The overall performance of a firm results from the individual and group performance of its workforce, so performance appraisal is a critical component of human resources management. It is a continuous process that involves planning, monitoring, managing, and improving the individual performance of the entire workforce. An increasingly popular contributor to this process is the 360 degree feedback system. But does it truly work?

Understanding 360 degree feedback

360 feedback mitigates the main risks associated with traditional, supervisor-based review systems. Rather than relying solely on the perception of a single individual, it combines feedback from a variety of sources, including peers, clients, subordinates, supervisors, and self-evaluations. This multi-source feedback system provides an ‘all-round’ view of an employee’s performance, identifying both strengths and areas for improvement. This broad spectrum of input is instrumental in formulating detailed and relevant development plans for employees.

The benefits of 360 degree feedback

Capable, engaged and motivated employees are pivotal to an organisation’s success, so it is crucial to understand how employees are performing, and to identify areas in need of improvement. 360 feedback can help achieve this through:

  • comprehensive evaluation: by incorporating feedback from multiple sources, a diverse and accurate picture of an employee’s performance is obtained; rich, multi-faceted feedback supports the creation of development plans that target specific areas for improvement;
  • enhanced self-awareness and performance: employees gain insight into how they are perceived by their colleagues, which is invaluable for personal and professional growth; self-aware managers and leaders typically outperform those who lack self-awareness (Bass and Yammarino, 1991);
  • focused development: the behaviours tracked in 360 feedback help people to understand what is valued and rewarded in the organisation and focus development efforts on the behaviours that matter most (Bailey and Fletcher, 2002);
  • reduction of bias: basing appraisals on collective feedback helps to mitigate personal bias that might be present in single-source evaluations, enhancing perceptions of fairness in the appraisal system.

Potential risks and challenges

When executed correctly, 360 feedback can significantly enhance employee development and organisational growth, but there are also risks that must be managed:

  • Administrative burden: it takes time to provide thoughtful feedback, and it is important to phase the implementation of such programmes to avoid creating peaks of demand on feedback providers; failure to do so can lead to poor response levels and less accurate feedback.
  • Resistance and sabotage: when 360 feedback is tied to pay, promotions, bonuses, or potential layoffs, employees may react defensively rather than constructively. Feedback providers may be reluctant to offer honest opinions if they know it could negatively impact someone they are close to; employees may resist the implementation of such programmes, potentially trying to sabotage them.
  • Privacy and anonymity concerns: one of the prime benefits of 360 feedback is that feedback providers can be assured of anonymity by combining their feedback with that of others; for this reason, many organisations prefer to use an independent third party to provide the service rather than managing the process in-house.

Whilst traditional, supervisor-led performance appraisal will undoubtedly remain an important part of the management process, it can be significantly improved by the support of 360 feedback. To realise its benefits, it is vital that 360 degree feedback is carried out using robust tools and methodologies. This ensures that the feedback provides managers and HR professionals with the insights they need to drive meaningful improvements and foster leadership excellence.

Are you looking to implement 360-degree feedback in your organisation? Contact our team of business psychologists to learn more about how to integrate this tool into your performance appraisal and development process.