Consider the following statements about setting performance standards:
(A) Standards are the criteria against which actual performance would be measured.
(B) Time to be spent in performing a task represents a qualitative standard.
(C) Improving the motivation level of employees is an example of a qualitative standard.
(D) Standards may need modification to be realistic in a changed business environment.
(E) Whenever qualitative standards are set, they should be defined in a manner that makes their modification easier.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (C) and (D) only
(A) Standards are the criteria against which actual performance would be measured. — Correct. Standards are the criteria against which actual performance is measured. They serve as benchmarks the organisation works towards.
(B) Time to be spent in performing a task represents a qualitative standard. — Incorrect. Time spent on a task can be counted in hours or minutes. So it is a quantitative standard.
(C) Improving the motivation level of employees is an example of a qualitative standard. — Correct. Motivation of employees cannot be put in numbers. So it is a qualitative standard, like improving goodwill.
(D) Standards may need modification to be realistic in a changed business environment. — Correct. The internal and external business environment keeps changing. So standards must be flexible and may need modification to stay realistic.
(E) Whenever qualitative standards are set, they should be defined in a manner that makes their modification easier. — Incorrect. Qualitative standards should be defined so that their measurement becomes easier. Easy measurement helps in comparing them with actual performance.
NCERT (2026-27 Edition): Step 1: Setting Performance Standards: “The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organisation strives to work. Standards can be set in both quantitative as well as qualitative terms. For instance, standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, time to be spent in performing a task, all represents quantitative standards. Sometimes standards may also be set in qualitative terms. Improving goodwill and motivation level of employees are examples of qualitative standards. … At the time of setting standards, a manager should try to set standards in precise quantitative terms as this would make their comparison with actual performance much easier. For instance, reduction of defects from 10 in every 1,000 pieces produced to 5 in every 1,000 pieces produced by the end of the quarter. However, whenever qualitative standards are set, an effort must be made to define them in a manner that would make their measurement easier. For instance, for improving customer satisfaction in a fast food chain having self-service, standards can be set in terms of time taken by a customer to wait for a table, time taken by him to place the order and time taken to collect the order. It is important that standards should be flexible enough to be modified whenever required. Due to changes taking place in the internal and external business environment, standards may need some modification to be realistic in the changed business environment.” |