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360-Degree Feedback: What Is It And How Does It work?

Francisco Homem de Mello

feedback

The 360-degree feedback is one of the most used – and misused – tools of the performance management stack. In this article, we will unpack what actually is a 360-degree feedback, the difference between a 360-degree review and a 360-degree feedback, what are the most frequent reasons companies use it, its limitations and main risks as well as some common mistakes in applying them.

The article is based on the foremost literature of industrial/organizational psychology, as it has very good insights on the subject.

So get ready for a ton of useful info J

 

What is the difference between a 360-degree review/appraisal/evaluation and a 360-degree feedback?

 

A 360-degree review is not necessarily the same thing as a 360-degree feedback. The difference is in how the results are used within the company.

 

A 360-degree feedback is a process where a given reviewee gets inputs on her performance (or other criteria such as behaviors, competencies and results achieved) from a number of different people that bear different working relationships with the reviewee (for example, they can be direct reports, manager, peers and other internal customers). The goal is to provide de reviewee with rich input on how she can improve, and usually, these results serve no other purpose within the company.

A 360-degree review, on the other hand, has similar workings, but its results are usually fed into some sort of decision-making process, where employees have their futures decided in terms of promotions, compensation and so on and so forth. In these reviews, ratings are usually averaged out and used to rank employees, and these rankings are further used to decide who gets to be promoted, for example.

In both cases, the input can be either qualitative or quantitative, or both. Quantitative input is in the form of ratings based on specific criteria such as behaviors and competencies. At Google, for example, employees are reviewed in a number of behaviors such as “delivers quality results without the need of handholding” on a scale of “below expectations” to “exceeds expectations”. Qualitative input, on the other hand, tends to come in the form of a narrative that may or not be guided. At Netflix, for example, there’s a structured feedback process every 6-months where people are encouraged to give each other feedback on the start/stop/continue framework. If everybody – that is, subordinates, peers and manager – that surrounds an employee give them feedback, we could call it a 360-degree feedback, but we’ll get into that in a bit.

To help you further, let’s talk a bit more about what feedback is and what a review are.

 

What is feedback?

The Oxford Dictionary defines feedback, among other things, as “The modification or control of a process or system by its results or effects, for example in a biochemical pathway or behavioral response.” Somebody or something gathers information about itself and changes information accordingly.

When our feet touch the floor, the reaction that the force of our foot touching the surface generates (in this case in the opposite direction) tells us are stepping on a firm surface, which supports our weight. Therefore, we keep on walking. On the other hand, if we step on a softer or unstable surface, we use the difference in the nuances of this reaction to recalibrate our steps, maybe deviating from our course, for example.

When we talk to people we also get constant feedback on the progress of the conversation. Those who are talking to us may, for example, show varying body language that sends us information about whether the conversation’s been perceived as pleasant, interesting, boring, etc. And often this feedback received from others serves as a basis for us to change our behavior according to our goals. A comedian can sense the absence of laughter and eye contact from the audience to change the jokes he uses on his stand-up gig with the ultimate goal of getting them to laugh.

 

Feedback at work

At work, feedback has a couple of more specific meanings.

First, we call feedback those conversations full of anxiety we have with our managers at the end of a performance review, where we receive information about our performance, strengths and weaknesses, about promotions and salary increases, and so on and so forth.

Second, we call it feedback when someone at work gives us some sort of direction on our behaviors and/or work output, such as when our colleague tells us we should consider not interrupting them so much during a conversation, or when we’re told we’re not properly preparing hiring managers for their interviews with prospective candidates.

 

What is a review?

When we search for the meaning of the word “appraisal,” that’s often used interchangeably with “review” as in “performance appraisal” or “performance review”, Google tells us “appraisal” is the estimate of the nature, quality, or skill of someone or something. Google gives us as synonyms evaluation, judgment, estimation, analysis, and opinion.

Based on this definition, we can infer that a review is more than a simple feedback: It’s feedback that attempts to quantify something about employees in order to make decisions compensation and talent management.

It’s easy to understand what we’re talking about: Many companies structure their performance reviews based on the “what and how” paradigm (where “what” and “how” mean, respectively, behaviors and results being appraised).

On the behavior side, employees are asked to review each other on the frequency with which someone shows behaviors related to “teamwork”. Thus, we may learn that our colleagues think I “work as a team” “always,” or “consistently.”

This feedback is, of course, feedback with which we can correct our behavior. That’s, of course, what companies using 360-degree feedback hope for: that I keep on “working as a team” (whatever that means) given that my colleagues acknowledge that I do this with “consistently”.

But we will see in a minute that that’s not always the case.

 

Those crazy degrees: who gives feedback to whom?

The first discussion that the very term “360-degree feedback” raises is the matter of using the geometry analogy as a way of describing who will review whom in a feedback or performance review process.

Companies call “360-degree” a feedback and/or performance review process where an employee gets input from a set of different people, such as:

 

  • The reviewee herself (the so-called self-review, or self-appraisal);
  • Colleagues (those who report to the same manager, or who belong to a same team/squad)
  • Internal clients, or those who feed directly off of the reviewee’s work
  • Manager
  • Direct reports, or those who report to the reviewee

 

As you can infer, 360-degree means feedback comes from all “directions” of the org chart, i.e., from below (direct reports), from the sides (peers and internal customers), and from above (manager).

 

An aside: try to ditch the geometry analogy

So far so good.

The problem is that many HR professionals try to use the same “degree analogy” to describe other types of processes. Then things get way more confusing. Some refer to the 90-degree feedback as the one in which only the manager reviews his or her direct report. Others refer to 180-degree feedback as the sum of a 90-degree feedback (manager’s) and a self-assessment. Some coaches even speak about 720-degree feedback (yeah, right!), where in addition to people at work the person also receives inputs from their family members.

In our opinion that’s all too confusing, so we suggest ditching the “degree” analogy altogether in favor of a more precise and less confusing term: multi-rater feedback, or multi-rater review, which is the term used by the organizational and industrial psychologists who invented the practice.

 

Rating criteria

As we’ve seen above, a 360-degree feedback is a process where a someone’s reviewed by a set of peers, internal customers, leader, direct reports in a number of criteria that can be values, competencies, behaviors, achievements, and results.

AB Inbev (the giant brewery), for example, has an annual 360-degree review for leaders that’s based on a set of observable behaviors derived from the company’s core values. This is the most common type of 360-degree review.

Rating criteria can also vary based on a number of variables. Let’s look into that.

 

A smorgasbord of criteria

360-degree feedback criteria may vary based on the relationship between the reviewer and the reviewee. For example, employees may review their managers on competencies related to leadership and people management.

Criteria may also vary depending on the nature of the job of the reviewee. For example, a software developer may be reviewed in the technical skills required of someone in their seniority level.

Criteria may finally vary depending on the level/seniority of a reviewee’s role. For example, the “leadership” expected from a CEO must be quite different from that expected from a middle manager.

In this case, the observable behaviors derived from “leadership” that will be used to review the CEO (who has a highly complex job) will be different from that used to review the middle manager (who has a low complexity job).

 

Why use 360-degree feedback?

Performance reviews have two major objectives:

  • Develop – that is, improve – the performance of the employees, and
  • Drive/inform people decisions, such as who should be promoted, transferred, fired, or earn comp increases and performance bonuses.

[For a complete discussion on the topic, read What is Performance Management. For the purposes of this article, we’ll focus on the relative merits of a 360-degree feedback compared to a simple, manager review, including a bonus discussion on the pros and cons of self-appraisals.]

360-degree feedbacks (versus manager reviews) are used for two major reasons. These are to:

  • Enhance the perception of fairness of participants in the process, and to
  • Enhance the accuracy of evaluations

Increasing the participants’ perception of fairness is a noble goal: research (Moorman, 1991; Konovsky & Cropanzano, 1991) shows that multi-rater reviews enhance the perception of fairness from employees toward a performance review process. And more perceived fairness builds trust, increases commitment to the organization, and enhances job satisfaction.

Science also demonstrates that some sort of self-assessment significantly increases employees’ perception of fairness on a performance review. It is believed that employees feel fairly treated because they have an active voice in the process.

Science also proves that adding more reviewers improves the attitude of employees toward a performance review, especially managers getting reviews from peers (Bernardin, et al., 1993).

So if your goal is to increase the perception of fairness towards the performance review process, a multi-rater component may be positive.

 

Why not use a 360-degree feedback

Increasing the accuracy of ratings is another goal frequently expected by HR departments to justify the use of 360-degree feedback. The thesis is that the multitude of perspectives reduces the impact that a biased reviewer (that is, with a very strong positive or negative outlook) has on the final ratings.

But if, on the one hand, we saw that multiple reviewers (and a self-assessment), may increase the perception of fairness and attitude towards the process, there is no scientific evidence that these additional ratings increase the accuracy of the ratings received by a reviewee.

Shocking, right?

Science shows that the “accuracy” argument of 360-degree feedback is quite fragile. Depending on how results are used, the accuracy of the ratings drops abruptly.

This is the case when reviews are used to make/inform people decisions (such as who should be promoted, transferred, fired, or have comp adjustments). In these cases, ratings get inflated across the board, i.e. on average, reviewers rate reviewees more positively or benevolently if they believe that results will be used for those types of decisions (Murphy and Cleveland 1995: 246).

According to Anthony Dalessio, “science suggests that when multi-reviewer feedback is used for decision-making and not just for development purposes, applicators must prepare for results that are potentially contaminated by evaluation errors that can make them indistinguishable good performances of mediocre performance, and which may limit the value of such evaluations for development purposes.”

 

Other risks of the 360-degree feedback

In a key article for any Human Resources professional who wants to understand more about 360-degree reviews and feedback, Angelo DeNisi and Avraham Kluger discuss pros, cons, and best practices for adopting these powerful performance management tools.

One of the main risks singled out by the pair of researchers is that the feedback received leads the reviewee to question the image she has of herself. According to them, this can significantly worsen her ability to grow, that is, improve performance based on feedback received: “If the feedback focuses attention on the self-image of the assessed, whether it is personal or because it is closely related to the self-image held by the assessee, the subsequent performance of the assessed person tends to suffer.”

On the other hand, we see at Qulture.Rocks that several companies insist on presenting their employees with performance review reports (whether 360-degree or not) that include some sort of comparison between the self-assessment ratings and those from other groups of reviewers, such as peers, manager, and direct reports. According to DeNisi and Klugger, such comparative presentations greatly worsen the chances of improvement.

 

Best Practices for Implementing 360-Degree Assessments

We have already seen what 360-degree feedbacks are, how they work, what are their goals, and main key risks. We think the best way to end this article is with practical, science-based recommendations on how to use this tool more effectively (and with less downside to your organizational culture and employee performance).

  • Do not use 360-degree feedback results to make people decisions (such as who should be promoted, transferred, fired, or get bonuses): as we’ve seen, this increases process-related anxiety, worsens chances of performance gains by reviewees and worsens the accuracy of the feedback (i.e., ratings are inflated)
  • Avoid presenting perspectives side-by-side: making it easier for the reviewee to compare his self-reviews with reviews received from others, such as manager, peers, and direct reports, can lead reviewees to question their self-image, which significantly dampens the chances of performance improvements after the process
  • Encourage participants to provide qualitative assessments: the most important part of the process is the qualitative component of the feedback or review, which takes the focus away from ratings and increases the chances of performance improvements
  • Encourage participants to provide feedforward: Another fundamental part of the process that is often overlooked when there are ratings is the feedforward, that is, the guidance that the reviewee receives on how she can actually improve, that is, how she can act differently in the future