Central tendency is the inclination of managers to rate all their subordinates with an “average” score during performance appraisal. For instance, if the rating scale was from 1-7, the managers would leave out the extremes i.e. 1,2,6,7 and rate all the employees with a score between 3-5.
This behaviour leads to the distortion of the purpose of evaluations as it does not reflect the employees’ true performance. Furthermore deserving candidates can be overlooked upon and underperforming candidates may be rated higher than their true potential. Consequently the subordinates will not get a clear view of their strengths and weaknesses and may remain stagnant.
Central tendency bias can be avoided by providing the rater with a shorter scale such as 1-3 or by using the ranking method since all employees cannot be given the same rank.
Due to central tendency, sometimes an error occurs which is known as the central tendency error. The impact of the central tendency error increases with increase in rating scale size – but shorter rating scales are also less exact.