What type of rater error occurs when a rater gives average ratings to all employees regardless of their actual performance?

The correct answer is central tendency. This type of rater error occurs when evaluators avoid giving extreme ratings and instead cluster their assessments around the midpoint of the rating scale, leading to an overall average rating for all employees. This can happen for various reasons—raters might feel uncertain about how to assess performance, wish to avoid conflict, or simply prefer to remain neutral.

Central tendency can significantly distort performance appraisals, as it obscures differences between employees who may be performing at vastly different levels. For example, if all employees receive a '3' out of '5' in a system designed to distinguish between superior and poor performance, it becomes impossible to identify high and low performers accurately. This can affect decisions related to promotions, salary increases, and training needs, as it does not provide a clear picture of individual contributions.

The other options represent different performance appraisal distortions: leniency occurs when a rater gives overly favorable ratings, the halo effect happens when a rater allows one positive trait to influence the overall evaluation, and strictness refers to a tendency to give overly harsh ratings. Each of these errors has its own implications, but central tendency specifically addresses the issue of averaging ratings across all employees.