Micro Burst Seminar

 

Recent ideas on making 360 appraisal an effective performance evaluation tool

 

Performance appraisal should be part of performance management that includes management by objectives, motivation, quality enhancement and in order to be effective requires strong cultural change inside the organisation and its management.

 

Appraisal is often used as a stand alone technique, introduced with little pre thought and almost certainly not looked at in the context of performance management as a whole.

 

Randell sees appraisal being used for :

 

Evaluation, auditing, succession planning, training, controlling, development, motivation, validation. (Randell 1994 p 230)

 

What is clear is that appraisal can be a potent management tool. It raises an important thought as to what we want from an appraisal scheme

 

The seminar looks first at the general overall of the technique and then explores some of the problems and other matters associated with 360 appraisal. 

 

An answer to the question “why do we appraise?” is one which is vital to our approach to 360 appraisal.

 

Concentrating on 360 appraisal Jayart Kirksey  and others in a paper “Companies Evaluate Employees From All Perspectives” give a reasonable overview of 360 appraisal.

 

They make the point that traditional performance appraisals at their worst can be subjective, simplistic and political. Yet the need for accurate, fair performance measurement has increased exponentially as most organisations face increasingly flatter structures, greater internal changes, and more external competitive pressures.                          

 

The 360-degree appraisal significantly differs from the traditional         supervisor-subordinate performance evaluation. Rather than having a         single person play judge, a 360-degree appraisal acts more like a jury. The people who actually deal with the employee each day create a pool of    information and perspectives on which the supervisor may act. This          group of individuals is made up of both internal and external customers.   

  

Using 360-degree appraisals provides a broader view of the employee's       performance. The most obvious benefit of the 360-degree appraisal is its    ability to corral a range of customer feedback. Because each customer       offers a new, unique view, it produces a more complete picture of an employee's performance.

 

                                                                                                                                  Unlike with supervisors, employees can't hide as easily in 360-degree   

appraisals because peers know their behaviours best and insist on giving more valid ratings.                                                       

 

In addition to providing broader perspectives, the 360-degree appraisal     facilitates greater employee self-development. It enables an employee to    compare his or her own perceptions with the perception of others on the     employee's skills, styles, and performance.

 

Companies must resolve a number of issues to use 360-degree appraisals      effectively. The first issue employers must solve in implementing 360-degree appraisals is how many raters should be involved, and, more      importantly, who should do the rating.                                     

 

As a rule of thumb, companies generally select between five and 10          raters. Why? Less than five raters unnecessarily limits the perspective on an employee; exceeding 10 raters typically makes the appraisal system too complex and time consuming.                                            

 

Once a company decides who will do the rating, it must create the           criteria by which the employee will be judged. The criteria or questions    used in 360-degree appraisals should be based on areas with which the       rater is familiar. But organisations should fashion the appraisal to fit their unique needs. For instance, in Digital's self-directed teams, each ratee distributes his or her personal-development and work goals to the entire team at the beginning of the appraisal year. Thus, all members of the team have the ability to evaluate each ratee's goals at year end.                                                                  

 

One 360-degree appraisal form includes items such as:                

 

Does the employee:                                                          

    

* Follow up on problems, decisions, and requests in a timely fashion     

                                                                                                                               * Clearly communicate his or her needs/expectations                      

                                                                                                                               * Share information or help others                                        

                                                                                                                               * Listen to others                                                       

                                                                                                                               * Establish plans to meet future needs                                   

                                                                                                                               * Adhere to schedules?                                                    

 

The raters score these items on a scale from 1 (needs improvement) to 5     (outstanding). Space is also provided for the raters to make written        comments. The ratee's final performance appraisal consists of a             combination of the comments and ratings from the various raters and the     supervisor's own feedback on the ratee's performance.                      

 

Advantages and Disadvantages of 360-degree Performance Appraisals          

 

Advantages                                                              

 

   1. Provides a more comprehensive view of employee performance.

   2. Increases credibility of performance appraisal.

   3. Feedback from peers enhances employee self-development.

   4. Increases accountability of employees to their customers.               

                             

Disadvantages                                                        

 

   1. Time consuming and more administratively complex.                        

   2. Extensive giving and receiving feedback can be intimidating to some     

   employees.                                                                 

   3. Requires training and significant change effort to work effectively.    

 

Another list of pros and cons of 360 degree appraisal

Pros and Cons of 360 Appraisal

Problems:

  • can be administratively burdensome
  • results can be difficult to interpret
  • feedback can be damaging unless handled carefully and sensitively
  • can generate an environment of suspicion and cynicism if not managed openly and honestly

Benefits:

  • the combination of opinions can approximate to an 'accurate' view
  • comments expressed by several colleagues tend to carry weight
  • some skills are best judged by peers and staff, not by manager alone
  • feedback may be motivating for people who undervalue themselves
  • the wider involvement help to engender a more honest organisational culture

 

What is 360 degree feedback?

 

What are the benefits of feedback?

 

360 degree appraisal is particularly powerful given that "…individuals have a significantly different view of their own job performance than that held by other people" (Thornton, 1980). There is good reason to believe that self appraisal is often more accurate than peer appraisal.

 

360 degree appraisal aligns self and others perceptions in order to increase self-awareness (Antonioni, 1996) which leads to enhanced performance at work, a central theme of Emotional Intelligence (Goleman, 1998). Indeed, studies have also found that inaccurate self-raters have higher development needs than their more accurate counterparts (Bass & Yammarino, 1991).

 

Potentially this type of appraisal can improve the communication between organisational members by increasing the openness of relationships and the frequency of constructive informal feedback. The process can therefore benefit the organisation and team as well as the individual.

 

Types of Feedback

 

The types of feedback that the individual undergoing appraisal receives can be a mixture of 4 different types.

 

Strengths - the positive feedback that the appraisee was expecting

Hidden Strengths - the positive feedback that the individual was not expecting

Known Development needs - agreement between appraisee and appraisers on areas needing development

Unknown Development needs - areas that the appraisee was not aware need development

 

Pre-appraisal information for appraisers


Those individuals who are rating their colleagues should be made aware of certain response biases that often occur in any type of appraisal. For example, it should be made clear to avoid being over lenient or critical, basing appraisal on past rather than current performance or letting one aspect of an individual's character being the basis for all responses.

 

Maury Peiperl of the London Business School looked at the feedback aspect of 360 degree appraisal in “Getting 360 Degree Appraisal Right” Harvard Business Review January 2001.

 

Peiperl sees the feedback process as critical to the success of 360 degree appraisal. Why does it work so well in some organisations but is such a dismal failure elsewhere?

 

The conclusion is that feedback is difficult because it has to be.  Peiperl sees four paradoxes that are embedded in the feedback process :

 

                                                                                                                               1 Paradox of roles

 

The paradox of roles means that people are torn between being  supportative colleagues  or hard nosed judges

 

It is soon appreciated that those who are best suited to engage in peer appraisal are those who work closely with them (this might explain why so many firms are restricting their 360 appraisal feedback  to the internal business)

 

People are reluctant to become peer appraisers. If pushed they may give conservative feedback rather than risk damage to relationships (as well as their own futures. (Many organisations have overcome this feedback blockage by inserting a neutral buffer between the appraiser and appraisee)

 

Some have resisted becoming peer appraisers for the very good reason that they prefer to give feedback informally rather than have it as a matter of record.

 

2 Paradox of group performance

 

Peiperl found evidence of groups rejecting 360 appraisal because of this paradox.

 

In instances where group performance is so important a “focus on individuals does not address how most important work is done these days – through flexible teams”  (Peiperl 2001  p143)

 

Rejection came in two areas

 

High performing groups saw assessment being concentrated in the wrong areas

 

Underperforming groups adopted coping strategies to reject the feedback because they feared for their own jobs.

 

                                                                                                                               3 Measurement Paradox

 

This is a rehash of the old problem of grades or dialogue (qualitative or quantitative). Simple grades or numbers lead to simplicity but as Peiperl says the problem with the quantitative approach is that it does not provide the rich insightful comments that often characterise the qualitative approach.

 

                                                                                                                               4 Paradox of Rewards

 

Peiperl found that when feedback was seen by appraisers as being for the HR department, participants were less inclined to take the process seriously. (Peiperl 2001 p 145)

 

One of the main conclusions in Peiperl’s researches is that managers and organisations do not spend sufficient time on why peer appraisal is used. The adoption of 360 appraisal requires that the manager act as constructive critic, role model and willing participants in a 360 appraisal programme.

 

All of this requires trust and confidence in the process by organisations that are willing to experiment and to learn.

Much of what Maury Peiperl says is also seen in a study entitled “Has 360 feedback gone amok” by David A Waldman; Leanne E Atwater and David Antonioni Academy of Management Executive Page 86 UMI Company 1998.

The paper opens by putting the point that despite the attention given to 360 feedback, there has been much more discussion about how to implement such programs than about why organisations have rushed to join the bandwagon or even what they expect to accomplish.

 

Are companies doing 360 degree feedback simply because their competitors are? What evidence exists to suggest that 360 degree feedback prompts changes in managers' behaviour? What evidence is there that the organisation really understands what it wants from this form of appraisal?

 

Reasons for Adopting 360 Degree Feedback

 

A key purpose driving the present use of 360 degree feedback is the desire to further management or leadership development. Providing feedback to managers about how they are viewed by direct subordinates, peers, and customers/clients should prompt behaviour change. Many managers have not received as much honest feedback as is necessary for an accurate self-perception. When anonymous feedback solicited from others is compared with the manager's self- evaluations, the manager may form a more realistic picture of his or her strengths and weaknesses. This may prompt behaviour change if the weaknesses identified were previously unknown to the manager, especially when such change is encouraged and supported by the organisation.

 

Other potential benefits of 360 degree initiatives are targeted ultimately toward organisational change and improvement. By increasing managerial self-awareness through formalized 360 degree or upward feedback, an organisation's culture will become more participatory and will be able to react more quickly to the needs of internal and external customers. This should ultimately lead to increasing levels of trust and communication between managers and their constituents, fewer grievances, and greater customer satisfaction.

 

In addition to the logical, performance-based reasons for pursuing a 360 degree feedback program, at least three other reasons account for its proliferation.

 

Imitation

 

Institutional theory suggests that organisations make attempts to imitate their competition or other firms in an organisational network. This suggests that the choice to adopt 360 degree feedback reflects a response to environmental pressures. Such conformity gives a firm a sense of external legitimacy.

 

Imitating without clearly understanding what other firms have accomplished, or the likely outcomes for one's own firm, may be a questionable strategy.

 

360 Degree Feedback as Part of Performance Appraisal

 

This second alternative reason for the proliferation of 360 degree feedback is the desire to expand formal appraisal processes by making such feedback evaluative, thereby linking it directly with a manager's or employee's performance appraisal .

 

In theory, the use of 360 feedback for evaluative purposes seems logical. An individual held directly accountable for ratings received will be more motivated to take action to make improvements based on the feedback. Unfortunately, problems exist that may negate the possible benefits of 360 degree feedback if it is made evaluative. Employees may rebel and try to sabotage the program. For example, in the case of upward feedback, implicit or even explicit deals may be struck with subordinates to give high ratings in exchange for high ratings. Such manoeuvring is less likely when the feedback is being provided strictly for developmental purposes. [Confirmed in most recent research]

 

Research has demonstrated that when ratings become evaluative rather than purely developmental, some raters (up to 35 percent) change their ratings. UPS tested the potential of using 360 ratings for evaluation. The company asked employees after they had provided upward ratings whether they would have altered the ratings if they knew they would be used as part of their managers' formal performance evaluations. Their findings suggested that some individuals would raise, and some would even lower, ratings if they were to be used for evaluation. Changes in ratings were made primarily in order to affect outcomes, i.e., keep the manager from trouble, or in some cases to get the manager in trouble. Three hundred sixty degree ratings are typically collected anonymously.

 

Ratings that are not anonymous may differ from those that are. Ratings become less genuine if the rater believes he or she will be identified. Not surprisingly, some raters indicate that they would raise their ratings if they were going to be identified to their managers. Anonymous ratings also have potential drawbacks. If anonymous 360 ratings were used as part of the documentation for a personnel action involving a manager- e.g. demotion, dismissal, or unattained promotion or pay raise-that manager could potentially make a legal case against the firm. Since the ratings are anonymous, they cannot be traced to specific individuals, and hence their validity could come into question in a court action. In contrast, traditional performance appraisal ratings are typically signed by the rater, i.e., one's supervisor, making them more verifiable.

 

A rating should be used for appraisal purposes only when the raters are committed to the goals of the organisation, rather than merely to their own personal goals. This is often not the case, as the rater is primarily concerned with his or her own short-term needs. For example, a subordinate may only provide high upward feedback ratings to a manager who maintains the status quo, even though the individual and the organisation could use a high degree of challenge.

 

Some companies have abandoned the use of 360 feedback for appraisal purposes. For example, half of the companies surveyed in 1997 that had implemented 360 degree feedback for appraisal had removed it because of the negative attitudes from employees and the inflated ratings.

 

Waldman, Atwater and Antonioni suggest caution in adopting 360 appraisal. Use 360 feedback strictly for development at first. Let managers and others become comfortable with the process. Once employees see that negative repercussions are unlikely and managers see that the information truly is helpful, they will be less apprehensive about using 360 ratings for evaluation.

 

Using 360 Degree Feedback for Political Purposes

 

A third reason that companies engage in 360 feedback is politics. There is often competition among individuals and groups over ideas and the individuals or groups pushing those ideas. Individuals or groups try to impress higher level management with their innovative ideas and plans. A manager with authority to make an implementation decision may attempt to appropriate credit. In an organisation that we helped to implement upward feedback, we communicated initially with a training director. Once his boss bought into the plan, the boss assumed ownership and credit. Indeed, the training director eventually left the organisation.

 

Similarly, a company as a whole may adopt 360 degree feedback to manage an impression. Organisations may embrace 360 feedback to convey an impression of openness and participation to clients or recruits when, in fact, this is not part of the organisation's culture. While the innovations themselves may not be very successful, the political gains from impression management may be valuable.

 

Summing up on 360 degree appraisal

 

The literature and experiences show that 360 degree appraisal requires considerable thought as to its purpose in the organisation. Those introducing and indeed those who have already introduced 360 degree appraisal should be aware of the pros and cons of the procedure before deciding whether or not to adopt the technique.

 

What is becoming clear is that the purpose of the process as a learning, developmental procedure is essential to establish at an early stage. The literature suggest that a cultural change may well be needed by those who embark on 360 appraisal.  It is this learning, developmental, no blame approach that will facilitate the development of more adequate and acceptable feedback and the openness  which the process needs.

 

What is so clear is that those who take the 360 degree appraisal approach of the shop shelf without bothering to do a considerable amount of thinking about the process, the competence and culture of the organisation to deal with procedure, will end up with a system that is either ignored, or so severely incapacitated as to be worthless.

Another warning comes from Appraisal 360 - The other side

Feedback when used as a stand-alone tool may not serve the purpose. British Nuclear Fuels PLC experience

The 360 degree feedback is essentially used as a tool to improve the performance of employees. Individuals, when appraised by colleagues, bosses and subordinates, improve self-awareness and change behaviour. This is the greatest strength of the 360 method.

However, a lot of companies, which jumped onto the bandwagon, were disillusioned, according to Valerie Garrow at Roffey Park Management Institute and author of ‘A Guide to the Implementation of 360-degree Feedback’. Reason? The improper usage of this valuable tool! Garrow pinpoints that typically organisations make the mistake of rushing into 360 degree appraisals without clear objectives and without dispelling people’s fears.

According to Peter Ward of Ward Dutton Partnership, organisations need to encourage consultations and dialogues among staff to enhance honest appraisals. The 360 degree system does not work in a command and control hierarchy.

Pitfalls  

Interpretation: Each rater of the appraisal sees a different behaviour and thus the findings differ. Interpretation these findings is a major issue. The basis for the ratings is another debatable question. Compounding these facts is the ignorance of the system in which the behaviour occurs.

Retribution: Fear of the wrath of colleagues or supervisors, if the rating is unfavourable makes the appraisal daunting.

Inaccuracy: According to Hedge & Borman, self-ratings are unreliable, biased and inaccurate.

Subjectivity: The Iconoclast column in the HR monthly, June 1996 issue, observes that performance appraisals, in general, have the “boss” making subjective judgements about the subordinate. In the 360 degree system, it is not only the boss, but also the colleagues, peers, co-workers, subordinates, customers and suppliers who make such subjective judgements.  

With proper design, development and implementation, these pitfalls can be overcome. Using the 360 degree feedback to improve performance appraisal may not always be the ideal situation. The 360 degree feedback provides maximum utility for voluntary individual developmental purposes.

 

Variables involved 

For designing, developing and implementing, the 360 degree system, companies need to consider the following variables:

In-house technology: Scoring the 360 degree is an arduous task. It can be scored manually, but this is time-consuming. Savvy companies use technology.

Anticipated usage: Organisations tend to be conservative in estimating the usage of the system. If a section was successful in its usage, other sections may adopt the system.

Confidentiality: Safeguards are required to keep the raters’ identity confidential. The feedback will be more honest if the raters know that their responses are being sent to an external processor in a sealed envelope.

Questionnaire: Relevant questionnaire to satisfy specific requirements is crucial. It is important to determine the parameters on which the feedback is essential. For example, it could be based on knowledge, skills and abilities, competencies, behaviour anchors and personality traits or on a strategic planning model.   

Application: Some models need to be developed for specific applications. Such as, for managers, supervisors, teams or individual assessment.

Whatever, the specifications are, qualified and trained people are required to interpret the information produced and assist the feedback process.

We have for you an interesting case study that would throw light on how a company can develop a unique model to increase the competency levels in its managers.  

BNFL’s strategy 

British Nuclear Fuels PLC (BNFL) used the 360 degree as part of a wider strategy process and tasted success. It used the system to enhance the competency framework for managers. The framework clearly identified desirable behavioural patterns. Roger Leek, the Human Resource Director, stresses on the importance of how to give feedback to individuals, how they can gain from appraisals.

At BFNL, feedback was given during a one-day workshop to eight to twelve people on what the findings reflected. Once the feedback was accepted, peer support and coaching became part of life. The findings also threw light on individual development needs and leadership programmes were devised accordingly.

Roger Leek insisted that this could be a tedious administrative process with a great demand on the front end. However, customised software programmes and intranets have proved to be helpful. The BNFL database is a living example of the success of this model of 360 degree appraisal. These are scores of the main competencies built up over the years, which allows the monitoring of behaviour. 

Learning

Candy Albertsson, the person behind the appraisal system at the oil company BP Amoco, reiterates the importance of identifying specific competencies that the 360 degree can measure. The unique feedback when used as a stand-alone tool may fail to achieve the desired result. Making it a part of a wider strategy is a more realistic approach to reaping the benefits of 360 degree appraisal.

The Dangers Of Using 360 Feedback For Performance Appraisal By David Lassiter 

This article appeared in the HR Executive Magazine

There is a rising demand in organizations for improved performance and results. American business, in serious trouble during the 1970's and 80's, led the way in finding new approaches and processes to boost performance. Today, organizations in all sectors, including government, are similarly challenged to operate more efficiently and effectively. Raising individual and team performance levels is central to this process and 360 feedback is increasingly used as part of the solution. Unfortunately, there is an advancing drift toward using 360 feedback for performance appraisal. Organizations need to be careful here. Using 360 for appraisal may be an intriguing idea, but it's not the best use of this exciting new technology, and it is counter-productive in this role. It can put the organization at unnecessary risk and have a negative impact on motivation, performance, and the entire work environment. This article explains how to avoid this costly mistake.

Tools With Different Purposes

At its best, performance appraisal is an evaluative process used to determine results. Its purpose is to measure and evaluate contribution to the organization in order to provide feedback and fairly distribute rewards. Performance appraisal allows employees to more clearly see the results of their efforts, the relationship between their job and the organization's performance, and be rewarded for their particular contribution. Results, or contribution, can best be determined by first creating clear and agreed upon goals, and then measuring progress against them. This establishes the benchmark and gives employees a known target at which to aim. In the absence of clear goals, managers are forced to measure something else. What often gets measured, then, are factors such as effort, attitude, personality, teamwork, behaviour, etc.; feedback on how an employee is supposedly "doing". This is not an accurate or fair measure of job performance or contribution.

360 feedback is a developmental tool. It is designed to encourage employees to grow and develop by providing feedback on their proficiency in the skills, competencies, behaviours, and practices related to the conduct of their jobs. As employees learn, grow, and develop, the organization increases its capacity to perform at higher levels. In business this means these organizations are more likely to out-perform their competitors.

By design, 360 feedback is good at identifying, measuring, and improving the skills and competencies needed to perform a job. It is especially good for the hard-to-quantify interpersonal areas (often labelled the 'soft skills') of behaviours and practices. Examples of this include listening, informing, resolving conflict, coaching, teamwork, and leadership. Well designed 360's can even identify the underlying attitudes and thinking patterns that drive the behaviors and get to root causes of counter-productive actions. 360 feedback can also be adapted and used appropriately to identify and measure areas such as customer satisfaction, team effectiveness, training needs, and work environments. 360 feedback adds value to the employee and organization development process for three reasons: It has clear and precise measurement capability; it provides perspectives from multiple sources - co-workers who see and know the individuals' proficiency levels on a daily basis; and it accelerates learning.

Performance appraisal, on the other hand, is good for measuring outcomes and results, what people are actually hired for and paid to produce. It is designed to clarify and document the goals, outcomes, milestones, time frames, and measurements to be used. Performance appraisal and employee development are separate and distinct processes with different purposes and different measurement tools. They can and do complement each other. They are related, but they are unique.

Problems with the Linkage

 It is too often assumed that since multi-source is better than single source, automated is faster than manual, and evaluating performance (results) is the same as measuring proficiencies (skills, competencies, etc.), then 360 feedback is simply a more efficient and effective tool for conducting appraisals. Assumptions like these can get you in trouble. For developmental purposes, multi-source feedback does have more validity and leveraging ability than single source. It is broader and brings in multiple and more balanced perspectives. But typical multi-source raters are less adept at providing balanced and objective feedback than the supervisors they may be replacing. They can have enormous problems separating honest observation from personal differences and biases. For appraisal purposes, co-workers are poorly qualified to give evaluative feedback that affects pay and promotion.

Because 360 feedback is usually automated, it is an attractive technology. But is it appropriate to performance appraisal because of its speed and ease? What is it that makes appraisal or development particularly effective? Thousands of managers have told me that it is the quality of the conversation between the rater and ratee that is important. Being able to explore and discuss aspects of one's work with clarity and without the usual time pressures is highly valued by most employees. When the boss takes time to sit down, close the door, and discuss performance, people frequently have the experience of being heard and valued. This often results in a boost in morale, motivation, and performance. Managers frequently say that they wish they took time more often to have these conversations because so much gets clarified and accomplished in them. It is the quality of the interaction, not a computer program, that has the greatest potential for improving appraisals.

Performance appraisal in most organizations is used to determine merit increases and bonus amounts. However, if 360 feedback is linked to compensation decisions, it loses its power and benefit as a developmental tool. When employees recognize that their financial rewards are based on multi-source feedback ratings, they quickly see how the new game is played. Realizing what is required to achieve a good appraisal, employees can manipulate the process to ensure the desired outcome. The 'ratee' can be helped or hurt. Putting two and two together, employees realize that "if you scratch my back, I'll scratch yours." Suspicions that were formerly directed at performance appraisal are now focused on 360 feedback. The "new" system becomes tainted. Trust and honesty begin to break down in favour of getting a good review. As a result, actual skill proficiencies can decline which, in turn, leads to a weakened ability to compete or deliver, and a performance environment of mediocrity. This can result in defensiveness, denial, conflict, accusations, and loss of trust. It puts the relationships within the work group in jeopardy and can lead to an expanded reduction in productivity and performance.

Potential Dangers

What occurs when the 360 feedback is actually used for performance appraisal? Here is a list of potential dangers, risks, and unintended consequences that can result when the two are merged.
Skewed and unreliable data from raters who, consciously or otherwise, shade their responses to protect or punish the ratee.

Increased cynicism from employees who know the system is being played.
Skill levels stay relatively flat or even decline because the "360 appraisal" is not taken seriously. The numbers needed for a "good" appraisal can be informally fixed by silent agreement among raters. Maximizing the size of the increase or bonus overshadows the desire to elevate performance.
Individual development plans become window dressing. People may go through the motions to create them but expend little effort in implementation. When not held accountable for this, performance levels off.
If employees don't get a "good" appraisal, blame is placed on co-workers causing a rise in the level of mistrust and apprehension. The work environment becomes politicized, candour and honesty are compromised, trust and integrity are damaged, risks are avoided, motivation diminishes, morale drops, performance declines, and turnover rises.

Executives and managers considering the use of a 360-feedback tool for performance appraisal need to be aware of the inherent differences between them. Be clear about your purpose. What is it that you are trying to achieve? What results and outcomes do you want to have? Remember, performance appraisal is an evaluative process for defining goals, and measuring results and contribution. 360 feedback is a developmental tool for identifying, measuring, and improving the skills, competencies, behaviours, and practices needed to perform the job. They can, and do, complement each other, but they have distinctly different purposes. Using 360 feedback for the wrong reason can result in decreased performance and increased risk. The bottom line: Keep developmental feedback separate from appraisal and compensation decisions. Using 360 feedback for the wrong reason can result in decreased performance and increased risk. And it will ensure that 360 feedback will be declared the management fad of the '90's. Large investments of time, money, and credibility will be lost.

This theme has been taken up by writers such as in Retooling 360s for Better Performance HBSWK Pub. Date: Feb 23, 2004

This most recent research claims that the majority of managers filling out 360-degree feedback reports hesitate to criticise any aspect of their peer's performance, particularly when raises and promotions may be on the line. Some also worry that negative feedback would strain their relationship with colleagues if it ever came out who had provided which ratings.

Jack Welch notes in Jack: Straight from the Gut (Warner Books, 2001): "Like anything driven by peer input, the system is capable of being 'gamed' over the long haul. People [at GE] began saying nice things about one another so they all would come out with good ratings." On the flip side, vindictive sorts might take advantage of an opportunity to besmirch a colleague's professional reputation. In the end, this leaves a great many managers dreading their involvement in 360s, whether as a subject or as a contributor.

What is being accepted is that there needs to be new ideas on reshaping the 360 tool so that it not only encourages direct and honest feedback in annual reviews but also fits the particular needs and priorities of a broad range of organizations.

Ginka Toegel and Jay A. Conger point out in "360-Degree Assessment: Time for Reinvention" (Academy of Management Learning & Education, September 2003) say "opponents of the migration toward appraisal argue that the goal of 360-degree assessment should be broader than simply assessing performance: it should foster continuous learning and personal development.… Using the 360-degree data for performance appraisal makes the developmental process potential 'punitive' and one that is 'forcing' instead of 'enabling' change."

To address such concerns, Toegel and Conger advocate creating two separate versions of the 360: one for professional development and the other for performance appraisal. The development version should rely more heavily on qualitative feedback, the appraisal version on quantitative responses. In the appraisal version, metrics would relate to measurable performance outcomes such as quality, quantity, and cost. Moreover, they say, reviewers should indicate the extent to which constraints such as high staff turnover and loss of funding have influenced the individual's performance. The recipient and his supervisor would then discuss how constraints might be eliminated in the future.

Some companies have discovered that the numerical rating scales commonly used to score recipients' performance generate meaningless information. This is especially true when the scales are used to rate hard-to-quantify managerial qualities such as "communication ability" or "integrity." Yet according to Bob Speroff, director of human resources-operations support at FedEx Express, headquartered in Memphis, there is a way to develop quantifiable criteria.

Not surprisingly, the peer portion of the feedback has posed the thorniest problems because peers do not always provide the most candid commentary on one another. Speroff says scores average 3.6 on a 4-point scale, suggesting near-perfect performance. But business results—in particular, earnings per share—aren't always that stellar for each divisional group. Clearly, a disconnect exists between the performance feedback and actual performance.

To address it, Speroff's group plans to change the peer-feedback component of the traditional 360. Specifically, rather than rating colleagues on hard-to-quantify criteria, peer managers will evaluate one another according to how well they meet measurable internal customer/supplier service agreements the parties have forged. For example, Speroff explains that "if I promise an internal customer—a VP of a division—that my group will hire 2,000 new employees for her division at a recruiting cost of $4,000 each, and that the turnover rate will be less than 20 percent, it'll be pretty easy to see if I've fulfilled those commitments."

With Speroff's new approach, there's only one criterion for excellent performance: Did a manager meet his commitments to the internal customer? This simplified approach enables the organization to avoid the political manoeuvring and the squeamishness about giving negative feedback that are inherent in the current rating system.

Peers evaluate one another's performance based on objectives they've identified as most important to their ability to excel within the company.

As we saw right at the beginning of these notes Digital's self-directed teams, each ratee distributes his or her personal-development and work goals to the entire team at the beginning of the appraisal year. Thus, all members of the team have the ability to evaluate each ratee's goals at year end. 

Francie Dalton, president of Columbia, Md.-based Dalton Alliances, a communications and behavioral sciences consultancy, agrees that having 360-degree feedback recipients participate in defining performance criteria offers major advantages. "Recipients perceive the results of the review as more valid," she says. "They also tend to feel more committed to acting on the results—a necessity for spurring change."

Where does this leave anonymous rating?

William Arruda, founder of the Paris-based branding consulting firm Reach, encourages his clients to include feedback from people outside their organization—such as customers, business partners, suppliers, and other external constituencies. "Business today," Arruda explains, "is more about your success outside the organization than inside. Getting feedback from external constituencies reminds you that outsiders' perceptions are important. You begin behaving more as a team player with people you wouldn't normally make yourself visible to."

Use qualitative data

Laurent Charpentier, head of Ford's customer service division-France, says managers have responded well to an increase in the qualitative-to-quantitative feedback ratio in the company's 360-degree surveys. Managers had viewed the quantitative-only metrics used in the previous version of the tool as "too impersonal," he says. Once the qualitative component was added, managers found the feedback "much more effective.

According to many executives, successful use of the 360 rests on a foundation of trust and candour. For example, at Ford Europe, a 360 recipient can nominate his reviewers. To prevent a recipient from trying to "stack the deck" in her favour, her supervisor must review and approve all nominations. In addition, Ford requires a wide array of respondents for each recipient: one to two supervisors, three to six peers, and three to eight direct reports. Finally, reviewers can decide whether to remain anonymous to the recipient. Charpentier says that about "20 percent of reviewers choose to sign their reports." Many recipients and reviewers, he notes, even discuss the rating process with each other.

Conclusion

Too many organisations have rushed into 360 degree appraisal without looking at the reason for appraisal as well as taking stock of the problems associated with the technique.

What this seminar has done is to make the decision making re 360 appraisal more realistic, effective and efficient and to suggest better alternatives.

Where do you go from here?

Reputational Management?

 

What is it?

 

It is not another financial compliance course neither is it about PR. It  looks at how we are seen by those who are outside our organisations.

 

The concept of reputational management is vitally important as it is the product of years of demonstrated superior competence as is seen as a positive contributor to organisational competitive advantage.  Organisations are only as good as their reputations, and reputation requires constant vigilance.  Reputational management is now being seen as a fundamental part of corporate culture.

 

Perhaps we should use the balanced scorecard to help identify the critical success factors to be used in a reputational management appraisal.

Stephen John BSc(Econ) MSc MEd MBA MPhil Chartered FCPID

22 June 2004

Some questions for discussion following 360 appraisal seminar

 

What do we really want from the appraisal system? What information do we want which we don’t already have?

 

Is individual appraisal worth the time and cost? This question is based on the premise that we already know a lot about our staff, their strengths and weaknesses. Should we be looking at departmental and Department reputation instead?

 

How can we be assured that we have done everything we possibly can to strip out bias from our appraisal systems?

 

How applicable are the paradoxes of appraisal identified by Maury Perpeil to appraisal in the departments and Department?

 

What can we take from the 360 degree appraisal micro burst seminar that will make 360 appraisal a positive tool for both manager and managed at the Social Security Department?

 

These questions need constant reference to the literature in order to derive maximum benefit.

 

Stephen John 5 October 2004.