the incumbent’s actual performance in
relation to the performance standard for that major duty.

· The supervisor should be evaluated on the successful administration of the plan and
ongoing performance management responsibilities.

· Training for supervisors and employees is encouraged.

· The Performance Management Plan should be consistent with federal and state laws
which address non-discrimination.

Q.2 Let, Ryan and Grossman suggested four key capacities for organizational

Q.3 Explain the process of performance management Pg.41 unit 3

Process of Performance Management

Performance management is the systematic process by which an agency involves its

employees, as individuals and members of a group, in improving organizational
effectiveness in the accomplishment of agency mission and goals.

Managing Performance Effectively: In effective organizations, managers and

employees have been practicing good performance management naturally all their lives,
executing each key component process well. Goals are set and work is planned routinely.
Progress towards these goals is measured and employees get feedback. High standards
are set, but care is also taken to develop the skills needed to reach them. Formal and
informal rewards are used to recognize the behavior and results that accomplish the
mission. All five component processes working together and supporting each other
achieve natural, effective performance management.

3.2.1 Planning
In an effective organization, work is planned out in advance. Planning refers to setting
performance expectations and goals for groups and individuals to channelize their efforts
toward achieving organizational objectives. Getting employees involved in the planning
process will help them understand the goals of the organization, what needs to be done,
why it needs to be done, and how well it should be done.

The regulatory requirements for planning employees’ performance include establishing

the elements and standards of their performance appraisal plans. Performance elements
and standards should be measurable, understandable, verifiable, equitable, and
achievable. Through critical elements, employees are held accountable as individuals for
work assignments or responsibilities. Employee performance plans should be flexible so
that they can be adjusted for changing program objectives and work requirements. When
used effectively, these plans can be beneficial working documents that are discussed
often, and not merely paperwork that is filed in a drawer and seen only when ratings of
record are required.

3.2.2 Monitoring

In an effective organization, assignments and projects are monitored continually.

Monitoring well means consistently measuring performance and providing ongoing
feedback to employees and work groups on their progress toward reaching their goals.

Regulatory requirements for monitoring performance include conducting progress

reviews with employees where their performance is compared against their elements and
standards. Ongoing monitoring provides the opportunity to check how well employees
are meeting predetermined standards and to make changes to unrealistic or problematic
standards. And by monitoring continually, unacceptable performance can be identified at
any time during the appraisal period and assistance provided to address such performance
rather than wait until the end of the period when summary rating levels are assigned.

3.2.3 Developing

In an effective organization, employee developmental needs are evaluated and addressed.

Developing in this instance means increasing the capacity to perform through training,
giving assignments that introduce new skills or higher levels of responsibility, improving
work processes, or other methods. Providing employees with training and developmental
opportunities encourages good performance, strengthens job-related skills and
competencies, and helps employees keep up with changes in the workplace, such as the
introduction of new technology.

Carrying out the processes of performance management provides an excellent

opportunity to identify developmental needs. During planning and monitoring of work,
deficiencies in performance become evident and can be addressed. Areas for improving
good performance also stand out, and action can be taken to help successful employees
improve even further.
3.2.4 Rating

From time to time, organizations find it useful to summarize employee performance. This
can be helpful for looking at and comparing performance over time or among various
employees. Organizations need to know who their best performers are.

Within the context of formal performance appraisal requirements, rating means

evaluating employee or group performance against the elements and standards in an
employee’s performance plan and assigning a summary rating of record. The rating of
record is assigned according to procedures included in the organization’s appraisal
program. It is based on work performed during an entire appraisal period. The rating of
record has a bearing on various other personnel actions, such as granting within-grade
pay increases and determining additional retention service credit in a reduction in force.

Note: Although group performance may have an impact on an employee’s summary

rating, a rating of record is assigned only to an individual, not to a group.

3.2.5 Rewarding

In an effective organization, rewards are used well. Rewarding means recognizing

employees, individually and as members of groups, for their performance and
acknowledging their contributions to the agency’s mission. A basic principle of effective
management is that all behavior is controlled by its consequences. Those consequences
can and should be both formal and informal and both positive and negative.

Good performance is recognized without waiting for nominations for formal awards to be
solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the
actions that reward good performance – like saying "Thank you" – don’t require a
specific regulatory authority. Nonetheless, awards regulations provide a broad range of
forms that more formal rewards can take, such as cash, time off, and many non-monetary
items. The regulations also cover a variety of contributions that can be rewarded, from
suggestions to group accomplishments.
Assignment Set- 2
Note: Each question carries 10 Marks. Answer all the questions.
Q.1 Explain the role of ethics in performance appraisal. 179 unit 10

Case Study On Ethics In Performance Appraisal

Frank became chief financial officer and a member of the Executive Committee of a
medium-sized and moderately successful family-owned contracting business six months
ago. The first non-family member to hold such a position and to be included in the
Executive Committee, he took the job despite a lunch-time remark by the company’s
CEO that some members of the family were concerned about Frank’s "fit with the
company culture." But the CEO (who is married to the daughter of the founder of the
company) said he was willing to "take a chance" on Frank.

Soon after Frank started, the company decided for the first time to "right-size" (a
euphemism for downsize) to respond to rapid changes in its business. Frank, who had
been through this before when he was a senior manager in his previous company, agreed
this was good for the long-term health of the 20-year-old company. He decided not to
worry that family members seemed more concerned about their own short-term financial

Besides, the CEO was relying on Frank to help him determine how to downsize in an
ethical manner; the CEO said he trusted Frank more on this than he did the head of his
personnel department, who had "been around a little too long."

On Frank’s recommendation, the company decided to make its lay-off decisions based on
the annual performance appraisal scores of the employees. Each department manager
would submit a list of employees ranked by the average score of their last three
appraisals. If the employee had been with the company less than three years, if the score
for two employees was identical, or if there was some extraordinary circumstance, the
manager would note it and make a decision about where to rank the person. At some
point, Frank and the Executive Committee would draw a line, and those below the line
would be laid off.

As Frank was reviewing the evaluations, he was puzzled to find three departments in
which the employee at the bottom of the list had "N/A" where the evaluation score should
have been written. When he asked the managers to explain, they told him these
employees had been with the company almost since the beginning. When performance
appraisals had been instituted six years earlier, the CEO agreed to the longtime
employees’ request that they keep receiving informal evaluations "as they always had."

The managers told Frank they had questioned this decision, and the CEO had told them it
was not their problem. When Frank raised this issue with the CEO, he responded, "Oh, I
know. I haven’t really evaluated them in a long time, but it is time for them to retire
anyway. They just aren’t performing the way they used to. The company’s been very
good to them. They’ve got plenty of retirement stored away, not to mention the severance
you’ve convinced me to offer. They’re making pretty good money, so cutting them
should let us lower the line a little and save jobs for some of the younger people – you
know, young kids with families just starting out. And don’t worry about a lawsuit. No
way they’d do that."

"Do they know they’re not performing well?" Frank asked.

"I don’t know," the CEO responded. "They should. Everybody else in the company

As they walked to the door, the CEO put his arm around Frank’s shoulder. "By the way,"
he said, "you should know that you’ve won over the Executive Committee. They think
you are a terrific fit with this company. I’m glad you talked with me today about these
three employees. You got it right: This is a company that cares for its employees–as long
as it can and as long as they’re producing. Always has, always will."

Frank left the CEO’s office with the vague feeling that he had some moral choices to

Does he have an ethical dilemma? What is the right thing to do? If he disagrees with the
CEO, how does he protect his own career and the interests of his own family? What do
you think?

Q.2 Mr. Sunil is a manager in a manufacturing company. He thinks that his subordinates
are inherently lazy, avoid work and they needs supervision to perform tasks and therefore
he shows authority over his subordinates’. According to McGregor theory, what
assumptions Mr. Sunil is having of his subordinates. And also elucidate McGregor both
the theories.

Q.3 Write notes on: Pg 125 unit 7

 Management by Objectives

Management by Objectives

The employees are asked to set their own performance goals. This avoids the feeling
among employees that they are being judged by unfairly high standards. This method is
currently widely used, but not always in its true spirit. Even though the employees are
consulted, in many cases management ends up by imposing its standards and objectives.
In some cases employees may not like ’self-direction or authority.’ To avoid such
problems, the work standard approach is used.
 Behavioral Anchored Rating ScalesBehaviourally Anchored Rating Scales (BARS):
This is a relatively new technique. It consists of sets of behaviourial statements
describing good or bad performance with respect to important qualities. These qualities
may refer to inter-personal relationships, planning and organizing abilities, adaptability
and reliability. These statements are developed from critical incidents collected both from
the assessor and the subject.
 Graphic Rating scale

Graphic rating scale

A graphic scale ‘assesses a person on the quality of his or her work (average; above
average; outstanding; or unsatisfactory).’ Assessment could also be trait centered and
cover observable traits, such as reliability, adaptability, communication skills, etc.
Although graphic scales seem simplistic in construction, they have application in a wide
variety of job responsibilities and are more consistent and reliable in comparison with
essay appraisal. The utility of this technique can be enhanced by using it in conjunction
with the essay appraisal technique.

 Behavioral checklist Checklist Method: The assessor is furnished with a checklist of

pre-scaled descriptions of behaviour, which are then used to evaluate the personnel being
rated (Monga, 1983). The scale values of the behaviour items are unknown to the
assessor, who has to check as many items as she or he believes describe the worker being
assessed. A final rating is obtained by averaging the scale values of the items that have
been marked.