How Important Can 360-Degree Feedback Be for Performance Review?

In an organization, employees work towards two goals — one is for self-career development, and the other is for the firm’s profits. Individual employees work with their peers in teams under the orders and directions of their supervisors to accomplish these goals. The organization has to have a program in place to maintain the performance of its employees and managers to ensure continued business excellence and to develop and retain its best talent. Performance management begins by aligning the organization’s short-term goals with its long-term goals.

The short-term goals dictate what employees’ output is expected to be to accomplish organizational goals. The performance of employees is then reviewed by the manager/supervisor/employer, and after the review, it then allows benefits to employees. This ends the cycle of performance management, which is repeated as necessary. Performance management thus acts as an internal assessment for an organization and creates a work culture that lets people perform to the best of their abilities.

The 360-Degree Feedback System

What role does 360-degree feedback play in performance management? To explain this, let’s take an example. During an MBA course, a student is expected to perform individually and in groups. His individual evaluation is done based on written examination, and group evaluation is done through the final presentation. Now if any student performs poorly, then he needs faculty to advise him to improve his written exam performance and also his team’s feedback to perform better in presentations. This is a sort of 360-degree feedback; that is, a student gets feedback from his faculty as well as from his peers to improve his overall performance. Thus the feedback for students provides regulations and guidelines to be followed for achieving maximum marks in examinations or towards increasing his/her productivity as a student.

In an organizational context, the individual performance of an employee and teamwork with colleagues is necessary for achieving organizational goals, which shows how much an employee is productive towards his/her firm. Feedback acts as a tool that, when embraced by an employee, results in enhanced productivity and directions for progressing toward strategic goals. Due to this, performance feedback is often tied up with salaries and promotions. This might due to the assumption that tying the development process with monetary benefits makes it a success.

In reality, when a 360-degree performance review is tied to a person’s salary or payoff, it can impact an employee in a negative way, mainly because it violates psychological safety. Moreover, this review system depends on the perspective of an individual to evaluate his/her peer; thus, a human element is included in the feedback. Therefore feedback may be affected by the human propensity to create hierarchies, protect the status quo, and take revenge. In other words, an individual may not be giving frank evaluations while rating bosses or peers. All these reasons show that implementing 360-degree feedback takes a lot of readiness and trust within an organization.

For an organization to ideally carry out a 360-degree feedback system, the steps given below should be followed, keeping in mind that the goal is to achieve collaboration and engagement and not distrust and fear.

1. Start with the Development

The 360-degree feedback system is mainly for organizations’ internal assessment. This system should be implemented as such instead of tying it to the salaries of an employee. The prime reason for the implementation of a performance system is to improve productivity or innovation or establish a work culture. A good performance management system results in subsequent profits. So the organization’s profit-making is a secondary outcome of the feedback system, while improving productivity is the feedback’s prime purpose. Therefore, for the best possible results, a feedback system should be introduced as a development tool; this also serves to partner employees with an organization.

Companies should start setting-up feedback systems one or two years before their expected returns, and this time duration should be used for understanding feedback systems by employees and employers. Some exercises for this duration should be:

• Self-appraisal. This is for an employee to evaluate themselves on appraisal platforms. This would act as bench-marking for the employee on how to evaluate his/her peers or boss and increase employees’ involvement in the review process.
• Subordinate appraisal. This is the review of a superior by an employee. This mainly serves development purposes rather than administrative purposes for a firm.
• Peer appraisal. This is important as individuals with the same rank in an organization review each other. The information from this review would be better than self-appraisal, as these can be biased. Thus peer appraisal provides very realistic information in terms of leadership and interpersonal skills along with strengths and weaknesses with regard to an employee’s colleagues.
• Team appraisal. This is very similar to peer evaluation, as an outside observer may find it difficult to keep track of individual contributions as compared to individuals within the team. This may also backfire in the form of the team focusing on non-productive activities.

2. Experiment with One Department

This is a pilot run of the 360-degree evaluation, and it should be used with the department most ready for it. Apart from checking the outcomes of feedback and performance evaluation, the goal here also is to establish buy-ins from other departments. Thus, the department must be selected which is most competent in implementing this feedback system. ‘Trust’ is the key here; this should be understood by the department and appraisers.

3. The 360-Degree Feedback System should be Aligned with Business Goals

Aligning feedback with the business goals defines clearly why the feedback system is required. This alignment helps in designing the feedback questionnaire so that the right questions are asked at the right time and not things that are in a manager’s control, such as the company’s AC infrastructure and their comfort with their seating arrangements. This alignment gives a specific set of questions that are worth knowing for improving work culture.

4. Training the Participants

Participants are the entities that would be giving and receiving feedback. Training is for participants’ knowledge on how the evaluation should be done and what it would be worth for the employees. Participants shouldn’t be taken simply as employees filling feedback but in the bigger context of overall employee improvement; thus, the training is the exercise to know how this affects the company as a whole. Managers should view this as a constructive process that leads to employee engagement and improvement rather than a punitive measure of keeping employees in check. Managers should also be trained to look at the positives in order to make improvements and second at the negatives in order to eventually eliminate it.

5. Follow-up

In the last step, it should be decided how the feedback should be used for implementing action plans for improvement. This would be decided from the third step, and thus the action plan needs to be aligned with business goals; tying to awards or punishments is not necessary for the beginning. Accountability is the key here, and care should be taken to ensure that the necessary actions for feedback and its effects should be monitored.

Feedback has always formed an integral part of performance management and helps improve performance and increase employee engagement. Negatives should be viewed as a bad habit that can be replaced by good habits via training. Thus,360-degree feedback systems help in turning those bad habits into good ones. This would serve as an encouragement for the employee, and using software solutions like performance management would help in setting specific appraisals program for him and adequately measuring his performance on the specific goals set for him. For a company, it would save the cost of training and recruiting new employees, buy-in from the employees, increase compliance, and increase employee engagement. In an ideal environment, all the employee would be more compliant, less deviated, more engaged, and supports the decisions of senior management, eventually leading to a lesser turnover.

Companies are fast understanding the importance of feedback; apart from giving a platform for continuous improvement, it also enables the employees with timely appreciation, which enhances team spirit, collaboration, and job satisfaction. Apart from that, collecting continuous performance feedback instead of annual performance cycles is better for routine action plans for improvements on a daily basis. It creates an environment where the problems are immediately taken care of while keeping focused on overall organizational strategies. Employees also become more engaged when they realize that they are an active part of the system. They become more responsive, perform better and make better-informed decisions. Continuous feedback also works because of the fact that the good work would be instantly realized and rewarded, whereas bad work would be immediately corrected, keeping all the processes in their place. This way, the whole 360-degree feedback mechanism can be very useful and important for organizations.