What is the term for when supervisors place employees into a "average" category artificially?

The term for when supervisors place employees into an "average" category artificially is known as the error of central tendency. This phenomenon occurs when evaluators avoid extreme ratings and instead cluster their assessments around the middle of the rating scale. This can lead to a lack of differentiation among employee performances, where high performers and low performers are rated similarly, thus obscuring their true abilities and contributions. This error reflects a reluctance to fully acknowledge exceptional or poor performance, which can have detrimental effects on employee development and motivation, as well as on organizational outcomes.

In contrast, other types of bias, such as the halo effect, involve allowing one positive aspect of an employee's performance to influence the evaluation of their other attributes. Error of bias encompasses a broad range of subjective influences that can distort an assessment. Error of contrast occurs when an evaluator's assessment is unduly influenced by comparisons with other employees rather than the criteria being evaluated. Each of these terms highlights different evaluative pitfalls, but the error of central tendency specifically pertains to the tendency to avoid extremes and artificially skew performance evaluations towards the average.