Chapter 1 Performance Management

Part I: Strategic and General Considerations___________________________________________________
Chapter 1—Performance Management and Reward Systems in Context

True/False Questions
1.1 A performance management system is the systematic description of an employee’s strengths and
weaknesses.
1.2 Linking each individual’s performance to the organization’s mission involves explaining to each
employee how the employee’s activities are helping the organization gain a competitive advantage.
1.3 Feedback often decreases motivation to perform because it points out what an employee does
wrong.
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.
1.5 Intangible returns include benefits and work/life programs.
1.6 Exempt employees are often employees in managerial or professional roles on salaries, and are not
eligible for overtime pay.
1.7 Short-term incentives are one-time payments typically given quarterly or annually.
1.8 The strategic purpose of PM systems involves constructing the strategic vision for the organization.
1.9 A reliable performance management system includes all relevant performance facets and does not
include irrelevant performance facets.
1.10 Distributive justice is the perception that the performance evaluation received is fair relative to the
work performed.
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.
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
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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 individual’s 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
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 employee’s 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.
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Chapter 1
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
D. B and C
1.26 Pay that focuses on position and duties performed rather than on a specific individual’s 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 employee’s 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.
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.
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Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
A. True
B. False
1.35 In which country is PM usually adapted to the country’s 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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Part I: Strategic and General Considerations___________________________________________________

Chapter 1—Performance Management and Reward Systems in Context

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

1.15 Income protection programs include:

1.24 Tangible returns include:

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

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