Skip to content

Business and Technology · Review and appraisal of individual performance

Linking Appraisal to Reward, Training and Discipline

Updated 11 October 2026 · Fact-checked

Appraisal reviews an employee's performance against agreed objectives. The results then feed three decisions: reward (pay rises, bonuses, promotion), training (gaps between required and actual skills) and discipline (formal action if poor performance or conduct is not corrected). Fair, evidence-based appraisal makes all three decisions defensible.

Understand Linking Appraisal to Reward, Training and Discipline

Performance appraisal is a formal review of how well an employee has done against agreed objectives. On its own it changes nothing. It matters because the results are used to make decisions about people.

There are three main uses. The first is reward: pay rises, bonuses and promotion. The second is training and development: the gap between the skills the job needs and the skills the person has. The third is discipline: action taken when performance or conduct stays below the standard required.

Performance related pay (PRP) links pay directly to results, such as a bonus for hitting sales targets. Advantages: it motivates people, focuses effort on organisational goals, and rewards high performers so they stay. Disadvantages: it can encourage short-term thinking, damage teamwork, tempt people to manipulate figures, and demotivate those who miss targets. It also works badly where results depend on factors outside the individual's control. A fair PRP scheme needs targets that are clear, measurable, achievable and within the person's control.

For training, the appraiser compares required competence with actual competence. Each gap suggests a development action, such as coaching, a course or a job rotation. This is a training needs analysis at individual level. It works best when appraisal is honest and the employee takes part in setting the development plan.

For discipline, appraisal gives written evidence of poor performance. A fair process normally starts with informal counselling, then moves through formal stages such as a verbal warning, written warning and final warning, before dismissal as a last resort. The employee must know the standard, be told what is wrong, be given a chance to improve and have the right to be heard. A grievance procedure is the reverse: it lets an employee raise a complaint, for example about an unfair appraisal rating, and have it considered formally. Details of the law vary by country, so exam answers should stay with general good practice.

How to solve Linking Appraisal to Reward, Training and Discipline questions

Use this method for any scenario or objective test question that links appraisal to its outcomes.

  1. 1Read the question and identify the outcome being asked about: reward, training or discipline.
  2. 2Find the evidence in the scenario: targets met or missed, skill gaps, behaviour, or complaints.
  3. 3Match the evidence to the right action. Strong results point to reward or promotion, skill gaps to training, and persistent poor performance or misconduct to the disciplinary process.
  4. 4Check fairness: are the targets clear, measurable and within the employee's control, and has the employee been told and heard?
  5. 5For multiple response questions, count how many options you must select and pick only those that fit the scenario.
  6. 6Eliminate options that skip stages, such as dismissal with no warnings, or that reward the wrong behaviour.

Quickest way: Outcome matching in 30 seconds

When to use it: Use this on two-mark objective test questions where you must pick the right consequence of an appraisal result.

  1. Underline the key word in the scenario: bonus, skills gap, warning or complaint.
  2. Link it: bonus means reward, skills gap means training, warning means discipline, complaint means grievance.
  3. Remove any answer that is too harsh, skips a stage, or ignores the employee's right to be heard.
  4. Choose the answer that is fair, evidence-based and linked to objectives.

Common mistakes in Linking Appraisal to Reward, Training and Discipline

  • Saying PRP always motivates staff.

    Students remember the advantages and forget the drawbacks.

    Fix: State that PRP motivates only when targets are fair, measurable and controllable. Mention risks such as short-termism and weak teamwork.

  • Treating training as a punishment.

    Students link appraisal gaps only to failure.

    Fix: Describe training as a way to close a skills gap and develop the person, not as a penalty.

  • Jumping straight to dismissal for poor performance.

    Students ignore the staged nature of discipline.

    Fix: Show the order: informal counselling, verbal warning, written warning, final warning, then dismissal.

  • Confusing disciplinary and grievance procedures.

    Both involve formal hearings and written records.

    Fix: Disciplinary action is started by the employer about the employee. A grievance is raised by the employee about the employer or a colleague.

  • Basing pay decisions on one overall impression.

    Students forget bias such as the halo effect.

    Fix: Say that ratings must rest on documented evidence against agreed objectives.

Worked examples

Example 1

A sales employee misses her target for three quarters running. Her manager has never discussed the shortfall with her. List the sensible steps the company should take before any formal disciplinary action.

Show the solution
  1. Identify the issue: persistent underperformance with no feedback so far.
  2. The employee cannot be disciplined fairly for a standard she has not been told she is missing.
  3. First step: hold an appraisal or counselling meeting to explain the shortfall with evidence.
  4. Second: look for causes such as a skills gap, poor resources or personal difficulties.
  5. Third: agree an improvement plan with clear targets, support such as training, and a review date.
  6. Only if there is no improvement after a fair chance should the formal disciplinary stages begin.

Answer: Give clear feedback, find the cause, agree a support and improvement plan with a review date, and start formal warnings only if she still fails to improve.

Example 2

A company pays managers a bonus only if quarterly profit exceeds target. Explain two advantages and two disadvantages of this performance related pay scheme.

Show the solution
  1. Advantage 1: it links managers' interests to the company's profit goal, so effort is directed at organisational objectives.
  2. Advantage 2: it rewards high performers and helps retain them.
  3. Disadvantage 1: a quarterly profit target encourages short-term decisions, such as cutting training or maintenance spend.
  4. Disadvantage 2: managers may manipulate figures or compete against colleagues, harming teamwork and honesty.
  5. Add a conclusion: the scheme is fairer if targets are controllable and also include longer-term measures.

Answer: Advantages: aligns managers with profit goals and rewards and retains strong performers. Disadvantages: encourages short-termism and risks manipulation and weaker teamwork.

Exam tips

  • Always name the link: reward, training or discipline. Examiners often test which outcome fits a given appraisal result.
  • For PRP questions give both sides, and say what makes a scheme work: fair, measurable, controllable targets.
  • Show that discipline is staged and fair. Never recommend instant dismissal unless the scenario describes gross misconduct.
  • In multiple response questions, read how many answers you must select and do not choose extras.
  • Link a training answer to a specific skills gap in the scenario, not generic training.

Practice questions from Review and appraisal of individual performance

Linking Appraisal to Reward, Training and Discipline: frequently asked questions

How does appraisal identify training needs?

The appraiser compares the skills the job requires with the employee's actual skills. Each gap becomes a development need. The employee and manager then agree actions such as coaching, courses or job rotation.

What are the advantages and disadvantages of performance related pay?

Advantages include motivation, focus on organisational goals and retention of strong performers. Disadvantages include short-term thinking, weaker teamwork, manipulation of results and demotivation of those who miss targets.

What is the difference between disciplinary and grievance procedures?

A disciplinary procedure is used by the employer when an employee's performance or conduct is unacceptable. A grievance procedure lets an employee raise a complaint formally, such as an unfair appraisal rating.

Should poor appraisal results lead straight to dismissal?

No. Good practice is to give feedback, offer support and training, and set a review date. Formal warnings come next, and dismissal is a last resort, except for gross misconduct.