Enhancing employee performance is a pivotal goal for HR professionals. Traditional performance management has often relied on top-down processes with feedback flowing primarily from supervisors to employees. However, 360 feedback broadens this perspective through evaluations from multiple sources, including superiors, subordinates, peers, and even customers. This multi-source feedback provides a more balanced and comprehensive view of an employee’s performance.

But how exactly does it impact on employee performance? A study by Himanshu Rai and Manjari Singh (2013) offers some insights into this question.

The basis of the research

Rai and Singh’s research focused on executives from four organisations, two of which had used 360 feedback systems for over five years, while the other two followed conventional appraisal methods. The study provides empirical support for the positive relationship between 360 feedback and employee performance, and identified several mechanisms which support its effectiveness:

  1. Interpersonal communication: the study found that employees who receive feedback from multiple sources develop better openness, trust, and understanding with their colleagues. This improved communication creates a supportive environment, ultimately boosting performance.
  2. Quality of working life: a better quality of working life, characterised by favourable working conditions and robust employee welfare, enhances the impact of 360 feedback on performance. When employees feel their views are valued and sought by their organisation, they are more motivated to perform at their best.
  3. Leader-member exchange quality: the 360 feedback process enables leaders to gain a more holistic understanding of their team members’ strengths and areas for improvement. This understanding fosters stronger relationships between leaders and employees, leading to higher performance levels.
  4. Perceived organisational support for development: when employees believe that their organisation is invested in their development through 360 feedback, they are more likely to reciprocate with increased performance and engagement.

The most important mediating factors

For HR professionals aiming to implement or refine a 360 feedback system, this study – perhaps surprisingly – underscores the importance of the first two as the most powerful reinforcing factors in its impact on performance:

  • interpersonal communication (openness, trust, better understanding of your colleagues and being supportive of others);
  • quality of working life (working conditions and relationships, employee welfare).

The relationship between 360 feedback and employee performance is multifaceted and seems to rest particularly on the role of 360 feedback in providing employees with an opportunity to have their voices heard. By understanding and leveraging these factors, HR professionals can drive meaningful improvements in employee performance.

For help in structuring a 360 feedback process tailored to your organisation’s needs, get in touch with our team.