Professional in Human Resources (PHR) Practice Exam

The central tendency error occurs when a manager rates all employees near the midpoint of a rating scale, regardless of their actual performance levels. This can happen as a way to avoid making difficult judgments about who is truly performing above or below average. By opting to rate everyone as average, the rater may be attempting to avoid potential conflicts or dissatisfaction among their staff. This practice diminishes the effectiveness of the appraisal process because it fails to accurately reflect individual employee performance and can lead to employee disengagement, as high performers may feel undervalued while lower performers are not appropriately identified and supported for improvement.

Other potential errors in performance appraisals, such as favoritism or bias, may distort ratings in a different manner, but the central tendency error specifically refers to the inclination to avoid extremes in ratings. In this context, overlooking achievements or relying solely on peer reviews may affect the appraisal outcome but are not representative of the central tendency error.