Which of the Following Potential Errors in Performance Appraisals Occurs

question 45

Multiple Choice

Which of the following potential errors in performance appraisals occurs when managers allow a single prominent characteristic of an employee to influence their judgment on each separate item in the performance appraisal?

• A) Halo effect
• B) Leniency
• C) Central tendency
• D) Alternation bias
• E) Recency

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Definitions:

Residual Income

A measure of a company's profitability, calculated by subtracting the cost of capital from operating profits.

Minimum Required Rate

The lowest rate of return that an investment must yield to be considered acceptable.

Residual Income

Income that continues to be generated after the initial effort has been expended, or in managerial accounting, the operating income that an investment center earns above the minimum required return on its operating assets.

Minimum Required Rate

The lowest return on investment that an investor is willing to accept, considering the risk involved.