What are some of the common biases and errors that can affect performance appraisal ratings?

1 Halo effect

The halo effect is a cognitive bias that occurs when an overall impression of a person influences the perception of specific traits or behaviors. For example, if an employee is friendly and charismatic, the manager may rate them higher on other aspects of performance, such as quality, creativity, or initiative. The halo effect can lead to inaccurate and inflated ratings that do not reflect the actual performance of the employee. To avoid the halo effect, managers should use objective and measurable criteria to evaluate each performance dimension separately, and avoid relying on general impressions or stereotypes.

2 Recency effect

The recency effect is a memory bias that occurs when the most recent events or information are given more weight than the earlier ones. For example, if an employee performs exceptionally well or poorly in the last week or month before the appraisal, the manager may rate them based on that recent performance, rather than the whole performance period. The recency effect can lead to skewed and unfair ratings that do not capture the full range of performance of the employee. To avoid the recency effect, managers should keep a regular record of performance incidents and feedback throughout the performance period, and review them before the appraisal.

4 Similarity and contrast effects

Similarity and contrast effects are rating errors that occur when managers compare employees with themselves or with other employees, rather than with objective standards. Similarity effects occur when managers tend to rate employees who are similar to them in terms of personality, background, or values higher than those who are different. Contrast effects occur when managers tend to rate employees who are different from them or from other employees lower or higher than they deserve. Both similarity and contrast effects can introduce personal biases and prejudices into the appraisal process, and affect the diversity and equity of the organization. To avoid similarity and contrast effects, managers should focus on the performance criteria and goals, rather than on the personal characteristics or preferences of the employees.

5 Central tendency error

Central tendency error is a rating error that occurs when managers tend to avoid giving extreme ratings, and cluster most employees around the middle of the rating scale. This can happen when managers are unsure about the performance of the employees, when they want to avoid confrontation or criticism, or when they perceive little variation among employees. Central tendency error can diminish the usefulness and credibility of the appraisal system, as it does not provide meaningful feedback or recognition to the employees, and does not identify the strengths and weaknesses of the performance. To avoid central tendency error, managers should use a specific and descriptive rating scale, provide examples and evidence to support their ratings, and differentiate among employees based on their performance outcomes and behaviors.