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

While training individuals to give and receive feedback may temporarily increase the expense associated with 360-degree feedback programs, the gains will outweigh the higher costs as the feedback delivered to participants becomes more focused, targeting the behaviors most closely associated with value creation and destruction. Ultimately, the goal should be to create a culture in which individuals feel comfortable giving and receiving feedback--both positive and negative--on a real--time basis, rather than waiting for an annual review.

* Create an "action plan" for each employee based on the feedback. "Knowing what to do and not doing it doesn't get you very far," Pfeffer says.

Rumely recommends that individuals sit down with their managers and their subordinates and review scores. "They should present their scores and then ask, 'Which ones do you think are the most critical to being as effective as possible, and what tactics are necessary to get there?"'

Companies should identify and enforce rewards and consequences for individuals related to their success in following their action plans. "If the program is just another add-or and not part of a scorecard, you're kidding yourself," Rumely says.

Monitor implementation, ask for ideas for improvement and make adjustments. Companies don't always get 360-degree feedback exactly right on the first try. By monitoring results, asking for feedback on the process and implementing changes based on the answers, companies may be able to put 360-degree feedback programs back on track.

It also helps to continually benchmark results against the objective articulated at the outset. "For us, the test is not whether we have a program in place, it's whether we got the desired result," Seretan says.

* Recognize that 360-degree feedback is not a panacea. Just because an individual receives insight into his behavior doesn't mean he can--or will--change it. Traditional performance management systems have struggled with this axiom for years, and it is naive to think that 360-degree feedback programs will be significantly different.

Take Another Look

The findings about 360-degree feedback programs are eye-opening. The fact that they are associated with a decline in shareholder value should persuade HR managers to revisit their existing or planned 360-degree feedback programs.

The existence of such data also should force companies to ask themselves what they hope to gain from 360 reviews--or, for that matter, from any HR initiative they undertake. What is the potential return on investment (ROT)? How do ROI projections compare to actual performance? And, if expectations haven't been met, what can be done to improve the effectiveness of these programs?

Implementing a successful 360-degree feedback program is akin to managing your own investment portfolio: You can come out ahead, but it takes work.

RELATED ARTICLE: Feedback Varies with Your Point of View

By Kenneth M. Nowack

Multi-rater feedback can raise more questions than I answers: How is an employee to react, for example when his manager gives him negative ratings while feedback from his direct reports an peers is situation. Research suggests than disagreement between rate groups is common-and that the resulting confusion creates challenges for employee development.