Truth 54. The Case for 360-Degree Feedback Appraisals: More IS Better!

Employees at the Cook Children’s Health Care System in Fort Worth, Texas, aren’t evaluated only by their supervisor. They also get evaluated by patients, coworkers, and people in other departments who interact with them. The reason is that Cook has implemented 360-degree performance appraisal. It’s intended to provide more accurate and diverse input on an employee’s performance by seeking feedback from varied sources such as bosses, peers, subordinates, team members, customers, and suppliers. Its popularity is reflected by the fact that nearly 90 percent of Fortune 1000 firms now use this approach for their employee appraisals.

The 360-degree feedback system recognizes that performance varies across contexts and that individuals behave differently with different constituencies. When you get feedback from various constituencies, the reliability of the performance evaluation is increased. So, 360-degree appraisals capture the reality that an employee’s performance typically is made up of multiple behaviors and that access to observing those different behaviors varies among constituencies. Multiple evaluations by different constituencies have been found to capture this variety of behavior and improve the quality of the performance appraisal data.

In the typical 360-degree appraisal system, employees are evaluated by 8 to 12 people. Ideally, they should be individuals who work closely with the employee and have direct contact in assessing his or her performance. It’s been found that 360-degree feedback works best with employees who work in teams or at a distance from their bosses. In the former case, team members are better able to accurately assess an employee’s contribution than his or her immediate supervisor. In the latter case, remote bosses often have little day-to-day contact with the employee, and evaluations tend to be inaccurate because they’re based on limited and selected bits of information. In the case of a sales representative who is on the road most of the time, the customers he or she meets with regularly can offer performance insights that a supervisor would never be privy to.

Jay Marshall found 360-degree feedback helpful when he was a partner at Booz Allen. In charge of a team of about 75 consultants, Marshall learned through a 360-degree review that he had “become invisible” to the consultants he was overseeing. The feedback he got made him realize that he was spending too much time trying to keep the client happy and shortchanging his team of the time they needed from him. That feedback wouldn’t have been possible from his boss or other superiors who never visited his job site.

The major problem you need to be aware of with these appraisals is the tendency of evaluators to use them as a means of “getting even” with an employee. This can be particularly troublesome with input provided by subordinates and peers. Since reviews are usually anonymous, evaluators with an axe to grind can use the system to even scores. To help alleviate this problem, most companies allow employees to choose which subordinates and peers they want to review them. While this can create a tendency for individuals to selectively “choose friends,” this bias can be reduced by ensuring that a substantial number of evaluations are sought. A sample of only 3 or 4 evaluations can be easily manipulated. But a sample of 10 or 12 is likely to provide a reasonably accurate picture of the evaluatee’s strengths and weaknesses.