What is a key limitation regarding individual differences in performance appraisal?

A key limitation regarding individual differences in performance appraisal lies in the way these differences can complicate the evaluation process. Individual differences refer to the unique traits, behaviors, and performance levels of employees. When these variances are not adequately accounted for, it can lead to misunderstandings or misrepresentations of an employee’s actual performance.

By suggesting that the presence of individual differences nullifies the utility of appraisal, this option highlights a significant challenge: if performance appraisals fail to recognize and adapt to these differences, they may not accurately reflect an employee's contributions or potential. In such cases, performance evaluations could become unreliable, leading to dissatisfaction among employees and potentially impacting overall organizational effectiveness.

Other choices suggest benefits or positive outcomes associated with individual differences—such as uniformity, enhanced understanding, and fairness—which do not acknowledge the challenges they pose in the appraisal process. However, the central concern emphasized here is that without proper handling of individual differences, the foundational goal of an effective performance appraisal system could be undermined.