What Is 360 Degree Performance Appraisal? Benefits

What is 360 Degree Performance Appraisal?

A 360-degree performance appraisal is used to judge the behavioural aspects of the performance of the managers. These are the aspects that all people related to the manager in the professional space can comment on.

360-degree performance appraisal is also called multi-rater or multi-source feedback. It is a type of performance appraisal feedback where the individual employee’s performance is reviewed by the employee himself/herself, his/her reporting manager, manager’s manager, direct reports, peers and even internal/external customers.

Table of Content

1 What is 360 Degree Performance Appraisal?
2 Benefits of 360 Degree Performance Appraisal
3 Purpose of 360-degree Appraisal
4 Methodology of 360-degree Appraisal
5 Advantages and Disadvantages of 360-degree Appraisal
6 Operating 360-degree Appraisal

360-degree performance appraisal is considered to be as old as the performance appraisal system itself. It is believed that during World War II German Military assessed their soldier’s performance by considering the opinions of their supervisors, peers and subordinates. The payment and promotions were based on this assessment.

However, the first documented use of surveys to conduct a 360-degree appraisal was in the 1950s by Esso Research and Engineering company. The process evolved over the years and saw remarkable development and finesses particularly over the last decade. As per one research article published by Atkins and Woods in the year 2002, self-versus-others ratings do validate effectiveness of 360-degree feedback.

360-degree performance appraisal is conducted anonymously. This helps people provide as objective feedback as possible. Therefore, it is believed that popularity of 360-degree feedback increased post the invention of ‘typewriter’.

Anonymity was impossible to achieve before a ‘typed’ survey/questionnaire could be filled. It became more popular after many larger organisations started using it. 360-degree appraisal must be accompanied by one or the other form of appraisal to make it a more robust performance appraisal system.

One must remember that it is not only about using the right HRIS or software or processes but ensuring the culture shift. Creating a culture of honesty, transparency, learning and growth mindset is possible through the successful implementation of 360-degree appraisal.

Benefits of 360 Degree Performance Appraisal

Below are the benefits of a 360-degree feedback system:

Larger and balanced picture of individual performance

It gives a much-balanced view about a person’s performance as there are multiple feedbacks received. If a number of people say the same thing then it is harder to ignore it. It is advantageous in a way that it is not dependent on just one person’s subjective opinion.

Effective in causing behavioural change

If the same feedback is provided by different employees for the manager being appraised, it is a sort of evidence that is difficult to ignore. When such feedbacks are communicated to the managers, they are resolved to make changes in their work methodology whenever required.

Reveals unique information

Since 360-degree feedback is taken anonymously it unburdens the subordinates and peers from giving any negative feedback about the team leader. Similarly, it removes the blockage in the minds of the managers who are reluctant to give any positive feedback about the subordinates.

Helps identify development needs

It gives an insight in the organizational framework, efficiency and culture. It helps identify the development needs which other methods fail to identify.

Promotes self-directed learning

360-degree feedback system makes the managers aware of the deep-seated problems in their working approach. They get to know their peers and subordinate’s perception about them vis a vis what they perceive about themselves. Such overwhelming evidence brings an inner drive in the managers for self-directed learning and improvement.

Purpose of 360-degree Appraisal

Primary purpose of 360-degree performance appraisal is to develop employee. 360-degree feedback allows all team members and leaders to be involved in the feedback process. It provides a holistic view of an employee’s overall performance.

360-degree feedback offers employees more varied, timely and relevant inputs. It helps an employee identify his/her strengths and weaknesses and develop relationships at work. It creates a transparent and open work culture.

Since 360-degree feedback is mostly gathered online – either through email or surveys or Google document or internal HRIS – it is easy to gather data from anybody. In the post-pandemic era when many employees are working remotely, a 360-degree feedback is even more appropriate and crucial.

It helps the leaders identify learning gaps and create developmental action plans for their team members.

360-degree performance appraisal is used for the following purposes:

To get holistic feedback on an employee’s performance
To identify one’s strengths and areas of improvement
To create learning and developmental goals and action plan
To motivate employees
To create self-awareness amongst employees

360-degree feedback can be gathered throughout the year however, 360-degree performance appraisal happens mostly once in a year. In many organisations, it happens only from a certain hierarchy and above.

However, seeing its value, one may consider administering this multi-rater appraisal system, even if it means it doesn’t provide a 360-degree perception. An individual contributor may not have a direct report but that shouldn’t stop an organisation from conducting a 360-degree appraisal for this employee. It could be a 300-degree or 240-degree or even 180-degree appraisal. But it helps receive multiple perceptions.

Methodology of 360-degree Appraisal

It is a performance appraisal process where an individual employee is evaluated and rated by self, manager, peers, subordinates and customers. An evaluation is shared about how one perceives oneself and how others perceive you.

A structured survey or questionnaire is designed to collect feedback about an employee. It includes questions related to various performance indicators as defined and agreed during the goal-setting process and also the behaviours expected from a particular employee. The size of the questionnaire depends on various parameters required to assess performance.

To get more holistic and unbiased feedback, feedback is taken minimum from 12 to 15 people and the employee himself/herself. A report is generated after all the respondents fill the survey/questionnaire. The same is then shared with the employee by his/her manager along with HR Manager in a face-to-face meeting.

The 360-degree appraisal may use following rating methods to analyse the feedback received from various stakeholders:

Rating scale method

This method uses a scale of 1 to 10 points for various performance indicators like results, discipline, behaviours. Number of points scored for all parameters and by all stakeholdersers are added and final rating is recorded. It makes 360-degree appraisal easier to administer.

Behaviourally Anchored Rating Scale (BARS) method

This method uses a set of behavioural statements explaining performance of an employee for a particular job/role. This method also uses a set of parameters and rating scale. This method can be one of the parts of the overall 360-degree appraisal.

Free form method

The rater uses ‘essay format’ to freely describe about an employee’s performance. The rater must also provide evidence through supporting documents and examples. This method can be one of the parts of the overall 360-degree appraisal.

Advantages and Disadvantages of 360-degree Appraisal

As any system or process, 360-degree performance appraisal has its own advantages and disadvantages.

The advantage of 360-degree performance appraisal are:

It provides holistic feedback to an employee about his/her performance
It offers insight into areas of improvement
It provides feedback on specific competencies that need to be developed
It helps an employee develop his/her current strengths
It provides better understanding to employees of their role and goals
If designed appropriately, provides as objective feedback as posible
It is anonymous which helps build confidentiality and trust It provides an excellent opportunity for an employee to under- stand perceptions of others
It helps in learning and development and growth of an employee
It helps generate important developmental data
It helps build learning organisation and culture of performance within the organisation
It helps improve employee accountability and productivity
It fosters team work across departments
It helps improve customer service
It helps self-managed teams/large teams/autonomous teams where day to day observation of work behaviour is not possible
It helps improve communication and team work as an employee understands how others perceive his/her
It helps reduce conflict as the employee understands how his/her behaviour affects himself/herself, his/her department and overall organisation
It helps an organisation improve its career development, succession and retention programme

The disadvantages of 360-degree performance appraisal are:

It is a time-consuming process as feedback needs to be collected from many stakeholders
It may require to invest in robust Human Resource Information System (HRIS) to maintain the huge data generated by this process and therefore may prove to be costly
Respondents may not provide honest feedback due to various reasons like fear, respect and many such psychological barriers
Managing large data, tracking it properly and ensuring it is not mixed could be difficult
Lack of training to people administering 360-degree appraisal
If not administered properly, it may encourage competition lead- ing to mistrust, jealousy and overall bad feelings
Lack of follow up support may lead to chaos and anxiety
Too much conflicting feedbacks may not help come to a conclusion
In small and medium scale organisations enough respondents may not be available
In family businesses senior management may consist family members and therefore unbiased feedback may not be received
Inappropriately framed or vague/unclear questions may not help convert answers into measurable behaviour
If the survey/questionnaire is not customised to match the needs (roles, expectations, goals, etc.) of the organisation then it may not be helpful
Accuracy of the feedback may be affected based on how long the respondents know the employee. The longer they know the employee the lesser objective feedback may be received
Improper communication regarding the objective of the survey/ questionnaire and lack of training to the respondents may result in very personal and biased feedback
If 360-degree appraisal is used for annual performance appraisals, a culture of mistrust may increase and will have negative impact on development of the individual as well as the organisation

It is important to note that 360-degree performance appraisal may not be applicable to all organisations and all employees within the organisation.

It requires commitment, resources and coaching from the top management. If administered appropriately, it can yield effective feedback that is helpful not only to the individual employee but also the overall organisation.

Some of the reports say that only 24% of companies foster a culture of change through recognition and therefore implementation of a 360-degree appraisal system may help an organisation use ‘recognition’ to bring long-term changes.

Operating 360-degree Appraisal

360-degree appraisal is mostly administered online. Nowadays free formats like Google Form are available easily. Even some professional apps/tools/websites like surveymonkey.com are available at a stan- dard fee per annum.

Following steps are involved in administering the 360-degree appraisal for an employee:

Employees for whom 360-degree appraisal needs to be conducted are short listed based on feedback received through annual performance appraisal
Based on individual employee’s role and goals, list of around 12 to 15 respondents under is finalised for each employee
A survey/questionnaire is designed online. It consists of several aspects of workplace competencies, observable behaviours, rating scale as well as descriptive questions
An email is designed to be sent to all the respondents along with the link of survey/questionnaire
The employee completes a self-assessment by filling the same survey/questionnaire
Feedback from the individual and all other respondents are collected and analysed
A report of the 360-degree appraisal is created and shared with the employee in a face-to-face meeting

It is important that the whole process is administered by the reporting manager and the HR and Training Manager. It is advisable to hire an expert consultant from outside of the organisation. This helps main- tain the integrity of the process.

The person administering the 360-degree appraisal must ensure the following:

All the respondents are trained to use 360-degree appraisal system effectively – by focusing on providing an objective and constructive feedback
Anonymity of the respondents and responses must be maintained at all times
The feedback must content collation of all feedbacks and not just few
Report is generated objectively and shared with a focus on ‘development’
Development plan is created for growth of individual employee
Follow up meetings and support are provided to the individual employee

As you must have noticed, design of the instrument used – survey/questionnaire – is very important for the success of 360-degree appraisal method. Therefore, to yield best result, it is important to frame questions appropriately.

How to ask the right questions?

Questions must be structured
Questions must be related to employee role
Questions must be based on competencies and performance expectations from an individual employee

Examples of some behavioural sentences that may be used during 360-degree appraisal: 

Inspires continuous growth and learning in others
Communicates openly and clearly Take initiative to solve problems Motivates others to reach their goals
Seeks out feedback
Treats others with respect

The respondent is required to most appropriate answer based on his observation and experience

360 Degree Performance Appraisal