Performance Appraisal and Potential Evaluation-1


SKU: AMSEQ-206 Category:

Assignment ‘A’

1. The most common type of PA System followed in public sector is:

a. Management group appraisal

b. Superior – subordinate appraisal

c. Staff – group appraisal

d. Committee appraisal


2. Which of the following is not a typical rater error :

a. Average behaviour

b. First impression

c. Central tendency

d. Halo effect


3. Spillover effect in Rater Error means

a. Ratee may be rated strictly or leniently

b. Influenced by most recent behaviour

c. Rating on one perceived positive quality

d. Past performance influencing present appraisal


4. “Halo” Effect is caused by

a. Status of the ratee

b. Ratee’s appointment

c. Observance of single positive quality in the ratee

d. Status of the rater


5. Appraisal discussion should be done:

a. Quarterly

b. Half yearly

c. End of the reporting period

d. Any time at the discretion of the rater


6. 360 Degree Appraisal means appraisal by :

a. Immediate superior of appraisee

b. A group of senior managers

c. Immediate superior and subordinates

d. Immediate superiors, subordinates and selected colleagues of the appraisee


7. Potential appraisal can best be judged by:

a. Performance appraisal

b. In basket exercises

c. Making a person “Under Study”

d. Making a person officiate in higher appointment


8. Common uses of information generated via PA include all the following except:

a. Administrative decisions

b. Training and development needs

c. Input to job content evaluation

d. Validation of selection devices



9. The responsibilities of HRM Department in PA System includes:

a. Valuation of employees

b. Review of appraisals with employees

c. Maintenance of a reporting system to ensure timely appraisals

d. None of the above


10. The responsibilities of managers in utilization of a PA System include:

a. Selection of methods

b. Review of appraisals with employees

c. Maintenance of a reporting system to ensure timely appraisals

d. None of the above


11. As a ratee my most important concern (regarding PA) is:

a. Non-performance

b. Biases

c. Validity of appraisal format

d. Does the rater know me adequately


12. Majority of the raters tend to inflate performance report due to :

a. Keeping subordinates happy

b. Personal job security

c. To improve organisational effectiveness

d. To retain good people in the organisation


13. Performance review is done to :

a. Reward work done

b. Focus on areas requiring improvement

c. Giving appropriate feed back to individual

d. All of the above


14. Counselling is :

a. Helping the employee to grow and develop

b. Giving him feedback

c. Reading his performance report

d. Explaining legal implications


15. Key result areas are usually termed as :

a. Objectives

b. Mission

c. Goals

d. KRAs


16. The process of identifying and developing people to replace the current incumbents in key

position is called:

a. Potential appraisal

b. Performance appraisal

c. Career planning

d. Succession planning


17. All reasonably healthy adults have a considerable reservoir of “Potential energy” is one of

the basic principles of:

a. Motivation

b. Performance appraisal

c. Potential evaluation

d. Job evaluation



18. A PA System can be used for the following, except:

a. Human Resource Planning

b. Tone up performance

c. Identify individuals with high potential

d. Discipline employees


19. By making effective use of the PA System an organisation may (tick mark – wrong one)

seek to :

a. Improve productivity

b. Create a positive work environment

c. Improve job analysis

d. Stimulate, recognise and reward achievements


20. Performance appraisal system in any organisation depends substantially on five factors,

which one of the following is not a factor:

a. Concept

b. Criteria

c. Context

d. Community


21. An appraiser is the one:

a. Whose performance is being appraised

b. Who does the appraisal

c. Who is one of the managers in the organisation

d. None of the above


22. An appraisee should know the following aspects of performance appraisal except:

a. What

b. Why

c. By whom

d. Whether


23. In a traditional form of PA, a confidential report is a report on :

a. The subordinate

b. A colleague

c. A superior

d. None of the above


24. The confidential report system is usually a descriptive one and permits a lot of:

a. Objectivity

b. Subjectivity

c. Latitude

d. Flexibility


25. A negative confidential report is required to be communicated to the ratee and if the

ratee disagrees:

a. The report needs to be rewritten

b. The report needs to be modified

c. A noting to this effect is made on the appraisal format

d. None of the above



26. In trait appraisal, the problem with the trait is that they often relates :

a. More to people

b. More to jobs

c. More to people than to job

d. None of the above


27. Which one of the following is not an appraisal technique :

a. MBO

b. Confidential report

c. Trait appraisal

d. Judging method


28. “Rating Scales” is an appraisal technique where performance is measured through:

a. Assigning numbers (0 to 4 or 1 to 9 etc.)

b. Assigning alphabets (A to D or E)

c. Words which are descriptive adjectives (Outstanding, very good, good, fair and poor)

d. All the above


29. “Ranking Technique” is a form of :

a. Comparative measurement

b. Subjective assessment

c. Objective evaluation

d. None of the above


30. “Paired Comparison” technique requires the rater to appraise:

a. Group of two employees together

b. Group of four employees together

c. Which of the two employees is superior

d. Which two employees are not suitable


31. In “Paired Comparison” techniques, the number of comparisons to be made for 4 persons

will be:

a. 4

b. 6

c. 8

d. 10


32. In PA “BARS” stands for:

a. A form of soap or steel

b. Behaviourally anchored rating scale

c. Behaviour and review system

d. None of the above


33. A rater could be anyone of the following except:

a. An appraisee

b. A superior

c. A subordinate

d. A member of the HRD Department


34. Sometimes clients or users are asked to rate the employees with whom they interact

most in which of the following types of organisations:

a. Product oriented organisation

b. Service oriented organisation

c. Heavy industries

d. Consumer item organisations



35. Which of the following is not a rater’s concern:

a. Desire to be accepted

b. Concern for self protection

c. Fear of playing God

d. Stereo typing


36. “Horn Effect” is opposite of :

a. First impressions

b. Central tendency

c. Latest behaviour

d. None of the above


37. “Halo Effect” means basing the entire appraisal on the basis of :

a. One perceived positive quality

b. One perceived negative quality

c. First impression

d. Old associations


38. “Spillover Effect” is caused due to:

a. Past performance

b. Present performance

c. Appointment held

d. Status of the appraisee


39. “In Appraisal by Objectives” KRAs are decided by:

a. Appraiser

b. Appraisee

c. By both appraiser and appraisee

d. In advance through joint effort of appraiser and appraisee


40. “Conscious efforts to minimize personal biases” is a step in :

a. Preparation of appraisal format

b. Educating appraisee

c. Improving the accuracy of ratings by raters

d. Review mechanism


41. A system of representation by a ratee against his report is called:

a. Grievance handling

b. An appeal system

c. An interview

d. Review


42. Performance refers to one’s:

a. Behaviour and skills

b. Abilities in meeting the requirement on the job which one currently holds

c. Achievements

d. All the above


43. Potential refers to the:

a. Abilities present but not currently utilized

b. Ability to discharge higher responsibilities in future role

c. Both (a) and (b) above

d. None of the above



44. The focus of an appraisal discussion (interview) should be on :

a. How to improve the performance of the ratee

b. How to motivate ratee

c. How to develop ratee

d. How the rater and ratee may, together endeavour to improve performance


45. Performance appraisal is an important component of :

a. Management information and control system

b. Training and development

c. Recruitment and selection system

d. Wage fixation

46.Traditionally the first review of an annual performance appraisal report is done by:

a. HR Department

b. The CEO

c. Immediate superior of the rater

d. A committee appointed by the CEO

47.Which one of the following is not a critical phase of conducting an appraisal discussion interview

a. Rapport building

b. Exploratory

c. Action planning

d. Advising


48. The approaches in appraisal discussion:

a. Should be directive

b. Should be non-directive

c. May be directive or non-directive

d. Combination of both directive and non-directive

49.”Tell and listen” method is another name of :

a. Directive approach

b. Non-directive approach

c. Combination of both (a) and (b) above

d. None of the above


50. The word TAPE” is used for:

a. Performance and Potential Evaluation

b. Performance Appraisal and Potential Evaluation

c. Potential and Performance Evaluation

d. Past and Present Entitlements

Assignment ‘B’

  1. What is MBO? Why have appraisals by result performance appraisal systems not become popular in the Indian Industries? Discuss important aspects only?
  2. What essential aspects would you keep in mind while introducing a new performance appraisal system in an organisation which has no appraisal system so far?
  3. “A successful appraisal discussion between the rater and ratee should result in an agreement regarding the future action plan for improvement”. Discuss with your reasons?
  4. Write short notes on any three of the following:


a)            360 degree appraisal

b)                   Rater’s concerns

c)                   Potential appraisal

d)            Self appraisal

e)            Uses of information generated by Performance Appraisal system

f)             Designing effective PA System

g)            Ratee’s concerns in appraisal


  1. It is often said that a majority of employees are unhappy with the existing Performance Appraisal (PA) system due to various apprehensions / concerns. Discus the various apprehensions / concerns of ratees and their likely responses?
  2. Why is Appraisal discussion considered to be the most important component of a PA system? What should be the elements of a good Appraisal discussion?
  3. In the Indian environment should a PA system be open or closed? Discuss the merits and demerits of both? Which one would you recommend for your organisation and why?
  4. What is “Appraisal Discussion”? What useful purpose, if any, does it serve in making a PA System more effective? What guidelines would you suggest in conducting an appraisal discussion?
  5. What is the importance of Potential Evaluation for Career Development? Should a person be promoted merely because    he has done well in his present job? Give your reasons?

10.”Accuracy of rating” is often the concern of most of the employees. How can we improve the accuracy of ratings in an organisation?

  1. What is “Potential Evaluation”? How is “Potential” different from “Performance”? What methods would you suggest for evaluating potential? Discuss.
  2. What aspects would you keep in mind in designing an effective Performance Appraisal and Potential Evaluation System in your organisation?
  3.  What is performance appraisal? Discuss its objectives and uses?
  4. Describe the characteristics of an effective appraisal system?
  5. It is often heard that majority of employees are not happy with the existing PA System due to various apprehensions/ concerns. Discuss the apprehensions and concerns of the raters and their responses?
  6. Is it necessary to have a PA System in an organisation employing over 400 personnel? If so, why? How can the PA System be made more objective?
  7. Discuss the role of the performance appraisal system in stimulating and guiding employee development?
  8. “Performance appraisal is a step towards Management by Objectives”. Discuss with the help of an example?

Assignment ‘C

Case Studies & Questions


The performance appraisal of supervisors and executives (total 92 supervisors and 36 executives) at Mitco Ltd., a large heavy engineering unit, is conducted annually by superior officers. The parameters taken into consideration and given equal weightage are:

a.         Performance at work

b.         Sense of responsibility

c.         Superior’s dependability on subordinates

d.         Community activities

e.         Initiative

f.          Regularity and punctuality

g.         Potentiality to develop

h.        Ability to take senior positions

The assessment reports prepared by seniors are discussed with concerned employee only in case there are shortcoming and deficiencies in the individual with the objective of counselling him. The assessment report is referred to in deciding promotions, salary adjustments, determining training exposures and also transfers.

This year (2000) twelve supervisors and five executives were not given any increment as the overall total score was below standard mainly because of low rating in respect of ‘community activity’ and ‘potentiality to develop’ aspects. They represented the case to the Managing Director suggesting that the entire performance appraisal exercise was faulty. They wanted that all employees at all levels be given time bound salary increments and promotions. This would give all employees a fair deal without subjective bias. They definitely were against the three parameters of assessment, i.e., ‘community activity’, ‘potentiality to develop’ and ‘ability to take senior positions’.


  1. As a Personnel Manager do you see any merit in their representations? Discuss briefly?
  2. 2.  Do you think that two different performance appraisal systems need to be adopted – one for the supervisors and another for executives? If ‘yes’ suggest major changes for both (be very brief). If not, why



A public sector enterprise proposed to reorganize its structure and activities along business lines. Its main functions were the procurement, storage and supply of certain essential commodities. The majority of the employees were originally civil servants, who eventually opted for the service of the undertaking when it was registered as a company and offered them attractive terms. The newly -formed company was naturally interested in retaining their services. Its new Managing Director was particularly anxious to switch over to the open system of performance appraisal and do away with the annual confidential reports. He believed in the open system of communication in a business enterprise and for judging each individual on the basis of his performance rather than on his length of service or stay on a particular job.

He was specially aiming at bringing about two major changes viz. (a) appraisal of performance, mainly through an appraisal interview with the immediate supervisor in relation to a number of pre-determined targets of performance, and (b) mainly on the basis of such appraisal to ensure that the more efficient persons got out-of-turn promotion, regardless of seniority or were rewarded by the grant of advance increments.

Such promotions on the basis of performance assessed through open discussion were not proving popular though the idea had initially found favour with many. This sparked a lot of discontent as many of the employees felt that the new system was causing injustice to a number of senior officers and they were not used to such an open system. It was felt that management was rather hasty in introducing the new system. Finding that representations and allegations of nepotism were not producing the desired results, there was a move to form a separate association of senior officers to safeguard their interests. Their views were not taken into consideration and most of the employees did not understand the implications fully.


  1. What were the main causes of the resistance to the new system of performance appraisal in this enterprise?
  2. What in your view, was the mistake, if any, made by the Managing Director in introducing the new system?
  3. Should the management listen to the suggestions made by the officers to modify the system?



Chief buyer Ms. Radha Shaluja, called the management trainee, Ms. Mridhula Bansal into her office. “Mridhula, you have been with us only for six months but in that time you have progressed very well. I am delighted with your work and I appreciate the efforts you have put into it”. Mridhula was pleased. When she had come to Shivani Exports, fresh out of the Management College, she had lot of inhibitions about joining an export house. The job was different from what she had expected, with long hours of working and little glamour. But now she has been there for six months and was getting adjusted to routine life. Her immediate boss Radha had said that she was doing well.

Three months later, however, Mridhula was in for a surprise. When an opening for the post of Dy. Chief Buyer occurred in Shivani Exports someone else was hired. No one even mentioned the opening to Mridhula. She was never even considered. Upset and annoyed Mridhula went to visit her friend Ramesh Gupta, a senior buyer in men’s division. Ramesh was someone in whom Mridhula could confide. “My boss Radha Shaluja said, I was doing well and I have greater future here”. I just could not understand why the management did not even consider me for promotion.

“Well, for one thing” Ramesh said “You are not ready yet”. “That is not true” Mridhula responded. “I have worked hard for the last nine months and learnt everything there is to know about fabrics, inventory control, fashion forecasting and buying. What else is there to learn”?

“I thought you knew the policy of this company, Mridhula”, Ramesh began hesitantly, “Shivani Exports wants to be a fashion leader. Buyer should know how to get the best items for the cheapest price. It also takes creativity and in-depth knowledge of the market -such as finding new fashion items that will be a big hit. You have to be ahead of the customers. Anticipate their needs and even generate their needs. You are competent, Mirdhula, but you have not come up with any new ideas so far”.

Mirdhula was disappointed. She walked dejectedly out of Ramesh’s office. The next day Mirdhula phoned in sick. Over the next few months, her performance gradually declined and she made several purchasing and accounting errors. Concerned that Mirdhula was failing to meet minimum performance standards, Radha asked her what was wrong? “Oh, nothing” Mirdhula answered. “It is just that I don’t feel like working so hard if I am not going to get rewarded”.


  1. How would you evaluate the Performance Appraisal System at Shivani Exports?
  2. What mistakes, if any, did Ms. Radha and Shivani Exports make with respect to Human Resource Management?
  3. What can Radha do now to restore Mirdhula’s motivation and get her back on track?


Ahuja Lamps has been a very successful private concern for the last 10 years, since its inception in 1985. Their products, lamps and shades have been the envy of the elite in the country. With near monopoly their business had grown from a small workshop in Delhi to six major branches in metropolitan cities of Mumbai, Calcutta, Chennai, Bangalore, Lucknow and New Delhi. New Delhi itself had four major outlets at Connaught Place, Barakhamba Road, Lajpat Nagar and Ajmal Khan Road.

However, in the last three years, it was noticed that the sales and the profits were marginally declining every year despite the growing markets for lamps and shades. Though a few competitors had also come up in market, they were no immediate threat to Ahuja Lamps. However, some customer complaints which came to the Head Office in Delhi from various outlets in the country were derogatory.

Vijay Dixit the Chief General Manager at Delhi, who was responsible for all the four outlets at Delhi, had aspirations to make Delhi as a model operation. He felt very concerned and wanted to take immediate action to improve customer service and outlets sales performance.

Besides instructing the outlets managers for a detailed feedback, he wanted to obtain first hand information himself. He sent some of the head office employees to the four Delhi outlets to pose as customers and “spotters” and provide him with report on what they observed and experienced.

The reports did not make Vijay happy. The major complaint was regarding the sales people behaviour. They did not seem to make any efforts to convince the customers and their actions were just mechanical answers in one or two words. Several of the spotters saw sales people leave their service counters to carry on extended conversations with each others and with some of the people who appeared to be their personal friends. In addition, some sales people were several times heard using crude and vulgar language in front of customers and display a noticeable disdain for organisational procedures and guidelines.

Vijay called a conference of his outlets managers and shared his concerns with them. While all the four of them reluctantly agreed with Vijay, they also mentioned that their sales men may be a little rough around the edges but they knew their jobs because they have mostly come up from the lowest rung and have been with the Ahuja Lamps for over 10 years.

However, Vijay was not fully convinced. He said “that there maybe some merit in what you say, but we are not going to keep our market reputation and top position unless we turn around the behaviour of our people. Delhi outlets are also not going to be a model of customer service and sales performance unless we smooth out those rough edges. How you do it is upto you. Just do it! I’ll check back with you in three months”.

He also followed this up in a memo along with other specific adverse comments of the customers and spotters.

The Delhi outlet managers were worried about the ultimatum. Their sales people and other outlet staff weren’t perfect, but they knew their lamps and shades business and majority of them had been with the company for more than 10 years. What could they do?

Vijay Dixit also briefed the top management about the existing situation.


  1. As Vijay Dixit, analyse the situation and put up the proposed actions you wish to take.
  2. As one of the Delhi outlet managers, what actions do you propose to take?
  3. As the Managing Director of the Ahuja Lamps, what steps would you consider in respect of replacement, training and motivation of staff?



XYZ Limited was a large paper manufacturing company in South India, the major departments of the factory were:

a.     Chemical Processing                                            b.    Pulp Department

c.      Paper Machine Department (PMD)                    d.    Finishing Department

e.      Grading, Winding and Packing Department     f.     Quality Control Department

PMD was the heart of the factory where processed pulp was fed into the paper machines. At first, a wet weak paper was formed which was subsequently dried and rolled. Twenty eight workers worked in the PMD in four groups -each group attending one machine. The nature of the work on each machine was such that all the seven workers had to work in cooperation. Because no individual task could be specified, the group was made responsible for the work turned out by them. All the twenty eight workers in the PMD had been with the company for over ten years.

The company did not have any incentive wage system for any class of its employees. They were all given straight salaries with normal annual increments. The annual increments were sanctioned each year in a routine way. It was the policy of the company that the increments should not be stopped unless the concerned department head recommended such an action.

Mr. Rog was placed incharge of the PMD a year ago. Though Mr. Rog was a new comer, he proved himself to be a very competent person. The management noted that he was very aggressive and enthusiastic and knew his job well. At the end of the year, when increments were due to be sanctioned, he recommended to the management that increments due to eleven men in his department should be stopped, in his opinion they were lazy and inefficient. The eleven men concerned belonged to all the four groups operating in the department. The management, though puzzled about the action recommended by Mr. Rog, acted upon it and stopped the increments due to the eleven men concerned. The management was aware that such an action was the first of its kind in the history of the company and could lead to strained relations between the management and the employees.

Soon after the action was taken, the eleven employees concerned made a representation to the management requesting them to let them know what was wrong with their work as to warrant stopping of their increments. There was also some unhappiness noticed among other workers in the company. The management was naturally concerned and tried to further ascertain the detailed reasons from Mr. Rog. When Mr. Rog could not pin point the reasons, the management suspected that Mr. Rog’s recommendations were based on his “impressions” rather than the facts.


  1. Evaluate the situation prevailing at this point of time in XYZ Ltd.?
  2. Was the action of the management proper?
  3. As Management (Chief Executive) what advise, if any, would you give to Mr. Rog?
  4. How would you (as Chief Executive) handle the representation?