Lesson One

1. Define Performance management?

Continuous process of Identifying, Measuring, Developing the performance of

individuals and teams. Performance management is aligning performance with the
strategic goals of the organization.

2. Compare between Performance management and performance appraisal?

Performance management Performance appraisal
- Strategic business considerations - Driven by HR
- Driven by line manager - Assesses employee
- Ongoing feedback and coaching, So - Strengths
employee can improve performance - Weaknesses
- Once a year, Lacks ongoing feedback or
coaching

3. Discuss and explain what contributions of performance management are?

1. Contributions of Performance Management for Employees
- Clarify definitions of Job and Success criteria
- Increase motivation to perform
- Increase self-esteem
- Enhance self-insight and development
2. Contributions of Performance Management for Managers
- Communicate supervisors views of performance more clearly
- Managers gain insight about subordinates
- Better and more timely differentiation between good and poor
performers
- Employees become more competent and engaged
3. Contributions of Performance Management for Organization/HR Function
- Clarify organizational goals
- Facilitate organizational change
- Fairer, more appropriate administrative actions
- Better protection from lawsuits
- More motivated and loyal employees
- Less counterproductive and deviant behavior and more voice behavior

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4. What are components of an Effective Performance Management Process?

- Direction sharing
- Role clarification
- Goal alignment
- Developmental goal setting
- Ongoing performance monitoring
- Ongoing feedback
- Coaching and support
- Performance assessment (appraisal)
- Rewards, recognition, and compensation
- Workflow and process control and return

5. What are Disadvantages/Dangers of Poorly Implemented PM Systems?

For employees

Lowered self-esteem and bad health

Employee burnout and job dissatisfaction

Damaged relationships

Use of false or misleading information

for Managers

Increased turnover

Decreased motivation to perform

Unjustified demands on managers resources

Varying and unfair standards and ratings

for Organization/HR Function

Wasted time and money

Demotivated or worse angry workforce

Unclear ratings system and so poor ability for HR planning and meeting HR
needs

Emerging biases and inability to distinguish between good and bad

performers

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Increased risk of litigation

Missed opportunities and unachieved goals

Difficulties in other HR systems like talent management and succession

planning

6. Define Reward Systems ? what are components of tangible and intangible

return?
Reward system is a Set of mechanisms for distributing Tangible returns and
Intangible or relational returns as part of an employment relationship.

A. Tangible Returns
1. Cash compensation

Base pay: Hourly wages and Salary

Cost-of-Living & Contingent Pay: Usually permanent increases in pay based on either
cost of living or performance

Incentives (short- and long-term): Used to increase performance

E.g., bonuses (short term) or stock options/ownership (long term)

2. Benefits

Income Protection: Sometimes required under law, such as , Social Security ,

Disability pay, medical insurance, pension plans, savings plans

Allowances: housing and transportation.

B. Intangible Returns
1. Work/life focus (to help employee balance work/home life): Such as
vacation time,flextime and telecommuting, services (e.g., counseling,
financial planning, fitness activities)

2. Relational Returns: Such as recognition, status, employment security,

challenging work, opportunities to learn, opportunities to form personal
relationships.

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7. What are Returns and Their Degrees of Dependency on the Performance

Management System?
Low Dependency

1. Cost of Living Adjustment

2. Income Protection

Moderate Dependency

- Work/Life Focus
- Allowances
- Relational Returns
- Base Pay

High Dependency

- Contingent Pay
- Short-Term Incentives
- Long-Term Incentives

8. What are Purposes of PM Systems Strategic Purpose

1. Strategic
- Link individual goals with organizations goals
- Communicate most crucial business strategic initiatives
2. Administrative

Provide information for making decisions regarding:

1. Salary adjustments
2. Promotions
3. Retention or termination
4. Recognition of individual performance
5. Layoffs
3. Informational Purpose
1. Communicate to employees:
2. Expectations
3. What is important
4. How they are doing
5. How to improve

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4. Developmental Purpose
1. Performance feedback/coaching
2. Identification of individual strengths and weaknesses
3. Identification of causes of performance deficiencies
4. Tailor development of individual career path
5. Organizational Maintenance Purpose
1. Plan effective workforce
2. Assess future training needs
3. Evaluate performance at organizational level
4. Evaluate effectiveness of HR interventions
6. Documentation Purpose
1. Validate selection instruments
2. Document administrative decisions
3. Help meet legal requirements

9. What are An ideal system of Performance management system?

1. Strategically Congruent

Consistent with organizations strategy

Aligned with unit and organizational goals

2. Contextually Congruent

Congruent with the organizations culture as well as the broader cultural context of
the region or country

3. Thorough
- All employees are evaluated
- All major job responsibilities are evaluated
- Evaluations cover performance for entire review period
- Feedback is given on both positive and negative performance
4. Practical
- Available
- Easy to use
- Acceptable to decision makers
- Benefits outweigh costs
5. Meaningful
- Standards are important and relevant
- System measures ONLY what employee can control

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- Results have consequences

- Evaluations occur regularly and at appropriate times
- System provides for continuing skill development of evaluators
6. Specific

Concrete and detailed guidance to employees

7. Identifies effective and ineffective performance

- Distinguish between effective and ineffective: Behaviors and Results
- Provide ability to identify employees with various levels of performance.
8. Reliable
- Consistent
- Free of error
- Inter-rater reliability
9. Valid

- Relevant (i.e., measures what is important)

- Not deficient (i.e., doesnt measure unimportant facets of job)

- Not contaminated (i.e., only measures what the employee can control)

10. Acceptable and Fair

a. Perception of Distributive Justice: Work performed Evaluation

received Reward

b. Perception of Procedural Justice: Fairness of procedures used to:

Determine ratings and Link ratings to rewards

11. Inclusive

Represents concerns of all involved

When system is created, employees should help with deciding: What should be
measure and How it should be measured

Employee should provide input on performance prior to evaluation meeting.

12. Open (No Secrets)

- Frequent, ongoing evaluations and feedback
- Two-way communications in appraisal meeting
- Clear standards and ongoing communication
- Communications are factual, open, and honest

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13. Correctable
- Recognizes that human judgment is fallible
- Appeals process provided
14. Standardized
- Ongoing training of managers to provide
- Consistent evaluations across: People and Time
15. Ethical
- Supervisor suppresses self-interest
- Supervisor rates only where (s)he has sufficient information about the
performance dimension
- Supervisor respects employee privacy

10. Discuss Integration with other Human Resources and Development Activities
PM provides information for:

Development of training to meet organizational needs

Workforce planning

Recruitment and hiring decisions

Development of compensation systems

11. Why burnout happiness ?what are warning signs and symptoms of burnout
?and impact of spillover of the burnout ?
Causes

1. No support 2. Demands 3. No feedback 4. Role ambiguity 5. No resources

Warning signs

Withdrawing from responsibility

Isolating self from others

Taking long to get things done

Exhausted all time

Skipping work or coming in late and leaving early

Spillover burnout :negative impact on professional, personal and social life , makes
body weak to illness.

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True/False Questions
1.1 A performance management system is the systematic description of an employees strengths
and weaknesses.
Answer F: A performance management system is the continuous process of aligning a given set of
organizational goals with individual/team performance, which are, also continuously, identified,
measured, and developed.

1.2 Linking each individuals performance to the organizations mission involves explaining to each
employee how the employees activities are helping the organization gain a competitive
advantage.
Answer T

1.3 Feedback often decreases motivation to perform because it points out what an employee does
wrong.
Answer F: If done correctly, receiving feedback about ones performance increases the motivation for
future performance.

1.4 Dangers of a poorly implemented performance management system include wasted time and
money, lack of standardized employee ratings, and confusion on how ratings are obtained.
Answer T

1.5 Intangible returns include benefits and work/life programs.

Answer F: Intangible returns, also known as relational returns, include recognition and status,
employment security, challenging work, opportunities to form personal relationships at work
(including friendships and romances), and learning opportunities. In contrast, tangible rewards include
cash compensation (i.e., base pay, cost-of-living pay, merit pay, short-term incentives, and long-term
incentives) and benefits (i.e., income protection, work/life focus including vacation time, tuition
reimbursement, and allowances).

1.6 Exempt employees are often employees in managerial or professional roles on salaries, and
are not eligible for overtime pay.
Answer T

1.7 Short-term incentives are one-time payments typically given quarterly or annually.
Answer T

1.8 The strategic purpose of PM systems involves constructing the strategic vision for the
organization.
Answer F: The strategic purpose of PM systems is to link an organizations goals with individuals
goals.
1.9 A reliable performance management system includes all relevant performance facets and does
not include irrelevant performance facets.
Answer F: This describes a systems validity, not reliability. A reliable performance management
system is consistent. For example, if two supervisors provided ratings of the same employee, or if one
supervisor rated the same employee twice over a short period of time during which nothing noticeable
occurs, then the ratings should be similar or identical.

1.10 Distributive justice is the perception that the performance evaluation received is fair relative to
the work performed.
Answer T

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1.11 Performance management systems in foreign subsidiaries often differ from those in home
country headquarters as differences in the power distance (i.e., the degree to which a society
accepts unequal distribution of power) increase between/among countries.
Answer T

Multiple-Choice Questions

1.12 ________________ is a continuous process of identifying, measuring, and developing the

performance of individuals and teams and aligning performance with the strategic goals of
the organization.
A. Strategic planning
B. Performance management
C. Reward system
D. Performance appraisal

1.13 Dangers of a poorly implemented performance management system include all of the
following EXCEPT:
A. Increased emphasis on behaviors rather than results
B. Lawsuits/internal complaints of discrimination
C. Biased performance ratings
D. Decreased employee motivation

1.14 When employees of an organization do not see the PM system as fair, the organization may
witness from its employees all of the following EXCEPT:
A. Job burnout
B. Lowered self-esteem
C. Increased turnover
D. Lawsuits

1.15 Income protection programs include:

A. Pension Plans
B. Medical Insurance
C. Social Security
D. All of the above

1.16 _____________ focuses on positions and duties, rather than on an individuals contribution.
A. Contingent pay
B. Base pay
C. Cost-of-living adjustments
D. Short-term incentives

1.17 The ___________ purpose of PM systems is to furnish valid and useful information for making
employment decisions including salary adjustments, promotions, and terminations.
A. strategic
B. informational
C. administrative
D. developmental

1.18 Information gained from the organizational maintenance purpose of a PM system is used for
all of the following EXCEPT:
A. Workforce planning

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B. Evaluating the effectiveness of job descriptions
C. Evaluating the effectiveness of HR programs
D. Creating talent inventories
1.19 Performance management systems should be thorough, meaning that:
A. All employees should be evaluated
B. An employees flaws should be discussed at length
C. The review should cover the entire review period
D. A and C

1.20 An ideal PM system is __________, which means that performance is evaluated and feedback
is given on an ongoing basis, the appraisal meeting consists of two-way communication, and
performance standards are clear.
A. open
B. standardized
C. ethical
D. specific

1.21 PM system information is important for the effective implementation of which of the following
HR function(s)?
A. Workforce planning
B. Training
C. Recruitment and selection
D. All of the above

1.22 All of the following are possible benefits of a performance management system EXCEPT:
A. Protection from lawsuits
B. Employees become more ethical
C. Employees become more competent
D. The definitions of job and criteria are clarified

1.23 Which of the following does the text identify as a possible danger of a poorly implemented
performance management system?
A. Salaries must be increased.
B. Poorly performing employees will always stay at the organization.
C. No time or money is spent on the system.
D. Motivation to perform is decreased.

1.24 Tangible returns include:

A. Base pay
B. Learning opportunities
C. Respect from coworkers
D. None of the above

1.25 Relational returns include:

A. Income protection
B. Recognition and status
C. Challenging work

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D. B and C

1.26 Pay that focuses on position and duties performed rather than on a specific individuals
contribution is called:
A. Base pay
B. Pay raises
C. Salary
D. Relational returns

1.27 Pay added to base pay that depends upon an employees performance is called:
A. An allowance
B. Contingent pay
C. Relational return
D. A benefit

1.28 Relational returns include all of the following EXCEPT:

A. Challenging work
B. Performance bonuses
C. Employment security
D. Recognition and status

1.29 All of the following are characteristics of an ideal performance management system EXCEPT:
A. Reliability
B. Meaningfulness
C. Inexpensive
D. Thorough

1.30 Which of the following are examples of work/life focus?

A. Counseling
B. Financial planning
C. Relational returns
D. A and B

1.31 A purpose of a performance management system is to:

A. Get rid of poorly performing employees
B. Provide documentation
C. Increase profits
D. Give the HR department something to do

1.32 An ideal performance management system is correctable. What does this mean?
A. If an employee is dissatisfied with a rating, it will be changed.
B. If an employee is dissatisfied with a rating, there is a process to appeal the rating
decision.
C. An ideal performance management system is not correctable.
D. None of the above is correct.

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1.33 In the context of performance management, validity means that the measures of performance
are trusted and perceived as fair by the employees.
A. True
B. False

1.34 In the context of performance management, validity means that all the employees agree with
the rating process.
A. True
B. False

1.35 In which country is PM usually adapted to the countrys unique culture?

A. South Korea
B. South Africa
C. Australia
D. All of the above

1.36 In what manner is performance management typically similar around the world?
A. Standardization of performance measurement
B. Emphasis on behavior versus results of employee performance
C. Interpersonal aspects
D. None of the above

1.37 In what aspect is performance management generally different around the world?
A. Interpersonal aspects
B. Standardization of performance measurement
C. Alignment of individual and organizational goals
D. All of the above

1.38 Since the 1997 Asian financial crisis, the main ongoing challenge for many organizations in
South Korea has been to __________.
A. incorporate the traditional emphasis on social harmony to PM systems
B. recruit and incentivize a more internationally and racially diverse workforce
C. reconcile a merit-based approach with more traditional, seniority-based values
D. develop greater sensitivity to equal opportunity and due process issues

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