MBA 3rd SEMESTER 1st MID IMPORTANT QUESTIONS

PERFORMANCE MANAGEMENT

1. Explain the concepts and scope of performance management.

2. Write a short note on appraisal system design.
3. Explain the traditional and modern techniques of performance management.

1. Explain the concepts and scope of performance management.

ANS: - performance management:- Performance management is the supervision and
oversight of employees, departments, and organizations with the objective of seeing that
milestones and objectives are reached in an efficient and effective manner. This niche aspect of
overall management involves defining what effective performance looks like, as well as
developing the tools and procedures necessary to measure performance.
Concepts Performance Management:-
A subjective view on any topic contains inherent dangers. The view is singular and not
examined by others. The objective view provides a safety mechanism. Plato believed in the
mechanism of dialogue to promulgate his ideas and that of Socrates. The jury in a criminal trial
could be described as a prime example of objective thinking in a situation whereby a defendant's
liberty is at stake.
At work, an employee may subjectively feel that he/she is carrying out the duties for which they
were engaged, in a satisfactory manner. However, those above that employee and indeed those
around, may feel, objectively, that the employee is not carrying out those duties satisfactorily.
If there is no feedback from management to employee on their progress, then the employee will
never realize that some aspect of their work is wanting. We will proceed on the basis that the
employee is not deliberately working beneath his/her capacity.
If the employee develops bad professional habits that go unchecked, three consequences will
occur:
 Such habits, if not effectively checked, grow to become conduct that may result in the employee
being disciplined or dismissed
 The organization is not addressing issues of quality of performance and thereby puts the quality
of product or service into question
 There will be no opportunity for the employee's improvement, recognition or development
Performance Management is the mechanism that ensures that the employee achieves the
objectives set by the organization and the organization thereby achieves the objectives that it
has set itself in its strategic plan.
When considering Performance Management, it is necessary to set out some basic terms:
 Effective behavior - the carrying out of activities
 Effectiveness of Performance - the level of the activities performed
 Criteria - the standards set by the organization for the activities
The performance of an employee in an organization depends upon various factors like
accomplishment and implementation of tasks assigned to him/her, his/her potential, objectives,
behavior, attrition risk, reduction by attrition etc.
Scope of Performance Management:
 Designing and assigning SMART action plans to inspire and persuade employees according to
specific department and role to achieve their goals that must be in turn aligned with the motive
of achieving organizational objectives.
 Evaluating an employee’s current benefaction and advance level of benefaction to an
organization.
 Consolidated Performance Reports to enable extensive analysis.
 Measuring an individual’s performance minutely by developing a 360 degree feedback culture
in your organization.
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2. Write a short note on appraisal system design?
ANS:- 1. Meaning of Performance Appraisal: - Appraisal means evaluation about the worth
of an object or person and performance appraisal means evaluation of employees’ worth in
terms of organizational performance. Judgment of employees’ performance at work can be done
formally and informally. Informally, superiors continuously judge the performance of
employees on a subjective basis. It may have an element of bias towards employees.
Informal evaluation, however, is not enough to arrive at realistic and correct assessment of the
worth of employees in absolute or relative terms. The ultimate goal of evaluation programmed
is to make the employees more valuable to the company
A proper evaluation and appraisal system can be valuable to the company. For this, performance
evaluation programmed should involve the study of employees (their habits, aptitude and skills)
and their work record (efforts and accomplishments). In the organizational context,
performance appraisal is done in a more formal way through formal appraisal techniques which
are objective in nature. Objective appraisal aims at systematic and accurate measurement free
of bias and prejudice. Performance appraisal is, thus, more of a formal exercise where managers
evaluate the employees, in terms of their contribution towards organizational objectives. It
evaluates their strengths and weaknesses in terms of attributes and behaviors to meet the
organizational objectives. It appraises the performance of employees on continuous or
intermittent basis and provides them feedback about their performance.
“Performance appraisal is the process of defining expectations for employee’s performance;
measuring, evaluating and recording employee performance relative to those expectations; and
providing feedback to the employee.”
Evaluating employees is a complex task because they perform a variety of activities and apply
different skills in different work situations. They exhibit different personal qualities in different
work areas. It is, thus, important that organizations have a sound monitoring system or
performance appraisal system to evaluate their work performance. Performance appraisal
system involves setting performance standards and comparing actual performance with the
standards to know the extent to which employees have contributed towards corporate profits.
“It is a process whereby managers and their subordinates share understanding about what has
to be accomplished, and the manager will naturally be concerned about how best to bring about
those accomplishments by adept management and development of people in the short and long
terms.”
2. Objectives of Performance Appraisal:
Performance appraisal has the following objectives:
1. Appraisal is a judgment which requires definite standards. Actual performance is compared
with standards and goals. Such standards should be worked out by organizations and conveyed
to all the employees, otherwise, judgment will be one way only. In a sound appraisal system,
goal setting must be high; and accordingly, high performance is expected. Goal setting must be
a mutual process and appraisal system should be transparent and known to employees. If there
is no system of appraisal, superiors will waste time in making decisions. Also, in absence of
specific knowledge, they will depend upon chance. To avoid this situation, there should be high
goals and high-performance appraisal system.
2. To judge means to apply a set of values. Value judgments without clear, sharp and public
standards are irrational and arbitrary. Such judgment or appraisal will demotivate the manager
and subordinates. It should, thus, be based on sound and objective appraisal standards.
3. Performance appraisal depends on “Merit Rating”. Merit rating refers to what the employee
is. Performance appraisal refers to what the employee does. Appraisal records what is done by
the employee. Merit rating gives information about “Potential”, “Personality” and “Promise”
but appraisal tells about performance. It, thus, helps in deciding employees worthy of promotion
or transfer to work areas that meet their skills and capabilities.
4. Standards consider what work was assigned, what resources were granted and what
promises were given regarding salary/rewards. They, thus, provide a measure of evaluation.
5. One can only build in strength. One can only achieve by doing. One cannot achieve anything
with what one does not do. Appraisal must, therefore, aim at bringing out what a man can do.
Only when a man’s strengths are known and understood, it makes some sense. Weaknesses, by
themselves, are of no interest.
3. Explain the traditional and modern techniques of performance management?
ANS: - Performance Appraisal: Traditional and Modern Methods: -
Methods of Performance Appraisal
Several methods and techniques are used for evaluating employee performance. They may be
classified into two broad categories :
a) Traditional Methods: -
i. Confidential Report: - • Used in most government organizations.
• A report is prepared by the employee’s immediate superior which covers the strengths and
weaknesses, main achievements and failure, personality and behavior of the employee.
• It is descriptive in nature

• Used mainly used for promotions and transfers of employees.

• Employee is not provided with the feedback. Therefore, the employees never get to know
about his strengths and weaknesses.
• The method focuses on evaluating rather than developing the employee.
ii. Free form or Essay: - • The evaluator writes a short essay on the employee’s performance
on the basis of overall impression.
• The description should be factual and concrete.
• The drawback is that the method may involve biasness as evaluation is not based on specific
performance dimensions related to the job.
• Another drawback is that quality of appraisal depends on the writing ability of the evaluator
rather than on employee performance.
iii. Straight Ranking: - • In this method, the superior ranks his or her subordinates in the order
of their merit, starting from the best to the worst.
• Straight ranking is one of the oldest and Simplest methods.
• The ‘how’ and ‘why’ are not questioned, nor answered.
• The major drawback is that ranking of individuals having varying behavior patterns or traits
is difficult especially when a large number of persons are to be rated.
• The method only indicates how a person stands in relation to others in the group but does not
tell how much better or worse he is than another.
iv. Paired Comparisons Method: In this method one employee’s performance is compared
with that of the other employees. Two employees are taken at a time and a decision is made on
who is more competent. Then another pair is compared and the same process is repeated until
all are compared and ranked. The number of times an employee is judged better
than t he o t her determines his Comparison is made on the basis of overall performance. The
number of comparisons to be made can be decided on the basis of the following
formula
v. Forced Distribution Method: - Herein, plus (+) sign implies the employee is considered
better and minus (-) sign means worse than the other employee in the C gets the highest number
of plus signs, therefore, his rank is the highest and so on.
b) Modern Methods: -
i. Assessment Centre Method: -An assessment center is a multiple assessment of several
individuals performed simultaneously by a group of trained evaluators using a variety of group
and individual exercises like role playing, business games and in basket exercises.
 Experienced managers with proven ability serve as
 Employees are evaluated on job-related characteristics considered important for job
 The evaluators observe and evaluate employees as they perform jobs. Assessments are
done generally to determine employee potential for promotion.
 The evaluators prepare a summary report and feedback is administered on a face-to-face
basis to the employees who ask for
 Assessment centers are not only a method of appraisal but help to determine training and
development needs of employees and provide data for human resource planning.
 The main tools used in assessment centers are:
1. Psychometric Tests: - Three types of tests or questionnaires such as aptitude tests, ability
test and personality test are employed. These tests are selected keeping in view:
 Measurement of objectives
 Reliability and validity
 Time required for administration
2. Interviews: - Structured interviews are used to probe background, critical incidents, and
situational and behavioral event of the employees.
3. Leadership Group Discussion: - A small group of employees are given a problem to solve
and are instructed to arrive at a group decision within a specified time frame.
4. In-basket Exercise: - The in-basket exercise or in-tray represents day to day decision
making situation which a manager is likely to face. The in-tray consists of various written
messages and communications from customers, suppliers, government authorities, internal
departments, senior’s management etc. The objective is to assess an employee’s activity level,
problem analysis skills, planning and organizing skills, time management, delegation etc. The
 in-tray materials are given keeping in view the job duties and competencies required of
each employee.
5. Business Games/Simulation Exercises: - A real life situation such as running a
manufacturing operation, stock trading etc. is simulated to the entire group of employees.
The complexities varies in these games, the common denominator is the relatively
unstructured nature of interactions among the participants and the variety of actions that
can be taken by all participants. The interactive nature of the business game provides
opportunities to assess dimensions such as strategic planning, teamwork, team skills,
leadership and analytical ability.
i. Assessment Centre Method: - An assessment center is a multiple assessment of
several individuals performed simultaneously by a group of trained evaluators using a
variety of group and individual exercises like role playing, business games and in basket
exercises.
 Experienced managers with proven ability serve as
 Employees are evaluated on job-related characteristics considered important for job
 The evaluators observe and evaluate employees as they perform jobs. Assessments are
done generally to determine employee potential for promotion.