Does 360-degree feedback negatively affect company performance? Studies show that 360-degree feedback may do more harm than good. What's the problem? - Performance Management - Statistical Data Included

HR Magazine, June, 2002 by Bruce Pfau, Ira Kay

The question is this: Can 360-degree feedback be implemented in such a way that it achieves these benefits without negatively affecting the bottom line? Based on our analysis--and conversations with clients-- we believe the following steps may help companies transform 360-degree feedback into a value creator, not destroyer.

* Implement 360-degree feedback for the right reasons. "The first thing you need to ask is why you're doing it," says Paul Rumely, a New York-based executive coach. If you can't articulate a strong business case for a 360-degree feedback program, it should not be introduced.

Jeff Seretan, head of human resources for Barclay's Global Investors, based in San Francisco, agrees. "You should not implement it unless you can show that it is solving a problem or adding value," he says.

Barclay's uses 360-degree feedback to provide senior executives with input on their management styles. "Our executives had minimal input into their leadership styles, so our goal was to address these information gaps," Seretan explains.

* Assess the costs of the program. Employers must "assess the real burden they are placing on the organization by doing 360-degree feedback," Seretan says. "If you don't do it in a way that is targeted and strategic, you run the risk of value destruction.

* Focus on business goals and strategy. Feedback should provide employees with insight into the skills they must develop to help the organization meet its goals.

* Do not rely solely on 360-degree feedback. Employees must receive regular, timely feedback about their day-today performance. "360-degree feedback is just one part of our approach," Seretan says.

Rumely likes to use 360-degree feedback as a baseline for a more in-depth look at an individual's performance profile. "While I've yet to see a 360 that was inaccurate, often they can stand to be fleshed out a bit," he says.

He recalls one 360-degree feedback assessment that made an employee "look like Mother Theresa." The woman was very talented, he says, "but nobody walks on water like that. I conducted a series of personal interviews with the woman's raters to follow-up. After the interviews, I had a much better view of her strengths and weaknesses."

Additional interviews won't always be necessary, but companies should consider using them in situations where they can help clarify the results of 360 feedback. Ultimately, the thing to remember is that 360 feedback is just one part of an overall performance management system.

* Get support at all levels of the organization. Make sure executives play a key, visible role. And, give line employees a voice in designing and implementing the program to ensure relevance and ownership. A 360-degree feedback program is doomed if HR is its only champion.

* Train people in giving and receiving feedback. Companies that implement 360-degree feedback without first checking and developing managers' feedback skills risk serious damage to teamwork and morale. Providing constructive feedback takes instruction, training and practice.