Everything you need to know about 360-degree performance appraisal

A 360-degree performance appraisal is a holistic approach to evaluating an individual’s performance in a professional milieu. The 360-degree appraisal method utilizes a comprehensive feedback system to gather insights from multiple sources, such as superiors, peers, subordinates and clients.

This appraisal method shifts the responsibility of evaluation to more than one person, reducing biases and errors and eliminating an array of other limitations. Hence, there is more room for collective growth and targeted developmental plans across all levels of rewards, recognition, promotions, pay raises, etc. This guide offers detailed insights into the basics, benefits and importance of 360-degree performance appraisal.

The 360-degree feedback tool is one of the most powerful mechanisms in the performance appraisal process. Leading companies adopt some form of 360-degree performance review to evaluate and develop their employees. Most of these companies use the results from the 360-degree appraisal system for purposes like succession planning, training and overall professional development.

A 360-degree review focuses on skills required across organizational boundaries. It results in a highly objective measure of a person’s performance and broader insights, with minimal to zero biases concerning behavioral perceptions.

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 multi-rater feedback, the 360-degree performance appraisal accommodates several methods of collecting insights, such as employee surveys, rating scales and custom questionnaires.

The core components of a 360-degree performance appraisal include-

• Self-assessment: Employees evaluate themselves through self-assessment, offering insight into their perception of their strengths and areas of improvement.
• Manager assessment: Supervisors or managers provide feedback based on their observations of employee performance reviews in manager assessments.
• Peer assessment: Colleagues or coworkers assess employee’s performance, providing a perspective from those who work closely with them in peer assessment.
• Subordinate assessment: If the employee manages others, direct reports can offer feedback on their leadership and managerial skills in subordinate evaluations (if applicable).
• External stakeholder assessment: Clients, customers, or external partners may also provide feedback, offering an external perspective in external stakeholder assessment.

The 360-degree appraisal strengthens an organization’s performance management system and benchmarks an employee’s development plan. It helps send and receive constructive criticism and appreciation in a balanced, honest manner. It helps address various inhibitions and objections concerning workplace reviews and feedback.

Performance appraisals need to be future-forward, holistic and positive. The objective is to nurture an environment where employees can map their career trajectories while undertaking personal development based on the feedback received from multiple sources. Concurrently, the results of such reviews should help organizations make significant decisions regarding their employees’ careers, annual appraisals or promotions. That is why companies are increasingly moving toward performance management tools that promise frequent, development-focused conversations among managers and subordinates.

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

The 360-degree appraisal system is a recognized and effective way to identify employee strengths and areas of improvement, boasting unique facets. They are:

A 360-degree performance review is inclusive for all professional levels and hierarchies.

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 insights also encourage experienced experts to take on new learning initiatives for self-growth.

One of the most significant factors that make 360-degree performance evaluation popular among organizations is how it benefits all stakeholders. On the one hand, initiating coaching, counseling and career development activities within a system is critical.

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

Traditional performance appraisals have drawbacks that affect the review. There are several concerns regarding the justness of single-rater approaches vis-à-vis the unbiased nature of 360-degree performance appraisal. Traditional appraisals may also unintentionally highlight a professional’s areas of improvement instead of considering how surrounding factors could affect their workflow. Problems such as the recency effect and attribution errors also damage the system.

Effective management of employee performance helps in achieving long-term business success. Keeping track of performance includes making unbiased decisions and treating everyone equally, even if it requires uncomfortable conversations with the workforce. A robust system of 360-degree performance appraisal helps organizations realize their vision.

The importance of 360-degree 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 discover 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.
• 360-degree feedback is useful when individuals seek a balanced view of their skills and behaviors.
• 360-degree reviews are vital in identifying employee strengths.

360-degree appraisal v/s conventional performance review

Some of the reasons why one needs to move on from the traditional review process to a 360-degree performance appraisal include-

A conventional performance review relies on an assessment that is not data-based; such a feedback system lacks accountability and key effectiveness metrics. On the contrary, a 360-degree approach takes a more humane approach. Three issues that accentuate the need for upgrading the traditional appraisal systems include:

• 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 an attribution error that fails to recognize that sometimes, performance can be affected by factors outside one’s control.
• Bias clusters: A wide variety of biases hinder an 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.

The purpose of 360-degree feedback is fundamentally different from its traditional counterpart. The latter insists on preset goal achievements; the former is about growth. The 360-degree performance appraisal 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. The 360-degree performance evaluation is about exploring possibilities and opportunities.

360-degree performance appraisal advantages and disadvantages

The 360-degree feedback system has both pros and cons. Some of the disadvantages of 360-degree feedback include-

• Susceptible to dishonest feedback: Employees who lack trust in the system may provide dishonest feedback, rendering the system ineffective. They may give pleasing feedback, compromising the integrity of the 360-degree appraisal process. Additionally, employees may manipulate data to undermine others or secure better reviews.
• Time-consuming process: While efficient, managers often perceive this feedback system as slow. Recipients may delay providing feedback or need help remembering to do so. Overthinking the rating further delays the appraisal. Compiling and satisfying all stakeholders with the final decision remains challenging, even with software to expedite the process.
• Conflicting reviews: Gathering feedback from multiple sources increases the likelihood of contradictory feedback, leading to confusion. Employees need help identifying priority areas for improvement and focus due to conflicting feedback.
• Poor execution: Organizations must improve the implementation and utilization of the 360-degree appraisal method. Introducing the technique positively and maximizing the value of feedback is crucial. It is essential during transitions between performance feedback types or when it may impact employees’ compensation or positions.

However, 360-degree appraisals provide structure and in-depth information about an employee’s performance and requirements. They lay the groundwork for detailed and futuristic development plans. It enables a firm to grow by nurturing its workforce to the maximum extent. There are numerous advantages of 360-degree feedback that aid in overcoming the disadvantages of the tool, such as:

• Anonymity encourages honesty: Anonymous 360-degree appraisal encourages employees to share feedback. It allows for honest feedback, including constructive comments, without hesitation or fear.
• Comprehensive evaluation: The 360-degree feedback system thoroughly reviews, quickly identifying recurring patterns and themes. It offers a thorough assessment of the employee’s performance, highlighting areas for improvement and showcasing their work processes and progress.
• Positive work environment: 360-degree feedback helps employees understand how they contribute to the company’s success, fostering a positive work environment and enhancing professional relationships within the organization.
• Proper training: The feedback system identifies areas where training programs can be developed to enhance strengths and promote a culture of continuous improvement. It helps determine the specific skills and qualities needed for success in the industry, allowing organizations to tailor their training programs accordingly.

Benefits of 360-degree performance appraisal tools for employers

360-degree appraisals are an excellent method to address several competencies through an analytical lens. The mechanism measures factors such as teamwork, leadership abilities and communication skills. This appraisal system creates more focused development plans aligning with the company’s and collaborators’ expectations. Additionally, the anonymity offered by a 360-degree 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. The benefits include-

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

The 360-degree process evaluation may differ among companies. The implementation plan depends on numerous factors, such as the core competencies for ratings, the type of questions, selecting the raters, communicating the process to all stakeholders, etc. Identifying the appropriate 360-degree feedback tool that aligns with unique business requirements is pivotal.

How to implement 360-degree performance appraisals in the organization? 

The key to the success of the 360-degree performance appraisal process is to view it as a tool to assist employees in reaching their potential. It can make the workforce a highly motivated group of people ready to improve and succeed.

Things to consider when implementing a 360-degree appraisal system in the company:

Opting for the most user-friendly tool

One must choose a simple and easy-to-use tool to ensure a high success rate in the 360-degree feedback process. The tool should be intuitive enough to provide high survey completion rates. Since the process depends on employee feedback, the process must be free from complications.

Reflecting on company culture

Before rolling out the appraisal survey, one must consider the company’s work culture. If the organization, stakeholders and employees are yet to use 360-degree performance reviews for appraisals, there can be a lack of faith in the process. In such cases, a 360-degree feedback tool can be used initially for developing leaders. Once employees build faith in the system, it can then be introduced for appraisals.

Holding a briefing session

It is essential to familiarize the organization with the 360-degree performance appraisal. Before expecting employees to take up the survey, holding a briefing session to give pointers on using the tool will simplify the process during its implementation. As employees understand a 360-degree performance appraisal questionnaire, they can use it better.

Communicating the purpose

Employees will have several questions regarding the new tool the organization is using for performance mapping. There will also be apprehensions regarding the reliability of the 360-degree performance appraisal method. HR professionals should communicate the purpose of the exercise, such as employee development, skill gaps identification and data-backed performance appraisals. An interactive session will help employees ask questions one-on-one and clear their doubts.

Setting the right competencies

Knowing and defining the core competencies one wants to measure using 360-degree feedback is vital. It helps streamline the process and address specific areas relevant to the organization for an ideal performance appraisal across teams.

Keeping it short

A pre-requisite for making the employees fill in any feedback form effortlessly and diligently is to keep it as concise as possible. Employees will only complete the survey if they know it is not going to consume a lot of time. If it is a long survey and takes an hour or more, possible delays or hasty and skewed ratings are likely, which will affect the final report.

Piloting the survey

Testing the 360-degree surveys on a small group of people will help 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-degree performance reviews on employees helps employers make better employee decisions.

Additional uses of 360-degree performance evaluation 

The 360-degree approach is a versatile process, and it is not limited to performance appraisals alone. The process focuses on futuristic and ongoing growth for all stakeholders, making it a potent tool for enhancing the following areas in a professional setting:

Most organizations can benefit from a better process that identifies the training needs of their workforce. The holistic approach of a 360-degree feedback survey offers that process by helping the company determine the development areas. It includes:

• 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.

360-degree feedback equips leaders with 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 learning and development initiatives.

When ‘potential’ is one of the critical assessment metrics, the importance of 360-degree feedback becomes evident in identifying and developing high-potential employees in an organization. A custom 360-degree review can accommodate the markers of the high potential to flag the indicators that make an individual more likely to succeed in a leadership role.

An efficient 360-degree appraisal system ensures all employees are included in performance reviews 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.

The questions asked in a 360-degree feedback performance appraisal depend on the process’s role and objective. The questions should be direct, non-emotive, and objective. They can include ratings-based, or Y/N questions followed by open-ended questions. Some question examples include-

• Does the employee communicate well in writing and have good grammar?
• Does the manager effectively solve problems?
• Is the manager responsive to their team’s needs and questions?
• What kind of skills does the employee exhibit?
• Is this employee someone that other staff will turn to for advice?
• What areas do you think the employee needs to improve?

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

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

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 360-degree feedback is an ongoing movement toward helping professionals improve and succeed. A well-implemented 360-degree assessment tool and process can boost overall performance across teams.