Which of the following best describes the concept of 'central tendency' in performance appraisals?

The concept of 'central tendency' in performance appraisals refers to the tendency of evaluators to rate all employees as average, rather than differentiating between high and low performers. This often occurs because raters may feel uncomfortable assigning extreme ratings or may lack detailed knowledge about each employee's performance. By defaulting to a midpoint or average rating, they adhere to a safe and cautious approach, which can lead to misleading assessments of employee capabilities and contributions.

Understanding this tendency is crucial, as it highlights a common pitfall in performance management practices, where the nuances of individual performance may not be adequately captured, thereby impacting employee development and organizational effectiveness.