Final answer:
Central tendency in performance appraisal refers to the error where most employees are rated as average, affecting the accuracy of evaluations. Mean, median, and mode are key measures, but they can be influenced by outliers, leading to potential inaccuracies in assessments.
Step-by-step explanation:
Central tendency refers to a measure that represents the center or typical value in a dataset. In the context of performance appraisal, the concept of central tendency errors is associated with the tendency of reviewers to rate most employees as average or near the middle of a scale. This can occur during a 360-degree performance appraisal, where various stakeholders, including supervisors, customers, direct reports, peers, and employees themselves assess an individual’s job performance.
There are three key measures of central tendency: mean, median, and mode. The mean is the arithmetic average, the median is the middle value, and the mode is the most frequently occurring value in a dataset. Errors in central tendency during performance appraisals can negatively affect the accuracy of the evaluation, leading to a lack of differentiation between high and low performers. As mentioned by Atkins and Wood (2002), self and peer ratings can be unreliable, and managers might underrate employees who rate themselves modestly. Understanding these measures and being aware of their limitations, particularly their sensitivity to outliers, is important in accurately interpreting performance appraisal data.