Correct Answer: Limited differentiation among employees

Solution : The correct answer is (b) Limited differentiation among employees.

A disadvantage of the forced distribution method of performance appraisal is limited differentiation among employees. This method requires categorizing employees into predetermined performance levels or categories, typically based on a fixed distribution curve (e.g., top performers, average performers, poor performers). The predetermined distribution curve often limits the number of employees that can be placed in each category, resulting in a forced distribution of ratings. As a result, this method may not accurately reflect the actual performance variations among employees, leading to limited differentiation and potentially overlooking nuances in individual performance levels.