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 strength of 360-degrees feedback is that it reflects he varying perspectives of different rate groups. That's also part of the problem. What one group views as effective behavior, another group may see as problematic.

And each rater group brings natural biases to the table. For example studies conducted by Organizational Performance Dimensions find that supervisor feedback tends to be based no bottom line results (are tasks completedon time and well?) technical competence and whether an employee's behavior draws complains or clients.

By contrast direct reports base their reviews on factors such as willingness to involve the direct report in decisions interest in a direct reports professional development and trustworthiness

Peers who lack perspective on their colleagues' day-to-day performance tend to focus on leadership potential. Their remarks often reflect opinions or whether the participant has the "rights stuff" to motivate and create a compelling vision for others to follow.

None of these perspectives is wrong and all of these insights can be valuable in creating a 360-degrees view of performance. However it's important that the person being reviewed-and his supervisors-understand how the filters used by different groups affect how they rate performance.

Kenneth M. Nowack is a licensed psychologist and director of Organizational Performance Dimensions, a Santa Monica Calif: based company specializing in 360-degree-feedback.

Focus on Why and How

Jai Ghorpade

In evaluating the effect of 360-degree feedback--on any HR practice--on firm performance we must ask why companies about it. For example in the 1930s many troubled companies adopted Joe Scanion's group incentive plan. As a result a snapshot of companies using the Scanion Plan at that time would have shown that the plan was associated with poor performing companies.

Therefore, I suggest caution in interpreting the Watson Wyatt study. We nee to know more about companies motivation for adopting 360-degree feedback as well as their financial condition before and after adoption. Perhaps the researchers can ferret out this information.

Assuming there is some truth to the Watson Wyatt report. I would like to focus on a potential explanation provided by Plau and Key for why 360-degree feedback is not living up to its advanced billing. The authors state that there may be a gap between an organizations business objectives and what 360-degree feedback programs measure. I strongly emphasized this point in an article they cite, which appeared in the January 2000. Academy of Management Executive.

But I believe the problem goes beyond congruence with company objectives. Most companies using 360-degree feedback tent to employ generic off-the shelf instruments that are of interest to psychologists but may not have much relevance to the organizational context in which they are being used. It is a question of the relevance of the behaviors and traits on the feedback instruments to specific interpersonal and cultural problems a specific company laces are a specific time.