There is a good deal of controversy today around whether 360 degree feedback performance reviews are appropriate or whether 360-degree feedback should be used strictly for development. We’ve followed this debate for over two decades, conducting extensive research with over 10,000 360-degree assessments. We now have a clear answer to the question, “should we use 360-degree feedback for assessing performance?” There are actually two answers: “maybe,” and “it depends.”
Ok, not the responses you were looking for, so I will elaborate. DecisionWise research found that 360 feedback assessments could have significant benefits for assessing performance if used correctly. That “if” is a big caveat.
Rather than going through the pros and cons of both sides of the 360 feedback for performance vs development debate, let’s assume that choice has already been made. Your organization intends to use 360-degree feedback performance reviews. Great! So, let’s make it effective.
360-degree feedback performance reviews can be very effective in driving results and change within an organization. DecisionWise research, as well as a good deal of human resources and academic press, has shown that traditional performance appraisals generally fail to provide an accurate view of performance. As a result, many organizations have turned to gathering more regular feedback from multiple individuals, rather than the traditional once-per-year, top-down evaluation most organizations (and employees) have grown to despise.
360-degree performance reviews provide additional points of view and reference, measure how someone does their job, address behaviors associated with accomplishing job responsibilities, and open up real developmental conversations with managers. But, as mentioned, using 360-degree feedback for performance (and, in particular, as a replacement for performance reviews), should be undertaken with care. Below are some tips for taking advantage of this powerful process.
1. Understand the differences in use and purpose of 360 degree feedback reviews
There are differences in how a 360 feedback survey should be used for development, as opposed to appraisal. Scores are typically elevated when a 360 feedback survey is used for appraisal purposes, as raters recognize that results may impact a person’s compensation. Understanding that scores will differ depending on the purpose will help in determining how best to use and interpret the scores. DecisionWise research has shown that, when used for appraisal purposes, raters will give feedback relative to others in similar roles. In other words, it takes on a “grading on the curve” effect—how Employee A’s performance compares to the performance of Employees B, C, and D. Ratings tend to group closer together, with fewer extremes in scores. However, when there are extremes, these 360 performance appraisals highlight some major gaps. When used for development, ratings tend to have a great range in scores, as raters aren’t rating individuals relative to other employees. These differences should be taken into account when determining how to use and interpret the feedback results.
2. Communicate the purpose and process of 360-degree feedback
Let employees know the intended purpose of the 360-degree feedback review before administering the assessment, as well as how the results will be used. Communicate the process and hold to it. Also included in this would be such areas as confidentiality, who will see the results, logistics (timelines, expectations, etc.), and what will be included in the 360 items or questions. It is also very important to educate the organization on how to provide useful feedback and accurate ratings. For many, this is a new process (and may not be natural to some).
3. Begin with a 360-degree feedback pilot group
Using a pilot group prior to an organization-wide rollout has several advantages. First, it allows for refinement of the process and of the instrument itself. Many potential problems are quickly identified that would have been wide-spread otherwise. Second, the pilot participants can act as champions to promote the 360 feedback process throughout the rest of the organization.
4. Hold off before taking administrative action
Some organizations that use multi-rater feedback for appraisal tie results to administrative action. Our advice? Unless your organization is truly ready for this step, don’t do it (or at least hold off for a while). Organizations using 360-degree feedback for the first time should wait until at least the second or third year of use before to tying raises, promotions, or other administrative outcomes to the review results. While a majority of organizations have decided against using these results for administrative actions, those that do find that getting the organization accustomed to the process far in advance is wise. This allows employees to become familiar with the 360 feedback process and comfortable with providing feedback.
5. Manage 360 degree feedback rater selection
The process of selecting feedback raters (those who will provide the feedback) is important. Some organizations allow individuals to select their own raters. This is often appropriate when it comes to using 360 feedback for development. However, when multi-rater feedback is used for appraisals, it is advisable that individuals not select their own raters. If participants select their own 360-degree feedback raters they may be tempted to “stack the deck” in their own favor. This can be solved by having the company select raters on behalf of the employee. Another method we have seen used often is asking participants to select their own raters, followed by having these individuals’ managers review the rater list before it is finalized.
6. Use small, but relevant, 360-degree feedback rater groups
Consider the number of people that will be involved in providing feedback. 360-degree feedback surveys often involve more of the organization in terms of providing and receiving feedback than it would if used solely for development. Each individual (especially managers), may be required to complete multiple evaluations. We recommend limiting the number of raters requested to provide appraisal feedback. Common practice is limiting the number of raters in each rater group (Peer, Direct Reports, Others, etc.) to 2-4 people. Ensure that the selected raters have regular interaction with the employee being rated, and can provide accurate feedback as to performance.
7. Carefully consider the rating scale used
What does “outstanding” performance look like? Along these lines, we also recommend using a 7-point Likert scale, rather than a 5-point scale. This allows for greater differentiation in scores. As part of your communication and education process, help raters understand how best to provide feedback that can be useful.
8. Keep a 360 degree performance appraisal short
Design a 360 feedback assessment that is brief enough that it can be completed in less than 10-12 minutes. We have found this to be 25 questions or less (as opposed to a longer 360 used for development). Longer feedback assessments tend to create rater fatigue (especially when completing multiple assessments for individuals), resulting in most scores falling in the “good” range. The shorter the appraisal, the more likely raters are to take the time needed to give accurate, thoughtful, and useful feedback.
9. Use a customized 360-degree appraisal assessment
Your organization (and each job) is unique, and so are the competencies that lead to successful performance. 360 degree feedback surveys for development include items and questions geared at behavior (the “how”). Appraisal assessments focus more on performance (the “what”). Your 360 assessment questions should reflect these differences in design. Be aware that most off-the-shelf surveys are designed for developmental use, not for appraisals. We typically find that off-the-shelf surveys are ineffective for appraisal purposes. Organizations should consider a survey customized to their specific purposes, roles, objectives, and competencies.
10. Don’t group 360 feedback questions into single category scores
Most 360-degree assessments contain categories or competency groups—“communication” or “interpersonal skills,” for example. These groups then contain several items or questions related to that category. This is very appropriate and useful. However, a category like “communication” is comprised of many elements: oral communications, written communications, listening, etc. Rather than providing scores for each item, many appraisals we have seen will give just one overall score for the category, rather than for each individual element within “communication.” When this is the case, it is often difficult for an employee to know which area of “communication” is being addressed. Providing a score for each individual question or item provides more useful data, and is simpler for the rater to evaluate accurately.
360-degree feedback is a powerful tool, whether used for development or appraisal purposes. A 360-degree appraisal adds the advantage of gauging the perspectives of different groups, rather than simply that of the manager. It lessens the effect of rater bias. A 360 feedback evaluation gives a more complete view of performance. When used correctly, it can be an effective consideration for providing both appraisal feedback and development feedback.