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Strategic Compensation in Canada 5th Edition By Richard Long – Test Bank

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Strategic Compensation in Canada 5th Edition By Richard Long – Test Bank

Chapter 10: Evaluating Individuals

TRUE/FALSE

  1. The majority of medium to large Canadian firms use performance appraisal.

ANS: T PTS: 1 REF: 353 OBJ: 1

  1. Three main categories capture the primary reasons why companies conduct performance appraisals: administrative, symbolic, and supervisory.

ANS: F PTS: 1 REF: 354 OBJ: 1

  1. If a performance appraisal process is deemed to be valid, then it must also be reliable.

ANS: T PTS: 1 REF: 355 OBJ: 2

  1. A major reason why performance appraisals may not work effectively is that they are applied in circumstances that are not appropriate.

ANS: T PTS: 1 REF: 359 OBJ: 2

  1. Evidence appears to support the notion that supervisors often have desired outcomes in mind before they start a performance appraisal process.

ANS: T PTS: 1 REF: 355 OBJ: 2

  1. One of the main drawbacks of ranking and forced distribution is that it offers an employee very little developmental opportunity via feedback

ANS: T PTS: 1 REF: 359 OBJ: 3

  1. Organizations using a classical management strategy tend to gravitate towards subordinate appraisals as a source of feedback to populate performance appraisals.

ANS: F PTS: 1 REF: 367 OBJ: 4

  1. Including a self-appraisal component in the performance appraisal process encourages employees to reflect on the performance of peers

ANS: F PTS: 1 REF: 367 OBJ: 4

  1. The 360-degree feedback method usually gathers data/information from three sources: subordinates, supervisors, and at times, customers.

ANS: F PTS: 1 REF: 368 OBJ: 4

  1. In an effort to “provide something to everyone,” organizations may lump merit pay and cost of living increases together. This action dilutes the relationship between merit pay increases and performance.

ANS: T PTS: 1 REF: 373 OBJ: 6

MULTIPLE CHOICE

  1. Which of the following statements would best summarize the general sentiment expressed by stakeholders in describing performance appraisals in Canada?

a.

Managers find the process much more worthwhile than employees.

b.

A great majority of companies tend to pick one process and stick with it over long periods of time.

c.

Managers and employees have little faith that the process leads to valid and reliable results.

d.

Employees are much more likely to embrace and find the process valuable.

ANS: C PTS: 1 REF: 353 OBJ: 1

BLM: Higher Order: Understand

  1. From your perspective as a compensation officer, which of the following is the most important category of reasons for doing performance appraisals?

a.

supervisory

b.

administrative

c.

developmental

d.

symbolic

ANS: B PTS: 1 REF: 354 OBJ: 1

BLM: Higher Order: Understand

  1. Karen’s performance appraisal provided almost identical results when six different managers evaluated her performance. Which of the following conclusions could you make about the performance appraisal process experienced by Karen?

a.

It appears to be reliable; however, no conclusions can be made about its validity.

b.

It appears to be reliable; hence, is it also valid.

c.

Issues of central tendency need to be addressed.

d.

It appears to be a very effective process.

ANS: A PTS: 1 REF: 354 OBJ: 2

BLM: Higher Order: Analyze

  1. John has fabulous interpersonal skills. This causes raters to ignore some of his weaknesses, which include time management, technical, and leadership skills. Which of the following perceptual errors is likely impacting John’s rating?

a.

central tendency error

b.

halo error

c.

leniency effect

d.

contrast effect

ANS: B PTS: 1 REF: 357 OBJ: 2

BLM: Remember

  1. Which of the following statements is NOT consistent with research on performance appraisals?

a.

The vast majority of medium to large organizations use some type of performance appraisal process.

b.

The attempt to capture both developmental and compensation variables in performance appraisal may create reliability and validity issues.

c.

Managers and employees appear to be equally dissatisfied with performance appraisal systems.

d.

An employee’s performance level impacts appraisal results much more than rater bias.

ANS: D PTS: 1 REF: 353–354 OBJ: 2

BLM: Higher Order: Analyze

  1. As a supervisor you have a tendency to rate all employees as “average” in everything. You are guilty of using what perceptual error?

a.

halo error

b.

contrast effect

c.

central tendency error

d.

recency effect

ANS: C PTS: 1 REF: 357 OBJ: 2

BLM: Higher Order: Apply

  1. Which of the following performance appraisal methods is congruent with a management approach that dictates that no more than 15 percent of employees are to be rated as excellent, commanding a top percentage increase in merit pay?

a.

forced distribution

b.

paired comparison

c.

behaviourally anchored rating scales

d.

field review

ANS: A PTS: 1 REF: 359 OBJ: 3

BLM: Higher Order: Understand

  1. Which performance appraisal method could be described as “win–lose,” creating a situation whereby in order to improve his/her standing, an employee has to displace another team or department member?

a.

graphic rating scale

b.

paired comparison method

c.

forced distribution

d.

field review

ANS: C PTS: 1 REF: 360 OBJ: 3

BLM: Higher Order: Understand

  1. What performance appraisal method requires that management identify specific characteristics relevant to good job performance, and is described as simplistic, while suffering from reliability and validity issues?

a.

behavioural observation scales

b.

management by objectives

c.

behaviourally anchored rating scales

d.

graphic rating scales

ANS: D PTS: 1 REF: 361 OBJ: 3

BLM: Remember

  1. Which of the following performance appraisal methods builds on the behavioural anchored rating scales by requiring that management provide a “frequency rating” associated with positive behaviour?

a.

behaviourally anchored rating scales

b.

graphic rating scale

c.

behavioural observation scale

d.

ranking and forced distribution

ANS: C PTS: 1 REF: 362–363 OBJ: 3

BLM: Higher Order: Understand

  1. John, a sales manager with a local coffee distributor, sits down with each salesperson at the beginning of the fiscal year to determine performance targets for the year. Then, on a regular basis, John reviews each employee’s performance against these jointly determined targets. What performance appraisal method is John likely using?

a.

graphic rating scale

b.

management by objectives

c.

results anchored rating scales

d.

behavioural observation scales

ANS: B PTS: 1 REF: 364 OBJ: 3

BLM: Higher Order: Understand

  1. What major advantage does BOS have over BARS?

a.

Frequency of a given behaviour is easy to judge.

b.

Once an item is selected, there is no need to develop detailed definitions for each scale point.

c.

BOS may actually be more subjective.

d.

BOS specifically identifies the behaviour that will be rated.

ANS: B PTS: 1 REF: 363 OBJ: 3

BLM: Higher Order: Understand

  1. What two key elements make management by objectives a highly effective approach to employee motivation?

a.

goals and feedback

b.

trust and open communication

c.

core competencies and engagement

d.

involvement and business strategy

ANS: A PTS: 1 REF: 364 OBJ: 4

BLM: Higher Order: Understand

  1. Which of the following statements associated with Management by Objectives (MBO) is NOT accurate?

a.

Goals should be determined jointly between a manager and an employee.

b.

To be effective, goals should be realistic.

c.

Broad general goals are congruent with the MBO approach.

d.

Regular evaluation and feedback against targets is critical.

ANS: C PTS: 1 REF: 364 OBJ: 5

BLM: Higher Order: Understand

  1. Which of the following is NOT a source of performance appraisals?

a.

supervisors

b.

board of directors

c.

subordinates

d.

professional raters

ANS: B PTS: 1 REF: 365 OBJ: 4

BLM: Remember

  1. Duane operates a retail clothing store in Vancouver, British Columbia. He is concerned that his evaluation of a particular employee is somewhat biased, given that Duane “sees himself” in that employee. Which of the following appraisal methods should Duane use so as to mitigate his explicit bias?

a.

behavioural observations scales

b.

performance management

c.

field review

d.

critical incident reports

ANS: C PTS: 1 REF: 365 OBJ: 4

BLM: Higher Order: Understand

  1. According to the author’s research, which of the following sources do the majority of Canadian employers use?

a.

supervisory and self appraisals

b.

only supervisory appraisals

c.

360-degree feedback

d.

supervisory, self, and peer appraisals

ANS: B PTS: 1 REF: 365 OBJ: 4

BLM: Remember

  1. A particular organization uses a forced ranking system to appraise employees. As a peer appraiser, why might an employee be tempted to give colleagues a low rating?

a.

Rating errors can be balanced out.

b.

A limited amount of merit pay is available.

c.

Conflict and ill will among peers is reduced.

d.

You can all benefit if you rate each other low.

ANS: B PTS: 1 REF: 366 OBJ: 4

BLM: Higher Order: Understand

  1. As a human resource professional, you have been asked by management to provide a list of potential issues associated with having subordinates provide feedback to be used in a performance review process for a manager. Which of the following would NOT be included in your list?

a.

Subordinates’ assessments tend to be less accurate than peers.

b.

Subordinates’ assessments work well in companies using a high-involvement management strategy.

c.

Subordinates simply are not capable of assessing the performance of a manager.

d.

The current management strategy being used at an organization should be considered.

ANS: C PTS: 1 REF: 365 OBJ: 4

BLM: Remember

  1. Which source is much less accurate in assessing the performance of managers?

a.

peers

b.

professional raters

c.

subordinates

d.

supervisors

ANS: C PTS: 1 REF: 367 OBJ: 4

BLM: Higher Order: Understand

  1. Which source of appraisals can be expected to work well only in classical organizations?

a.

peers

b.

supervisors

c.

self

d.

subordinates

ANS: B PTS: 1 REF: 367 OBJ: 4

BLM: Higher Order: Understand

  1. John tends to demonstrate behaviours that are counterproductive to strong work performance. Which of the following appraisal methods would most likely provide the most inaccurate ratings?

a.

peer

b.

self

c.

subordinate

d.

supervisor

ANS: B PTS: 1 REF: 367 OBJ: 4

BLM: Higher Order: Understand

  1. Which source uses many different rating groups to evaluate the employee’s performance?

a.

professional raters

b.

tiered supervisors

c.

360-degree feedback

d.

field review

ANS: C PTS: 1 REF: 369–370 OBJ: 4

BLM: Higher Order: Understand

  1. Which of the following statements would you NOT associate with a multisource/360-degree feedback process?

a.

They tend to be seen by recipients as fair.

b.

They are more accurate than single-source processes.

c.

They tend to be more effective when results are linked to merit pay.

d.

They are more credible to the recipient.

ANS: C PTS: 1 REF: 368–369 OBJ: 5

BLM: Higher Order: Understand

  1. Which of the following is NOT a key element of performance management?

a.

goal setting

b.

encouragement and support

c.

feedback

d.

multisource input

ANS: D PTS: 1 REF: 370 OBJ: 5

BLM: Higher Order: Understand

  1. Which of the following statements regarding the notion of performance management is NOT accurate?

a.

Goal setting is central to its application.

b.

Although 90 percent or more of Canadian companies use some performance management process, only 10 percent find it “effective or very effective.”

c.

It tends to work best in organizations using a high-involvement or human relations strategies.

d.

Development of benchmarks that are valid and reliable is critical.

ANS: B PTS: 1 REF: 370 OBJ: 5

BLM: Remember

  1. You have designed your merit pay grid so that employees with a “satisfactory” performance rating receive no merit increase if they are in the third and fourth quartiles, and a three or four percent merit increase if they are in the first or second quartile. What is the logic behind your decision?

a.

You believe that employees paid above the midpoint have already been rewarded for “satisfactory” work.

b.

You believe that this practice ensures procedural justice.

c.

You believe that it is important to maintain a compa-ratio of less than 1.

d.

You believe that pay raises should constitute a “just noticeable difference.”

ANS: A PTS: 1 REF: 372 OBJ: 6

BLM: Higher Order: Apply

  1. Senior management determines how much money will be available for merit pay against performance metrics identified in the beginning of the fiscal year, and then distributes those funds across departments. Which of the following approaches have you used to determine the total amount of money available for merit pay?

a.

top-down

b.

across the board

c.

organizational performance indicators

d.

bottom-up

ANS: A PTS: 1 REF: 372–373 OBJ: 6

BLM: Remember

  1. What key factor determines the effectiveness of the appraisal process?

a.

the validity of the appraisal method

b.

the quality of the relationship between the supervisor and subordinates

c.

the performance score

d.

employee satisfaction

ANS: B PTS: 1 REF: 376 OBJ: 7

BLM: Higher Order: Understand

  1. There are several critical issues that need to be addressed in designing an effective merit system. Which of the following is NOT identified as a critical issue in the textbook?

a.

the ultimate goal(s) of the merit system

b.

the process for training evaluators

c.

the manner in which feedback will be provided

d.

the process that ensures equal increases across employee job ratings

ANS: D PTS: 1 REF: 375 OBJ: 7

BLM: Higher Order: Understand

SHORT ANSWER

  1. Identify and briefly explain the main categories of reasons for doing appraisals.

ANS:

The rationale for having appraisals includes the following four main categories:

(1) Administrative reasons: These include identifying individuals for whom corrective action may be called for; identifying those who should be considered for a promotion or merit increase; and monitoring overall quality of performance in the organization.

(2) Developmental reasons: These include using the system to better understand employer expectations and the key performance dimensions of their jobs, assisting employees to understand strengths and weaknesses in their performance, and developing methods to improve this performance for the mutual benefit of the individual and the firm.

(3) Supervisory reasons: These focus on enabling and helping supervisors think systematically about employee performance and encouraging communication with employees.

(4) Symbolic reasons: These center around creating the perception that management cares about good employee performance, and the appropriate conducting of appraisals manifests this concern.

PTS: 1 REF: 354 OBJ: 1

  1. Identify and describe the various perceptual errors that can affect appraisal accuracy.

ANS:

Perceptual errors that can undermine appraisal accuracy include the following: (a) central tendency rating error, which occurs when appraisers rate all employees as “average” in everything; (b) halo error, which occurs when appraisers rate an individual either high or low on all characteristics because one characteristic is either high or low; (c) recency effect, which is the tendency of appraisers to overweight recent events when appraising employee performance; (d) contrast effect, which is the tendency for a set of performance appraisals to be influenced upward by the presence of a very low performer, or influenced downward by the presence of a very high performer; (e) similarity effect, which is the tendency of appraisers to inflate the appraisals of appraisees they see as similar to themselves; (f) leniency effect, which is the tendency of many appraisers to provide unduly high performance appraisals; and (g) harshness effect, which is the tendency of some appraisers to provide unduly low performance appraisals.

PTS: 1 REF: 357 OBJ: 2

  1. Identify the key characteristics and advantages of 360-degree feedback appraisal system.

ANS:

This is an appraisal system that utilizes feedback from superiors, peers, subordinates, and possibly customers to establish a balanced and objective input on specific performance measures. These systems have several key characteristics. They use standardized forms that provide numerical ratings of the ratee along numerous dimensions. Individual raters, exclusive of the supervisor, are assured of anonymity so that they feel free to be candid about their input to the ratings. The system also employs several procedures to screen out invalid data. It is claimed that their advantages include: (a) they are more accurate in having numerous raters, which results in information from a variety of perspectives; (b) they are more credible to the recipient, as the ratees may believe a single rater to be wrong or biased, but certainly not all of them; (c) they may be more valuable for behavioural change, since work associates are likely to more specific about behavioural feedback; and (d) they may be more motivational, since peer pressure may motivate constructive behaviour changes.

PTS: 1 REF: 368–369 OBJ: 4

  1. Define and describe the key elements of performance management.

ANS:

Performance management is a method for improving employee performance, based on goal setting, feedback, encouragement and support, and rewards for success. When used properly, performance management is more of a management system than an appraisal system. Its elements are as follows: (a) goals are tied to the strategy and key success factors of the business; (b) measures are the primary indicators of success; (c) feedback is the data used to determine progress towards goals; (d) reinforcement is the active encouragement and support for action; and (e) rewards are what the individual or team receives for achieving desired results.

PTS: 1 REF: 370 OBJ: 5

  1. Describe the conditions under which recognizing individual contribution levels may be essential.

ANS:

Evaluating individual performance is necessary in the following instances: (a) to discourage free riding and assure contributing team members that their positive efforts will be rewarded; (b) members do not have strong intrinsic motivation: (c) strong positive norms do not exist; (d) group sanctions against poor performers are ineffective; and (e) little member commitment to overall project goals is evident.

PTS: 1 REF: 378 OBJ: 7

  1. You have been tasked with developing an effective merit system for an organization. What critical issues would you have to address to ensure the merit system is effective?

ANS:

Answers should draw on elements from the eight questions identified on page 374, including:

– what the objectives of the system should be

– what the most appropriate measurement system is

– how frequently appraisals should be conducted

– how appraisals are to be linked to pay

– how feedback should be provided

– how procedural justice is to be achieved

– how raters are to be trained and evaluated

– how the system is to be evaluated

PTS: 1 REF: 374 OBJ: 6

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