Explanation:

The correct answer is option B, which states that a rating committee used for performance appraisals consists of 3-4 members. Let's discuss why this is the correct answer.

Importance of Rating Committee:
A rating committee plays a crucial role in the performance appraisal process of employees. It is responsible for evaluating and assessing the performance of employees and assigning ratings or scores based on their performance. The committee ensures that the appraisal process is fair, unbiased, and consistent across the organization.

Factors Considered for Determining Committee Size:
Several factors are considered when determining the size of a rating committee. These factors include:

1. Number of Employees: The size of the rating committee should be proportional to the number of employees in the organization. If the organization has a large number of employees, a larger committee may be required to effectively evaluate and appraise all employees.

2. Hierarchy and Complexity: The complexity of the organizational hierarchy and the nature of the job roles also play a role in determining the committee size. If the organization has multiple levels of hierarchy and diverse job roles, a larger committee may be needed to ensure a comprehensive evaluation.

3. Expertise and Diversity: The committee should consist of members who possess the necessary expertise and knowledge to evaluate the performance of employees. They should have a good understanding of the job requirements and performance expectations. Including members from different departments or functions can bring diversity and different perspectives to the evaluation process.

Optimal Committee Size:
While the optimal committee size may vary depending on the specific organization and its requirements, a rating committee consisting of 3-4 members is generally considered appropriate. This size allows for a balanced evaluation process while ensuring that different perspectives are taken into account.

With a committee size of 3-4 members, it becomes feasible to gather input from multiple evaluators while avoiding excessive complexity and potential conflicts. It also allows for effective discussion and consensus-building among committee members.

Conclusion:
In most firms, a rating committee used for performance appraisals consists of 3-4 members. This size ensures a fair and comprehensive evaluation process while considering factors such as the number of employees, hierarchy, complexity, expertise, and diversity.