What is the central tendency error in performance appraisal?

The central tendency error in performance appraisal refers to the tendency of appraisers to rate all employees as average or near the midpoint of the rating scale, regardless of their actual performance levels. This can occur when an evaluator avoids making extreme judgments and instead clusters ratings around the center of the scale. This practice can undermine the appraisal process by failing to accurately reflect individual performance levels, leading to a lack of differentiation between high and low performers. As a result, the performance feedback becomes less useful, as it does not provide the necessary insights for improvement, promotion, or other HR decisions. Recognizing and addressing this error is crucial for maintaining the integrity and effectiveness of performance appraisals.