I talked in a recent post about the need for management to lead by example, to live organisational values. This has since led me to consider how values come to exist in the first place. How do you define and embed meaningful values that are lived by leadership, engage employees and, ultimately, drive business performance?

Values should be a reflection of what a company stands for. How its people should conduct themselves and what image they are projecting. Values drive the behaviour of both leadership and employees. So it is important that they reflect the underlying attitudes of employees.

Defining organisational values should be an organic process – they must fit the organisation. If they aren’t a true reflection of the culture and how the company works, it inevitably becomes a tick box exercise. It will be meaningless for employees and for the organisation. This is why consultation with employee groups is needed before setting and embedding values.

Companies often have different reasons for introducing organisational values. Some choose to do it when they are starting out to establish their identity, some when they grow significantly in order to ensure consistency and understanding across the business and others to respond to their competitors or clients.

Whatever the drivers though, there are two critical components to the success of values. The first is leadership buy-in and sponsorship. The second is having values aligned with business strategy that employees fully understand and believe in.

The reward is simple: Companies with an established value base that is lived by leadership and employees alike achieve a strong employee value proposition, increased levels of engagement and, ultimately, increased business performance.

Estimates put usage of 360 or multi-rater feedback at around 89% of medium and large companies. Its enduring popularity with companies owes to its unique versatility as a development tool.

For those taking part though, it isn’t always so popular and can be quite a daunting prospect. Receiving feedback, especially if some of it is negative, can be particularly uncomfortable.

Leaders must be prepared to be more open in order to leverage genuine value from the 360 process though, as a recent article in the Wall Street Journal explains.

Sharing is good. Sharing 360 development actions with others will create clarity around the process and help foster trust between managers and their teams. What’s more, there is compelling evidence to show that this will help increases the effectiveness of the 360.

By sharing, leaders and managers will also show that they have taken feedback on board. This will not only validate the 360 process but it will also strengthen the feedback culture and, help the individual in question to follow through on development actions.

A number of senior HR people tell me that leadership development is their biggest organisational focus this year. But what is behind this trend?

Companies have, almost en masse, pinpointed leadership development as key within their people strategy. In some cases this is due to companies introducing fresh strategies and wanting to ensure they have the right leadership skills in place to implement effectively. But for the majority of companies, it simply reflects the growing acknowledgement that good leadership is critical to business success. The flat economic forecast has sparked a need to boost performance internally and as such, leadership has never been more important.

This is the case for several of our biggest clients including Sainsbury’s, who are investing in putting managers through 360-degree feedback to help identify key areas of focus. Such a process provides useful data to inform both a strategic development proposition and individual personal development plans.

This trend should be welcomed. Everyone stands to benefit from better leadership and management. That includes the most junior employees through to shareholders and everyone in between.

Business leaders and managers at all levels play a crucial role in motivating and engaging employees. The skill and competency of a company’s managers will therefore have a direct bearing on a company’s long term success. It will influence staff turnover, employee engagement, customer service scores and, of course, the bottom line.

The economic world remains in a state of flux as we watch and wait for a resolution to the debt crisis. And, after using our veto, the UK is very much a spectator in this process. The uncertainty surrounding the Euro and a flat economy suggests a tough year ahead. But I was buoyed to see that HR professionals appear in bullish mood where 2012 plans and budgets are concerned.

We polled 70 mid-to-senior level HR professionals to gauge expectations for their 2012 budgets in light of the struggling economy. Half of the respondents said budgets would remain the same or increase next year. A further third of those polled (31%) expect a small reduction of their HR budget – by up to 10%.

Put into context, this looks very positive. It suggests that executives are recognising the business value of identifying, developing and engaging talent and aren’t keen to cut back on investment in this area.

It’d be foolhardy to make bold predictions about 2012 while so much uncertainty remains – particularly as the success of the UK’s economy’s is so closely aligned to the rest of Europe. But these figures are at least cause for quiet optimism.

360-degree feedback is used on an unprecedented level by medium and large companies. The best estimates put usage at about 90 per cent of these organisations. But many report struggling with common issues preventing them from realising its full strategic value.

If you use 360 but it isn’t delivering the desired results, don’t throw it away. Go back to the drawing board. The most critical thing is aligning it to the wider business strategy or organisational goals. If it isn’t, it’ll have little business value.

In our latest original HR insight paper – 360-degree feedback: tackling the three biggest challenges, we suggest there are three main areas of focus when implementing 360-degree feedback. Unsurprisingly, these are also the aspects of 360 that companies are struggling most with:

There’s no doubt that 360 is a strategic business tool. It can help companies embed cultural values, behaviours and ways of working. It can have an enormous impact on the long term success of businesses. It can help boost employee engagement, retention, strengthen the employer brand and boost customer service and revenue. But in order to realise any strategic benefits, it must be implemented effectively.

360-degree feedback is no longer exclusively used for leadership development and has a number of other corporate uses. Topping this list is using 360 for appraisal.

We explore this trend and the considerations required in greater detail in our latest original HR insight paper: 360 for appraisal. Our client RBS, gives an account of their use of 360 for performance management.

Our survey of senior HR professionals found that a quarter of private sector companies use 360 for appraisal. But what is it about 360 that is leading companies to incorporate it into appraisals, and why now?

Traditionally performance appraisals have focussed only on what objectives have been achieved by an individual. Using 360-degree feedback allows companies to capture how employees go about reaching targets. Increasingly, companies are seeing the importance of assessing their employees on behaviours and values. By doing so companies can see how employees contribute to long term objectives, in addition to what they achieve.

And 360-degree feedback helps such measurement. It is a unique tool that recognises the complexity of management and brings together multiple relevant perspectives, not just that of the line manager.

Despite being a well established tool in the corporate world, questions persist about 360-degree feedback. Should it form part of performance appraisals or be used purely as an employee development tool? Or can it be both, and more? What is its best use?

It seems the 360's versatility may be both its strength and its weakness. And to further confuse matters, we're seeing new trends of how 360s are used. It’s clear that the 360 has evolved from being simply a development tool.

a href="http://www.etsplc.com/360-degree-feedback-review.aspx"> ETS research of 100 senior HR practitioners from blue-chip companies revealed 25% use 360s as part of the appraisal process. Further insights show companies we work with use 360s to:

In truth there's no single answer to the question about the best use of 360s. It will differ by company and careful consideration needs to be made to critical broader organisational issues such as the maturity of the feedback culture. But it can certainly add value for companies if used in the right ways.

Companies implementing 360-degree feedback programmes must be transparent with employees about its purpose and what are results to be used for. Don't link 360s to pay-related decisions immediately; you must first embed the process for 12-18 months. And ensure you have senior management buy-in otherwise adoption elsewhere may be low.

360-degree programmes are versatile and insightful and are increasingly being used to inform broader people strategies. For example results can inform decisions around workforce planning and targeted training and development initiatives. Just pinpoint what its best uses are for your company, ensure clear communication with users and implement a programme that fits your unique organisational needs.

A new original insight report by ETS looks at how HR professionals typically replicate 'best practice' processes, based on accepted industry thinking when tasked with implementing a new HR solution.

What's wrong with that? While traditionally, this approach has been effective for HR professionals, I argue that so-called 'best practice' may not be the best suited solution for organisations.

This paper shows a different approach: HR professionals can be more successful if they shape and deploy bespoke HR practices and technology that are the 'best fit' for their organisation.

In short, this paper outlines a practical overview of why and how HR departments should create distinctive and more successful initiatives.

There are a lot of debates out there regarding 360-degree feedback. Which is better: anonymous or face-to-face assessment? Should 360s be used to inform performance appraisal or to assist employee development? Is an annual process beneficial or are ad hoc 360s better?

Or, most importantly: does 360 degree feedback really make a difference, or is it just another ‘soft’ HR practice?

360-degree feedback, also known as multi-rater feedback, is a method in which colleagues, managers and sometimes customers assess an individual’s performance through direct reports, face-to-face conversations and online performance management systems.

This procedure is a strategic organisational process that enhances employee engagement, promotes retention and develops the individual’s skills and competencies.

The recent studyconducted by ETS examined responses from 100 private-sector HR directors and managers from blue-chip UK and international companies and firms regarding their perceptions and uses of 360-degree feedback. The results indicate that some of the ‘traditional’ practices are changing:

However, measuring employees is not enough to generate positive change; instead, there needs to be a follow-up programme. The ETS study found that the best support is provided by a coach. Internal or external coaches help the individuals to interpret the feedback, plan performance and to behave in ways that are valued by the organisation. In my practice, I find that feedback workshops and follow-up 360s have significant benefits also.

According to the Chartered Institute of Personnel and Development, performance improvement is a continuous process, not a one-time event. In order to be effective, several support structures are needed.

So, to answer my earlier question: yes, 360-degree feedback does matter, but only if it is supported beyond the measurement process.

“Anonymous brings out mean spirited responses from those with an axe to grind. There is something unhealthy in telling someone that they can say whatever they want and no one will ever be able to hold them accountable”.

So says Toni Lynn Chinoy, founder of leadership development firm Harlan-Evans. But is it right to consign anonymous 360-degree feedback to the rubbish heap, or can it be made to work?

Feedback is anonymous in nearly all the organisations I’ve worked with. And with good reason:

The list goes on.

But it still comes down to how the organisation handles the feedback.

Feedback should be mediated by someone who understands the sensitivities of the 360-degree feedback process. This is a specialist role, often requiring training. The key skill is to be able to take the essence of the feedback, remove any accusatory tones and help the recipient to accept, and then act on, the feedback.

According to the CIPD, “If 360-degree feedback is to make a difference, it is important to ensure that feedback is only given by individuals trained to give it. Ideally the whole process should be anonymous and the feedback presented to the recipient by a skilled coach”.

I believe this is the key to using 360-degree feedback constructively. It’s not about attributing feedback; it’s about handling the feedback in the right way.