360-Degree Performance Appraisals: Advantages and Disadvantages

Introduction

This paper provides an overview of the 360-degree performance appraisal. A 360-degree feedback system is also known by a number of other names, such as multi-rater feedback, multisource feedback, or multisource assessment. This model of performance appraisal involves gathering performance feedback from a number of different sources, including supervisors, employees, customers, and peers, among others. The model is flexible, and virtually anyone who works with someone else can provide a performance appraisal. This paper discusses some of the advantages and disadvantages of the 360-degree feedback system. If administered properly and implemented in the right setting, this model can provide an effective tool that helps organizational members advance their careers.

Traditional vs. 360-Degree Performance Appraisals

Performance appraisals are an important tool in any organization. The effective use of different evaluation programs has actually been shown to reduce employee stress and lower intentions to quit and overall turnover rates (Avey, Luthans, & Jensen, 2009). However, traditional evaluations were processed in a top-down fashion — simply a supervisor sharing their perceptions of an employee's performance with those they supervise. The top-down model eventually became more formalized, yet it has been shown to be ineffective in many cases. Because it is based on the subjective and sometimes biased opinions of a single individual, these performance evaluations are prone to inaccuracy. Furthermore, in many cases supervisors do not actually spend much time working directly with their employees and are therefore often unfamiliar with those employees' performance in the first place.

As the problems associated with top-down and traditional models of performance evaluation have become more apparent, many practitioners have worked to develop alternative evaluation systems. One such system that is relatively new to the field is the 360-degree evaluation. The feedback given to the employee in this system is far more comprehensive and incorporates a broader range of perspectives than the traditional model alone. The employee generally receives the same top-down information from their supervisors; however, they also receive evaluations from their peers and, in some cases, from customers or clients as well. This adds a bottom-up perspective as well as a side-to-side perspective on an individual's performance. Another development within this system is the inclusion of a self-evaluation. The basic idea is that if information is gathered from all angles and a consistent pattern emerges, that information is likely to be more reliable and more relevant. The concept can be thought of as a circle of feedback from those around an individual — hence the term "360-degree" was applied to it.

The Role of Peer Input in 360-Degree Evaluations

Peer-to-peer or co-worker performance evaluations are conducted by employees who work at the same organizational level. Gathering feedback from colleagues on the same level has proven to be a commonsense approach to performance evaluation. This is primarily because people who work at the same level generally spend the most time working together and doing so in similar ways. When appraisals are provided from this level, they can significantly enhance the reliability of an evaluation system. A supervisor may have only limited interaction with their subordinates on a daily basis, and even when such interaction occurs it may not be task-related. Members of the same work group, by contrast, typically interact on a more continuous basis. Because this group is often more familiar with the actual working habits and styles of their peers, they are thought to be more qualified to provide meaningful insights that can help guide the team toward the fulfillment of organizational goals (Muniute-Cobb & Alfred, 2010).

Two distinct ways in which a 360-degree evaluation system can influence peer performance have been identified. First, when employees know that they are being evaluated by their peer group, the likelihood that they will be more engaged in group activities and participate fully in the tasks at hand increases (Wiley & Gardner, 2009). Knowing that one's performance is being evaluated at all times provides a strong incentive to perform at one's best. However, in some cases this can be counterproductive. Some employees may experience heightened stress or anxiety from being continuously evaluated and may actually perform worse than they otherwise would have.

Conclusion

An effective evaluation process can be a valuable tool for attraction, retention, and motivation (Becker, Antuar, & Everett, 2011). For the most part, employees who are actively engaged in their career development are continually seeking to advance on their own behalf. Receiving timely and relevant feedback can therefore help support employees' personal and professional ambitions. In a 360-degree peer review, because the feedback comes from multiple perspectives, it also provides extra motivation to perform well even when a manager is not present. It additionally offers a more complete picture of how an employee is performing by capturing how they are regarded from different positions within the organization.

The greatest advantage of the 360-degree system is that it provides a more comprehensive level of feedback regarding performance appraisal. Within this system, the employee has an opportunity to compare the views of others with their own self-assessment. This comparison can yield many valuable insights that help employees further develop their skills. When there is consistency across the feedback received, this can also act to strengthen the credibility of the overall evaluation. Although this feedback system does require more time and effort than traditional models, it offers one of the most advanced and comprehensive sets of performance perceptions available — one grounded in multiple levels of the organization. As research on performance management continues to evolve, the 360-degree model remains a widely recognized approach to fostering employee growth and organizational effectiveness.

Avey, J., Luthans, F., & Jensen, S. (2009). Psychological capital: A positive resource for combating employee stress and turnover. Human Resource Management, 677–693.

Becker, K., Antuar, N., & Everett, C. (2011). Implementing an employee performance management system in a nonprofit organization. Nonprofit Management & Leadership, 255–271.

Muniute-Cobb, E., & Alfred, M. (2010). Learning from evaluation by peer team: A case study of a family counselling organization. International Journal of Training and Development, 95–111.

Wiley, K., & Gardner, A. (2009). Developing team skills with self- and peer assessment: Are benefits inversely related to team function? Campus-Wide Information Systems, 365–378.