We wrote previously about companies moving away from traditional performance appraisals, citing the examples of firms like Netflix and Accenture. But, while there seems to be a common acceptance that the ‘top down’ appraisal is no longer fit for purpose, this begs the question, “what should we use instead to evaluate performance?” Could 360 degree appraisals help?
Why the traditional appraisal no longer works
Among the reasons for its demise is that traditional performance reviews offer a very one-dimensional assessment of an individual’s performance. It’s therefore unrealistic and unfair to expect line managers to accurately evaluate direct reports who may be routinely working remotely, on different project teams, at other sites or even in different countries.
The case for 360 degree appraisals
One solution could already be staring you in the face: 360 degree appraisal. It’s highly likely, certainly in most medium and large sized organisations, that 360 degree feedback (or multi-rater feedback) is already used, probably in a developmental capacity.
Well, there’s an argument that it could also help to inform performance appraisals too, making them more balanced, fairer and, most importantly, more accurate.
Using 360 degree appraisals in this way isn’t a brand new trend. But evidence suggest its use for this purpose is growing. In fact, the 360 degree feedback trends report we published last autumn showed that 360 degree appraisals are already being used to inform performance reviews in just over one in four businesses.
How are other organisations using 360 degree appraisals?
A number of businesses we work with in the financial services, legal and retail industries are using 360 degree appraisals as an additional input into performance conversations.
One of the world’s leading financial services firms is introducing a 360 degree feedback tool and, while the 360 degree appraisal won’t be the sole measure of performance, it will provide leaders and managers with more regular feedback and give a more rounded view of their performance.
Another financial services firm we work with, RBS, does something similar. They use a 360 degree appraisal to provide additional data for line managers to assess the performance of direct reports. The obvious appeal of 360 degree appraisals in this scenario is that it brings together multiple perspectives and enables evaluation of both behavioural as well as task performance.
At RBS, 360 degree feedback has become an integral part of the performance management approach for leaders at RBS and has also enabled the organisation to gather a wealth of information on leadership behaviours, informing development planning and helping to embed cultural change.
How should you introduce 360 degree appraisals?
The most important thing to remember when using 360 degree feedback for appraisal is that this should never be the sole measure for assessing an individual’s performance. Using this to directly rate performance and to inform compensation or promotion decisions is illegal. Rather, you should use 360 feedback to provide additional context or as another input into performance reviews, as described in the examples above.
Here are a few more pointers to consider if you’re considering introducing a 360 degree feedback as part of your appraisal process:
1. Use a 5-point rating scale as this helps people spread their ratings, giving more balanced results and avoiding ‘positive bias
2. Offer training on how to use the rating scale, how performance should be rated and how to interpret feedback. This will lead to more consistency in resultsPilot your 360 degree appraisal. Start with senior leaders as their participation should reassure others
3. Pilot your 360 degree appraisal. Start with senior leaders as their participation should reassure others
4. Where the process is to be used in different global regions, be aware of cultural differences and consider whether to translate the questionnaire into other languages
5. Communicate how 360 will be used, explaining who’ll complete feedback and how results will be used. This is essential for securing employees’ buy-in
6. Establish an appraisal process first, then add 360 degree feedback to complement the existing appraisal process
7. Keep developmental 360 degree feedback and 360 degree appraisal processes separate and distinct from one another
8. Never use the 360 degree feedback score on its own as a performance rating
9. Ideally, use 360 feedback for development first as employees will already be comfortable with giving and receiving feedback.