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Everything You Need to Know About 360-Degree Performance Appraisal

Learning and Development | 4 Min Read

Everything You Need to Know About 360-Degree Performance Appraisal

Introduction

360-degree performance appraisal is a holistic approach to evaluate an individual’s performance in a professional milieu. The 360-appraisal method utilizes the features of a typical 360-degree feedback system to gather insights from multiple sources- superiors, peers, subordinates and even clients.

Unlike a conventional method, the 360-degree appraisal shifts the responsibility of evaluation to more than one person, reducing biases, errors and eliminating an array of other limitations. Hence, there is more room for collective growth, targeted developmental plans and absolute fairness across all levels of rewards, recognition, promotions, and pay raises, etc. This guidebook offers detailed insights into the basics, benefits and the importance of 360-degree performance appraisal. You will also learn about the reasons that make it such an effective appraisal system, how is 360-degree appraisal implemented and why it is necessary.

 


Chapter 1: The Fundamentals of 360-Degree Performance Appraisal

Authors and leadership scholars Barry Posner and James Kouzes recognize the 360-degree feedback tool as one of the most powerful mechanisms in the performance appraisal process.

Research shows that by collecting feedback from a variety of perspectives, especially peers and direct reports, individuals can understand how they’re seen from all points of view. They can then utilize this knowledge to assess the extent to which they actually exhibit exemplary leadership behaviors.

Kouzes and Posner
The Leadership Challenge: The Value of 360- Degree Feedback

Over the years, a growing number of Fortune 500 companies have adopted some form of a 360-performance review to evaluate and develop their employees. Interestingly, most of these companies use the results from their 360-appraisal system not just for conventional purposes but also for succession planning, training and overall professional development.

Unlike the limited approach of conventional appraisal methods, a 360 review focuses on skills that are required across organizational boundaries. Therefore, it results in:

a.  A highly objective measure of a person’s performance

b.  Full of broader insights, with minimal to zero biases concerning behavioral perceptions

c.  A procedurally and substantively fairer practice

 

What is a 360-degree performance appraisal?

 

A 360-degree performance appraisal is an advanced upgrade to conventional appraisal systems. It is a highly comprehensive process and gathers feedback about professionals from all possible sources who have directly or indirectly worked with them. Also known as the multi-rater feedback, the 360 performance appraisal accommodates several methods of collecting insights, such as employee surveys, rating scales and custom questionnaires.

 

Factors that make 360-degree feedback an ideal tool for performance appraisal

 

Widely recognized as a surefire way to identify employee strengths and weaknesses, the 360 appraisal system boasts of 3 unique facets. They are:

1. Inclusive, multi-dimensional components

A typical 360-performance review is a highly inclusive system that is ideal for all professional levels and hierarchies.

There are 5 multi-dimensional components integral to this process, lending it high efficiency:

  • Self-appraisals are an opportunity for employees to assess their performance and self-analyze their strengths and weaknesses.
  • Managerial reviews include ratings awarded by an employee’s supervisors across essential parameters.
  • Peer reviews help determine an individual’s ability to work well within a team, taking up initiatives and proving himself/herself as a reliable contributor.
  • Anonymous subordinate feedback alleviates reluctance or the fear of offering honest opinions about a superior’s performance.
  • Customer/client reviews help evaluate the output and external impact of an employee’s work.

In addition to multiple perspectives, the 360-degree performance review approach offers the time to reflect and realize how different sources perceive professionals at a senior level. The overall insights also encourage experienced experts to take on new learning initiatives for self-growth.

2. Benefits for employers as well as employees

One of the most significant factors that make 360 performance evaluation popular among organizations is how it benefits all stakeholders. On the one hand, it serves as a key to initiate coaching, counseling and career development activities within a system.

And on the other, it encourages employees to invest in self-development, embrace change management and enhance the awareness of how their performance impacts other associates.

The second chapter of this guidebook deep dives into the benefits of 360-degree feedback and why is 360 feedback important for wholesome, futuristic people decisions.

3. Solutions to conventional performance review problems

Perhaps it is not discussed as openly and as frequently as it should, but traditional performance appraisals are fraught with flaws. There are several concerns regarding the fairness of single-rater approaches vis-à-vis the unbiased nature of 360-degree performance appraisal. Traditional appraisals may also unintentionally focus on highlighting a professional’s weaknesses instead of considering how surrounding factors could be affecting his/her workflow. Additionally, problems such as the recency effect and attribution errors further damage the entire system.

We will extensively cover how 360-degree performance appraisal methods help overcome such conventional challenges in the section: 360 appraisals v/s conventional performance review.

Typically, performance appraisal has been limited to a feedback process between employees and supervisors. However, with the increased focus on teamwork, employee development and customer service, the emphasis has shifted to employee feedback. Hence, the questionnaire is the main approach used in the 360-degree performance appraisal.

Robert W. D. Zondo
The influence of a 360-degree performance appraisal on labour productivity in an automotive manufacturing organization

 


Chapter 2: The Importance of 360-Degree Feedback in Performance Appraisal

Effective management of employee performance helps immensely in achieving long-term business success. However, the practice should not remain limited to merely reward the high performers. After all, management also implies regularly maintaining and improving the performance of average individuals. Furthermore, keeping track of performance includes making unbiased decisions and treating everyone equally, even if it requires uncomfortable conversations with an under-performing workforce. Striking this balance is what propels organizations toward realizing their vision. That is where the robust system of a 360 performance appraisal comes into the picture.

Originally used only for L&D, the applications of the 360-degree performance appraisal method have significantly evolved over the past decade. Whether one agrees with it or not, an increasing number of organizations have begun turning to 360-degree performance evaluation for appraisal instead of their exclusive usage in development. This chapter explains the primary reasons behind this welcome trend.

 

Why do you need a 360-degree appraisal?

 

Apart from serving as a benchmark within an employee’s development plan, the 360-degree appraisal strengthens an organization’s entire performance management system. It is a wonderful professional opportunity to send and receive constructive criticism and appreciation in a balanced, honest manner. More importantly, it helps address a broad range of inhibitions and objections concerning workplace reviews and feedback.

Did you know?

  • 55% of workers believe that traditional annual reviews do not improve their performance. (Workhuman)
  • 1 in 4 professionals has felt discriminated against during their career. (Workhuman)
  • 77% of HR executives believe performance reviews are not an accurate representation of employee performance. (Linkedin)
  • 69% of workers say they would work harder if they felt their efforts were better recognized. (Linkedin)
  • Nearly 60% of survey respondents reported that they would like feedback on a daily or weekly basis—a number that increased to 72% for employees under the age of 30. (PwC)
  • Managers who received feedback on their strengths showed 8.9% greater profitability. (Gallup)

The big takeaway from these surprising statistics is the need for an advanced performance review solution!

The performance appraisal’s and the feedback’s focus need to shift from accountability to learning. Performance appraisals need to be future-forward, holistic and positive. The objective is to nurture an environment where employees can map their career trajectory while undertaking personal development based on the feedback received from multiple sources. Concurrently, the results of such reviews should help organizations make major decisions regarding their employees’ careers, annual appraisals or promotions.

That is why companies are increasingly moving toward a system that also promises frequent, development-focused conversations among managers and subordinates. Such a system is accurately known as 360-degree performance appraisal!

 

360 appraisal v/s conventional performance review

 

To understand remove why we need to move on from the tried-and-tested performance review processes, let us compare them with the offerings of a typical 360-performance appraisal method.

Areas of comparisonConventional performance review360-degree performance appraisal
PerspectiveLimited: Confined to supervisors.Broad: Inclusive of coworkers, supervisors, subordinates and clients.
ProcessTwo-party dialogue.Multi-factor conversation.
PerceptionPerceived as a tool to earn rewards.Perceived as a tool for strength building, learning, and long-term success.
ObjectiveEvaluation of preset goals, comparison of targets met, and successes delivered.A futuristic development of individual career plans, encouraging individual growth to propel company success.
FocusEmployee performance.Holistic development.
ConfidentialityNIL: Employee knows who the reviewer is.Complete: Anonymity ensures honest inputs that help the employee.
CompetitionUnfair and highly competitive: Individuals vying for survival and focused on getting a larger share of the pie.Healthy and self-centered: No one to defeat as the goal is self-improvement.
OutcomeShort-term positive/negative consequences: Pay raises, promotions, demotions and transfers.Long-term achievements: Actionable plans for growth, learning opportunities, higher productivity, besides rewards and recognition.

Internationally acclaimed HR thought leader Dr. John Sullivan elaborates up to 50 problems with traditional appraisal methods across categories, such as the process, execution, subject, timing and employee wellbeing. For starters, a conventional performance review relies on an assessment that is not data-based. Moreover, such a feedback system is often infrequent, lacking both accountability and key effectiveness metrics. On the contrary, a 360-degree approach can be best described as a more humane one!

3 specific issues that accentuate the need for upgrading the traditional appraisal systems:

  • Recency effect: A cognitive bias, the recency effect manifests itself in the form of immediate recollections regarding an individual’s behavior or performance. Hence, it completely disregards the individual’s ongoing efforts in favor of what the juror may or may not have encountered only recently.
  • Attribution error: Another recurring problem with conventional performance reviews is the tendency of a supervisor to overemphasize personal characteristics and overlook situational factors when evaluating an individual’s performance. This tendency is known as an attribution error that fails to recognize that sometimes, performance can be affected by factors outside of one’s control.
  • Bias clusters: There’s a wide variety of biases that hinder a fair employee evaluation when organizations refuse to upgrade their review approaches. Examples include the halo and horn effect, primacy effect, confirmation bias and single-rater bias, among others.

This brings us to the question: “how are 360-degree performance appraisal methods different?”

The purpose of 360-degree feedback is fundamentally different from its traditional counterpart. While the latter insists on preset goal achievements, the former is all about growth. Where one attempts to answer, “Did the individual complete all tasks effectively?”, the other focuses on “What can this individual do to get better at his/her job?” The key difference in objectives makes the 360-approach stand out. It emphasizes that appraisals need not be solely based on performance but on a combination of factors, such as performance, potential and the eagerness to learn. In other words, 360-degree performance evaluation is all about exploring possibilities and opportunities.

 

What are the advantages of the 360-degree appraisal?

 

The benefits of the 360-degree appraisal system are relevant for employers and employees. The 360 appraisals provide a structure and in-depth information about an employee’s current performance and requirements. Simultaneously, they lay the groundwork for detailed and futuristic development plans. It all comes down to enabling a firm to grow by nurturing its workforce to the maximum extent.

 

How the 360-appraisal system helps employees?

 

The importance of 360 feedback in improving work relationships is demonstrated by the process’s ability to boost communication and motivation across teams. It involves people from all over the organization in the evaluation process, giving colleagues new potential areas of development and boosting self-awareness while encouraging better behavior.

  • It helps uncover blind spots in an employee’s behavior, which allows individuals to focus on learning and development in a way that helps improve those overlooked areas.
  • The importance of 360-degree feedback increases when employees seek a balanced view of their skills and behaviors.
  • 360 reviews are key to identifying employee strengths.

 

The benefits of 360-degree performance appraisal tools for employers

 

360 appraisals are an excellent method to address several competencies through an analytical lens. The mechanism also helps measure factors that are otherwise difficult to quantify, such as teamwork, leadership abilities and communication skills. Not only does this appraisal system helps create more focused development plans, but it also ensures that those plans are in line with the expectations of the company and its collaborators. Additionally, the anonymity offered by a 360 performance evaluation ensures honest responses, increasing the reliability and objectivity of the information received.

In turn, employers can utilize these parameters to detect and eliminate biases and make futuristic people strategies.

  • Adopting the 360-degree feedback practice allows employers to address and resolve problems in an open, supportive environment.
  • It encourages honest communication that is instrumental in initiating team development programs to encourage accountability and boost employee morale.
  • 360 appraisals provide employers with valuable data to help engage their workforce and create multiple opportunities for collective growth and success.
  • It also helps employers retain and develop talent, motivate performance and broaden their perspectives on employee performance and wellbeing.

 


Chapter 3: 360-Degree Appraisal Method and Applications

The process of 360-degree performance evaluation may differ among companies. The implementation plan you choose depends on numerous factors, such as the core competencies for which you want the ratings, the type of questions to include, selecting the raters, communicating the process to all stakeholders, etc. Additionally, you should also know how to choose the right 360 feedback tool that matches your requirements.

 

How to implement a 360 performance appraisal in your organization?

 

The key to the success of the 360-degree performance appraisal process is to view it as a tool to help employees reach their potential. Done right, it can make your workforce a highly motivated group of people who are ready to do whatever it takes to get better, including acknowledging their mistakes. Organizations that implement 360 performance reviews for their appraisal process report higher levels of completion, fairer evaluations, increased accountability, more personal growth and a more open corporate culture.

Here is a list of things to consider when implementing a 360-degree appraisal system in your company:

 

Opt for the most user-friendly tool

 

You must choose a simple and easy-to-use tool to ensure a high success rate of your 360 feedback process. Besides, the tool should be intuitive enough to ensure high survey completion rates. Since the process depends on feedback from all employees, every step of the process must be free from complications.

 

Reflect on your company culture

 

You must be mindful of the existing work culture before rolling out the appraisal survey in your company. If your organization, stakeholders and employees have not used 360 performance reviews for appraisals before, they will not instantly trust the process. In such a scenario, it is best if the 360-degree feedback tool is used initially for developing leaders. Once the staff begins to have faith in the system, you can also roll it out for appraisals.

 

Hold a briefing session

 

Even though this step sounds clichéd, it is an important one for familiarizing the organization with something new. Before you expect employees to take up the survey, hold a briefing session to give pointers on using the tool. This exercise will simplify the process during its implementation. As employees begin to understand a 360-degree performance appraisal questionnaire and its workings, they can use it better.

 

Communicate the purpose

 

You need clarity before addressing your employees. Employees will have several questions regarding using a new tool for performance mapping. There will also be apprehensions regarding the reliability of the 360-degree performance appraisal method. To shun all the misconceptions, HR professionals should communicate the purpose of the exercise – employee development, identification of skill gaps and data-backed performance appraisals. An interactive session will act as an open forum where employees can ask questions one-on-one.

 

Set the right competencies

 

It is vital to know and define the core competencies that you want to measure using 360-degree feedback. It helps streamline the process and address specific areas that are relevant to the organization for an ideal performance appraisal across teams.

 

Curate a relevant 360-degree performance appraisal questionnaire

 

After defining the set of competencies, you must pick the right questions that help identify areas where employees excel and identify issues, which may require immediate attention.

 

Keep it short

 

A pre-requisite for making your employees fill any feedback form effortlessly and diligently is to keep it as concise as possible. Employees will not delay filling the survey if they know that the number of questions they must mark candidates on is only a few. If it is a long survey and takes an hour or more, possible delays or hasty and skewed ratings are likely, ultimately affecting the final report.

 

Pilot the survey

 

Testing the 360-survey on a small group of people will allow you to figure out the loopholes in the system, which can then be improved before rolling out the survey at all job levels. Also, understanding the impact of 360 performance reviews on employees helps employers make better employee decisions.

 

Additional uses of 360-degree performance evaluation

 

The beauty of the 360-approach also lies in its versatility. That is why the use of 360-degree feedback in HRM is not limited to performance appraisals alone. As hinted earlier, the way this process focuses on futuristic and ongoing growth for all stakeholders makes it a potent tool for enhancing the following areas in a professional setting:

Training needs identification

Most organizations can benefit from a better process that helps identify the training needs of their workforce. The holistic approach of a 360 feedback survey offers that process by helping the company determine the development areas. The latter could include:

  • Analyzing what type of training leaders may need to perform better in their roles.
  • Preparing a development strategy for all individuals throughout the professional hierarchy.
  • Identifying gaps in skills and knowledge.
  • Introducing reinforcements to ensure sustained development, etc.

Learning and development

360 feedback equips leaders with potent knowledge and insights into what is working and what isn’t. When using this feedback data correctly, decision-makers can act quickly by helping employees improve and become better leaders and contributors through streamlined L&D initiatives.

High-potential identification and succession planning

When adapted to look at ‘potential’ as one of the key assessment metrics, the importance of the 360 feedback becomes evident in identifying and developing high-potential employees in an organization. A custom 360 review can accommodate the markers of the high potentials to flag the indicators that make an individual more likely to succeed in a future role.

Employee engagement

An efficient 360-degree appraisal system ensures that all employees are included in the process of performance review and feedback. Additionally, the feedback survey can be custom-made into an activity for employees to review the organization, strengthening their voice and reassuring them that they are valued and their opinions matter.

 


Mercer | Mettl’s 360View: An Introduction

When seeking an employee-friendly 360-degree performance appraisal process, you must choose a tool that serves as a holistic solution to your evaluation needs. Mercer | Mettl’s 360 View is the most employee-friendly, cloud-based 360 tool with intuitive features that ensure high completion rates. The tool is designed to help organizations:

  • Implement a 360 appraisal system seamlessly.
  • Address all 360 feedback needs.
  • Enjoy customizations across competency models and question banks.
  • Assess rich insights in the form of elaborate reports.
  • Ensure high survey completion rates.

And more!

Explore Mercer | Mettl’s 360 View: Highlights, insights, client stories, and more.

View a sample report: Competency summaries, respondent summaries, and development plans.

Discover the process: How does Mercer Mettl’s 360 View work?

Learn more: 360 evaluation templates, questions, and competencies.

Further reading: The Definitive Guide to 360 Degree Feedback

 


Conclusion

Implementing a 360-degree performance appraisal in organizations is a wise investment and a business decision that promotes self-awareness among professionals and creates transparency in communications. The appraisal method nurtures an environment of trust, sharing and increased clarity toward expected behaviors and goals. The reason why is 360-degree feedback important is further explained by how it serves as an ongoing movement toward helping professionals get better at their jobs. A well-implemented 360-assessment tool and process can boost overall performance across teams.

 


FAQs

What are the four components of a 360-degree appraisal?

Why is 360-degree feedback preferred over traditional appraisal methods?

Do 360-degree reviews work?

Originally published February 18 2019, Updated June 11 2021

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360 degree feedback is a method of collecting anonymous feedback about an employee from multiple sources - manager, peers, subordinates - for appraisals and organizational planning. 360 degree feedback empowers organizations to make better people decisions.

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