The 360 degree appraisal or 360 feedbacks is generally known as the “multi-rater feedback,” “multi-source feedback” or the “multi-source assessment.” This feedback comes back to the employee from all around, whether it’s from his/her peers, subordinates manager or supervisors. The term “360” is used in terms of 360 degrees, which shows the comparison of this process with a circle.  Because feedback is provided from all around the employee and is based on the year round performance, this name sticks and suits this process. However this process also includes a self assessment and in most cases feedback is also taken from external sources such as customers of the company, or suppliers with whom the employee interacts with in the work area. This tool is actually part of the performance appraisal process, which is conducted annually by managers and supervisors to determine the worth of the employee in an organization for future improvement or rewards. Though in performance appraisal employee’s are only reviewed by their managers, this tool requires the employee to be rated by almost all related employees in the office.

The results from these feedbacks or appraisals are used by the person for whom the appraisal is being done, so that the information can be used for future development and training. These results may also be used by the organization to determine pay cuts or pay increases or demotions and promotions. When these assessments are used for employee jobs and pay reviews, then these tools are called “360-degree review.” Though there have been many discriminative controversies regarding this factor, whether this should be used as developmental purposes by organizations or just for appraisal purposes. “There is also controversy regarding whether 360-degree feedback improves employee performance, and it has even been suggested that it may decrease shareholder value” (Pfau & Kay, 2002).

[adsense1]If the perception of others on how well one performs at his/her job is important to an individual then, evaluating that and taking suitable actions on that feedback should be part of ones jobs as well as being part of the job requirements. The 360 appraisal is almost an irresponsible practice conducted by organizations, because they are resigned to human resource departments or survey companies. How can organizations achieve accurate results about their employees, if everyone is evaluating them, how accurate can that information be if most employees are not having good work relationships with each other, and even if they are who is to say that the evaluations are not biased?

One of the common practices when it comes to 360 appraisals is that confidential surveys are conducted, so that people can rate their peers and supervisors. The organization promises confidentiality in these matters so that employees can comment in secret about their peer’s job performance, and sometimes even their managers. All this data is collected and forwarded to the employee in question, then this data is used to rate that employee.  In spite of the significant research in evidence that shows the risk linked with peer evaluation and how the chances of it being legitimate are very low, anyone’s concern with this process, based speculation is justified.

How accurate is the 360 Degree appraisal?

A recent study performed on the patterns of accuracy of raters shows that “length of time that a rater has known the person being rated has the most significant effect on the accuracy of a 360-degree review.” This study also shows that “subjects in the group (known for one to three years) are the most accurate, followed by (known for less than one year), followed by (known for three to five years) and the least accurate being (known for more than five years). The study concludes that the most accurate ratings come from knowing the person long enough to get past first impressions, but not so long as to begin to generalize favorably.” (Eichinger, 2004)

What do results suggest?

[adsense1]Several studies (Hazucha et al., 1993; London & Wohlers, 1991; Walker & Smither, 1999) indicate that the use of 360-degree feedback helps people improve performance. In a 5-year Walker and Smither (1999) study, no improvement in overall ratings was found between the 1st and 2nd year, but higher scores were noted between 2nd and 3rd and 3rd and 4th years. A study by Reilly et al. (1996) found that performance increased between the 1st and 2nd administrations, and sustained this improvement 2 years later. Additional studies show that 360 feedbacks may be predictive of future performance (Maylett & Riboldi, 2007).

According to some authors, “360 processes are much too complex to make blanket generalizations about their effectiveness” (Bracken, “et al,” 2005). Whereas Smither et al. suggests, “We therefore think that it is time for researchers and practitioners to ask, ‘Under what conditions and for whom is multisource feedback likely to be beneficial?’ rather than asking ‘Does multisource feedback work?” (p.60, 2005)
“It has been suggested that multi-rater assessments often generate conflicting opinions and that there may be no way to determine whose feedback is accurate” (Vinson, 1996). Recent studies also indicate that “self-ratings are generally significantly higher than the ratings of others” (Lublin, 1994; Yammarino & Atwater, 1993; Nowack, 1992).

It has come to a point that many organizations that shop for performance appraisals, or 360 feedbacks take a step in the wrong direction the minute they think about such things. They forget their real needs, and how to identify them. Before starting the 360 appraisal process, organizations need to ask themselves, if they really need it, it doesn’t need to be done if there is no need; also it is important to understand the validity of such a process in your organization and the effect it may have on your organizations values and customs. The most common reason that organizations give today, for using the 360 appraisal is that everyone else is doing it, that is not reason enough to adopt such a practice, since no where in research does it show that it is completely accurate or even an important part of the performance appraisal, is reason enough to avoid the 360 appraisal. If such appraisals seem to be unavoidable, it is better to conduct other more employee and organizational friendly reviews, as the 360 appraisal only tends to being a nightmare and a superfluous expense.