Which error occurs when all employees are rated within a narrow range in the middle of a performance scale?

The central tendency error occurs when all employees are rated in the middle range of a performance scale, regardless of their actual performance levels. This error reflects a tendency for evaluators to avoid selecting extremes – either very high or very low ratings – leading to a clustering of scores around the midpoint. This can happen for various reasons, such as a desire to be fair or difficulty in making distinctions between employee performances.

By relying on this middle-ground rating, the central tendency error fails to acknowledge the full spectrum of performance levels. As a result, high performers may not receive the recognition they deserve, while low performers may not be identified for improvement opportunities. This type of error undermines the effectiveness of the performance appraisal system, as it does not provide meaningful feedback that can inform decisions regarding promotions, development needs, or disciplinary actions.

Understanding central tendency is important for managers because it emphasizes the need for training in performance appraisal techniques and encourages more differentiated assessment practices that accurately reflect employee contributions and performance outcomes.