360 appraisal – The advantages and disadvantages when used as a performance management tool

The pros/benefits of using 360 degree feedback for performance appraisal

Using well rounded feedback to measure employee performance (if done well) can:

Reduce individual subjectivity and bias

A key benefit of gaining constructive performance feedback from multiple sources (as opposed to just the line manager) can help reduce the personal subjectivity encountered when only one person completes the review. Things like the ‘halo effect’ or ratings that are grounded in personal feelings (like vs dislike).

Provide an 'output' rating and ranking

360 degree feedback can also be of real value in helping to differentiate between low, middle and high band performers

Inform development goals

360 degree feedback can make an important contribution to the employee's ongoing professional development by raising self-awareness to their strengths / skills and potential areas for development, through the provision of real insight.

Help embed clear working standards/expectations

360 degree feedback questionnaires typically capture those working behaviours expected by the employer. The process of self-reviewing and rating others, helps people understand what’s expected of them and forces them to consider how they behave/are perceived against the behaviours described.

Provide a rounded perception

Typical appraisal processes provide a top town perspective only. Using a 360 degree feedback tool enables the perspectives of team members, peers, other employees, internal customers etc to be considered, thereby providing a broader (and potentially more accurate) assessment.

Provide greater quality

The more feedback received:

• The greater the opportunity to identify strengths to leverage
• The more likelihood of identifying development gaps
• The greater possibility that the whole appraisal process will be perceived as fair, since it’s coming from multiple sources

Promote honesty

Unfortunately, many colleagues, direct reports and staff members don’t feel comfortable providing feedback, especially constructive / developmental feedback. Most 360 degree appraisal merge feedback ratings in order to provide anonymous feedback in the hope of encouraging honesty and building even more effective working relationships.

Enable greater self awareness

The 360 feedback process provides an effective way for the recipient to understand how their style/ approach is viewed by others which raises their own self awareness to what colleagues view as their strengths, continuous improvement opportunities and raises awareness to any blind spots.

Anonymity

Most 360 degree appraisal systems are built around anonymous feedback, as a mechanism for encouraging honest feedback.

The concerns/disadvantages of using 360 degree appraisal for evaluations

Using 360 degree appraisal software for performance reviews also increases the potential risk of the activity being viewed as a negative experience and one that de-values feedback and performance management. The key disadvantages of using 360 degree feedback as an annual review process are:

The potential to create a negative working environment

Critical/negative feedback given in a culture of low feedback maturity can create a lot of resentment, alienation, tension and anger within the team

Feedback from colleagues and direct reports can become contaminated

What typically happens is that ratings go up, because respondents don't want to disadvantage the participant. In addition to the scores rising, the range of ratings (between highest and lowest) reduces along with the number of developmental/ critical feedback comments. The flip side is that in a few cases, the anonymity provided may lead some raters to be overly negative, critical or focused on weaknesses. in short the process is prone to political and social games being played by people.

It uses a lot of organisational time

Appraisal were traditionally conducted annually, however, many organisations using much shorter cycles (every six months, every quarter). Assuming each participant is rated by 10 people, the questionnaires take on average 20 minutes to complete and its done twice per year, the total time needed is about 7 hours per appraisee/ employee. Multiple that by a workforce of 100 and the impact on the organization would be very time consuming.

Participants can disengage

For many, there is a big difference between receiving 360 development feedback and entering a process where the output is being used to score / rate you or influence the judgements of key stakeholders within the organization.

Additional training is needed

Communicating/ engaging people to develop a consistent understanding of the rating scales and how it should be interpreted (in order to improve data reliability). Developing people so they have clear guidelines and know how to leave well balanced and meaningful feedback commentary that acknowledges strengths, provides positive constructive criticism that helps improve performance .. all take time!

Too much focus on the negative/ constructive feedback

Those with a lower level of feedback maturity will inevitably:

• Focus on the lower scores and ignore the positive feedback
• Blow things out of proportion
• Spend more time thinking about who said what (as opposed to listening to the message)
• Find critical feedback where there is none
• Have an emotional response to any perceived criticism

Anonyminity

Providing raters with anonymity can be a double edged sword. On the down side it can lower the level of feedback maturity by creating a culture where feedback is given behind people’s backs and doesn't need to be owned by the individual giving it.

Rater errors

Whilst rater errors are a known issue with traditional appraisal processes, there impact is multiplied with the 360 feedback approach. Rater errors include the following:

• Varying standards – Raters typically have different skill levels, standards and expectations and therefore everyone’s perception is slightly distorted.
• Regency effects – We naturally focus on a persons most recent behaviour rather that giving full consideration to the full period of time being reviewed
• Central Tendency - The data we have collected shows that rater use a much narrow range of responses
• Leniency / Strictness – Where raters don’t want to disadvantage the appraise or are particular strict
• Rater Bias - where a person rates according to their values or prejudices
• Halo and horn effect – Halo is where an rater has an positive impression of the person in some areas and this positively influences their opinion in weaker areas and the horn effect is the opposite to this where the rater scores on all items because of one characteristic that they dislike
• Contrast - The tendency to rate people relative to other people rather than to the persons individual performance

360 degree feedback appraisals – Key considerations when using it for performance evaluation

If you are in the process of planning to use a 360 performance appraisal model to score / evaluate / review performance, then you should be aware that whilst the basic concept / process is similar to that used when the system has been designed for development purposes, successful implementation requires the following to be considered, planned for, and applied:

Clarity about how the 360 degree feedback process will be used

As a core principle, we would strongly advise that the feedback collected should be used to influence outcomes, not dictate them.

Honest communication

It sounds obvious, but clearly and honestly explaining to all users, the context and how the 360 degree appraisal will be used is essential (and a legal requirement).

Alignment of competences

The questions in the 360 degree feedback survey must accurately paint the picture of role/ behavioural expectations. Therefore, the use of a range of questionnaires tweaked to meet the needs at different organizational levels or in different functional may be needed.

Use a feedback process that is balanced

To make the whole process balanced, consider:

• Incorporating the facility for self assessment
• Asking raters to comment on skills/ the employee's strengths as well as providing constructive feedback
• The use of open ended questions as well as tick box responses
• Providing those receiving feedback with the support needed to capitalise on their perceived strengths and further develop any identified weaknessess

Develop a 'weighting plan'

Different parts of the feedback data, will add different value, to the different aspects of the measured areas – for example:

• When measuring ‘team leadership’ a team member’s feedback should carry more weight than the perspective of a peer / colleague/ internal customer
• There is evidence that peer feedback can be a good indicator of future potential and therefore should it carry more weight in that areas
• Colleagues' feedback relating to cross functional working should be worth more than other groups
• The ratings a team leader receives linked to supervising others could carry more weight than the ratings received relating to strategic thinking
• Should the line manager’s score be weighted more than other populations?

In summary, there needs to be a clearly thought through ‘weighting plan’ that cuts across feedback population groups and behavioural areas.

The risk of extreme perspectives

Consider not collecting in feedback ratings from anyone with pending / disciplinary issues.

Subjectivity/ data reliability

Consistency of rater responses and how the feedback is used by line managers is very important. Put a process / training in place that enables greater ‘reliability’ of respondent ratings and define how line managers will use the information. This can be achieved by:

• Using clear / detailed descriptors on the rating scale
• Providing 360 degree performance review training, focused on developing organisational consistency in the understanding of the rating scale and how to provide great 360 degree performance evaluation feedback
• Being consistent in how the feedback is used – through the use of line manager workshops

Provide rater training programs

Rater engagement, their consistency/ reliability in completing the feedback form and their ability to leave well balanced feedback are key areas/ factors in getting it right. Whilst there is a significant time and cost to this, it is essential to ensure the whole process doesn’t result in a useless exercise.

A word of warning

In our experience 360 degree feedback appraisals used for performance reviews / evaluation is far more likely to work if the organization has a reasonably mature feedback culture. Managers and employees should have previous experience of providing, receiving, interpreting and actioning 360 degree feedback given in a developmental setting.

A solution that works

Whilst the principle of using 360 feedback/ peer appraisal to measure performance has its advantages, the risks of getting it wrong are also reasonably high with detrimental consequences.

Lumus360 have worked with many organisations that have found the middle ground i.e where the 360 feedback process is used to provide developmental feedback only, but the participant is expected to take their resulting development plan into their appraisal conversation.

This approach keeps all of the positive aspects of 360 feedback, encourages respondents to offer honest feedback, enhances employee engagement, provides self improvement / development ownership to the employee and grows the level of feedback maturity in the organisation.

In practice it works by running a ‘developmental’ 360 process a couple of months before the annual review and then establishing clear expectations that the key themes and proposed follow up actions are shared and mutual goals are agreed as part of the performance appraisal meeting.