Introduction
A 360-degree performance appraisal is when employers evaluate the performance of each employee from all angles and sources possible. Many organizations have adopted this mode of performance assessment, where the performance of the employees is judged considering all the elements surrounding them, such as the employees’ managers, peers, direct reports, fellow workers, and others. The performance of employees is evaluated according to feedback from 7 to 10 people and other sources in the organization (Taylor, 2018). The 360-degree performance appraisal exercise aims to understand an employee’s strengths and weaknesses to improve and reward where necessary. With full knowledge of employees’ strengths and weaknesses from the 360-degree performance review, the organization will likely establish strategies to improve their overall performance.
The 360-Degree Performance Evaluation Process
The management effectively informs each employee about the 360-performance evaluation exercise. The communication process includes spreading awareness to the employees about the entire exercise’s purpose, objectives, risks, and advantages. It also involves educating them on the exercise process, for instance, through surveys or questionnaires. It can also give the employees the appropriate way to be easily accessible to everyone (Armstrong, 2009).
The management also educates the employees on the process by which the feedback is collected. They also discuss the timeframe of the activity. This communication can be passed through physical meetings or emails.
Raters fill in the surveys, and the employees selected to give comprehensive feedback. The management must carefully choose enough employees to obtain fair, non-biased, and relevant data (Knights et al., 2007). The raters should include the managers, supervisors, peers, direct employee reports, and possibly several clients. The number of raters depends on the employee’s profile and job description (Nowack, 2019). The performance management theory dictates that employees have a role in each other’s performance, whether by correction or teamwork (Nowack, 2019).
The surveys or questionnaires are then distributed to the employees, which might take a week. The management chooses the fastest way to distribute the surveys. Many organizations choose an online 360-degree feedback program. This is mainly done through emails, where the employees click the link and start filling in the surveys (Syed & Kramar, 2017).
Filling in the surveys takes the longest time, depending on the number of raters carrying out the activity, the employees’ job profiles, and the organization’s size. To quicken the process, they place a deadline for the submission date. After filling in, the raters submit their surveys via the same mode.
Management then uses the submitted surveys to develop comprehensive reports about the employee’s performance. Once the reports are ready, they are sent to the employees confidentially via their emails (Knights et al., 2007). The employees and managers might conduct one-on-one feedback sessions for inquiries about the reports. Others arrange meetings with their managers to discuss the feedback and the review. If the employee is conflicted, the meetings are held to allow them to agree.
A development plan is carried out for the employees. The reports highlight the areas employees need to improve or maintain (Syed & Kramar, 2017). Due to this, the management is aware of what steps to take after the report. The proper channels for improving the highlighted areas are employed. They include training programs, workshops, coaching, and conferences that can be arranged for employees.
The development plan is to help the employees improve quickly (Knights et al., 2007). Afterward, a re-evaluation is carried out to help the organization monitor employee performance progress. The management expects an improvement in the highlighted areas of the employee’s report.
Risks Associated with the 360-Degree Performance Appraisal
Poor and unclear performance reports might demotivate the employees. Some employees might feel that the organization conducts the performance review to know who to fire. Others might feel that the results and the issues highlighted in the review must be more accurate (Syed & Kramar, 2017). Therefore, the employees panic and become phobic whenever the exercise is announced.
There is a risk of employees’ performance deteriorating or resigning from the job altogether. Sometimes, the employees find the program unfair, which would risk their boycotting and causing friction in the organization. However, the management might be forced to employ the operant conditioning theory, which dictates that the employees should get appropriate rewards or punishments according to their performance review.
The organization is likely to face the risk of legal cases. Some employees may not be pleased with the performance review and, therefore, choose to sue the organization for downgrading their performance (Taylor, 2018). Others might be sued for giving negative reviews without proof or evidence.
Therefore, the employees might feel they have been evaluated unfairly, forcing them to seek legal action against the organization. This might cost the organization money and reputation. Any company intending to carry out performance reviews should be prepared for this.
The results of the performance might be biased. Due to factors such as jealousy and competition, some raters might fail to give honest reviews of the employees. This case might lead to an inappropriate review and development plan.
Biased results might lead the management to make wrong decisions toward an employee, contributing to the organization’s factors (Armstrong, 2009). Even though bias in the current performance reviews is unintentional, they still adversely affect the organization’s operations. For instance, if a doctored performance review of an employee says that they meet the expectations, while it is false, the employee’s poor performance will continue to affect the organization’s overall performance, undetected.
Advantages of the 360-Degree Performance Appraisal
The 360-degree performance appraisal promotes employees’ self-awareness of their performance in the workplace. The employees learn their strengths and weaknesses. They are also informed about the areas that need improvement and new skills (Armstrong, 2009). This exercise improves the employees’ self-esteem, creating a distinction between how they see themselves and their colleagues’ opinions on their performance at the workplace (Syed & Kramar, 2017).
This performance boosts the employee’s motivation to work on their professional world to seek improvement in the next appraisal. For instance, when an employee is weak at filling, the performance review helps them to be aware of this and perfect it. It is mainly based on the motivation theory of performance management, which emphasizes the intrinsic motivation of motivating employees. It involves showing them their weaknesses, which would motivate them to improve.
Since the 360-degree performance review comes from many sources, the data collected will likely be accurate and fair. The management prefers getting feedback about their employees from different people rather than from one person. For instance, one person might provide biased information or have a vendetta against the employee.
Using many sources helps gather information that could not be known by a single person (Knights et al., 2007). The employer might also need a pattern for the feedback. The management can also compare the feedback and conclude that all the sources are exhausted.
The 360-degree performance appraisal improves teamwork among employees. If employees can evaluate their colleagues’ strengths and weaknesses, they can help each other where necessary (Knights et al., 2007) and make the necessary changes and improvements. For example, if a team needs a mechanic in the organization, the employee can know what skills to possess to collaborate with the team.
A 360-degree feedback system promotes anonymity in the organization during the performance review. Employees or raters feel more comfortable giving accurate and honest previews when promised anonymity (Armstrong, 2009). For example, the raters might have negative or constructive criticism about an employee’s performance, which might need to be handled better if their identities were revealed. If the exercise were not anonymous, they would hold back information, such as highlighting mistakes, which would affect the organization. Exercising the 360-degree performance appraisal helps the raters to fearlessly correct these mistakes without the fear of ridicule or hate.
Drawbacks of the 360-Degree Performance Appraisal
The employees might assume that the company carries out the feedback exercise to find the negative aspects of the employee’s performance instead of rewarding the positive outcomes of the report. Therefore, the employees might have negative perceptions about the exercise, discouraging them from participating (Martin & Fellez, 2017). For instance, research says that negative perception is the first human instance to react to scrutiny (Armstrong, 2009). Therefore, employees will react differently if they realize they are being examined.
Regardless of the performance report, some organizations do not necessarily take action to improve the performance of their employees. No steps are taken for employees with poor performance (Martin & Fellez, 2017). Therefore, one might think that the time, money, space, and effort invested in the 360-degree performance appraisal were in vain. Therefore, the organization might lose resources for an exercise that would not assist its operation. For instance, the organization can fail to push through with the development plans since they must allocate money and resources, which might require more.
If the method is implemented appropriately, the organization is safe from significant losses. It might lead to demotivation, discouragement, and resignation of some employees. Others might lose their self-esteem, leading to the deterioration of their work performance. Poor performance might lead to a lack of revenue and capital (Martin & Fellez, 2017). It might also lead to legal issues as the company accumulates resources to fight the litigation against the employees. For instance, an employee might sue the organization for biased reports without evidence.
Challenges Faced by Managers when Implementing the Appraisal
The main challenge faced is the reluctance of the employees to participate. Some interpret the appraisal as pitting employees against each other. They take it as a platform to express their contempt for others, which makes the management question the reliability of the feedback produced by the raters (Taylor, 2018). Appraisals are time-consuming since the employees dedicate their time to carrying out their activities instead of working. The process takes months, which is a lot considering that the exercise is to be carried out each year.
Some employees cannot give honest reviews about their colleagues since they fear hurting their feelings and demotivating them. Anonymity also means that employees cannot inquire for clarifications, anything short of the unhelpful comments left in their performance survey (Taylor, 2018). In most cases, more data than is obtained from the appraisal is needed to make the necessary development plans to help the organization move forward. This means the appraisal might need to be better implemented, which would be unproductive.
Strategies to Deal with Constraints during the Appraisal
To deal with these constraints, managers can carry out prior assessments to determine the readiness of the employees. This prepares them for the 360-degree process, which would be a good use of time if all employees were ready (Armstrong, 2009). They can also scrutinize potential obstacles, such as legal litigations and employee reluctance, to put sufficient effort into them. To reduce employee resistance, management should educate employees on the importance of exercise so that they can propose to improve the organization regardless of their insecurities. Other organizations hire experts to carry out the exercise to ensure it is appropriately implemented.
How the 360-Degree Feedback System Improves the Overall Organizational Performance
The 360-degree feedback system assists the raters in evaluating the team members and knowing what is best suited for them. When employees are aware of their strengths and weaknesses, they can work on them through the development plans assimilated by the company (Mahlke, 2019). With the help of management, such as mentoring, coaching, and training their employees in these areas, they can improve consistently (Mahlke, 2019). A 360-degree feedback system motivates employees to do better and work on their imperfections, which registers a steady margin of improvement. As every employee improves, the organization’s overall performance increases, leading to higher productivity.
This is a case study of PepsiCo, a company that periodically conducts a 360-degree feedback system on its employees. PepsiCo is the world’s second-largest food and beverage company and the global snack leader, employing over 285,000 people globally. The company desired to implement a program using 360-degree feedback to develop its leaders better. The key obstacle was developing consistent leadership behaviors across all markets.
ETS, a software development firm, has developed more flexible and intuitive online 360 systems, allowing its leaders to receive more effective feedback. PepsiCo’s Director of Organization and Management Development, Erica Defrosters, discovered that employees were very committed to the program (Martin & Fellez, 2017). Up to and including their CEO, senior leaders see the value of this process. It is the program that has such senior-level support. As a result, they consistently receive response rates above 90%, demonstrating the value of their employees.
Conclusion
After the performance review, the employee sets specific goals for the employee to attain within a particular time frame. These goals correspond to the strengths and weaknesses of the employee. These goals help the employee to improve in specific areas. They also highlight the necessary skills the employee requires to attain the goals. These goals help the employee improve consistently as the employer monitors their progress.
The employer might change the employee’s course to put them in a field where they are best suited. Other development plans that ensure consistent improvement include training and mentoring. The management adapts these activities to ensure that the employees progress in the areas where they should improve.
Reference List
Armstrong, M. (2009) Armstrong’s Handbook of Human Resource Management Practice. 11th edn. Kagan Publishing.
Knights, D., Willmott, H. and Brewis, J. (2007) Introducing Organizational Behavior and Management. London: Thomson.
Mahlke, J. (2019) Validation of 360-Degree Feedback Assessments: Development, Evaluation, and Application of a Multilevel Structural Equation Model (Doctoral dissertation).
Martin, M. and Fellez, M. (2017) Organizational Behavior and Management. 5th edn. Andover, Hampshire.
Nowack, K.M. (2019) ‘From insight to successful behavior change’: The Real Impact of Development-focused 360 Feedback.
Syed, J. and Kramar, R. (2017) Human Resource Management: A Global and Critical Perspective. Bloomsbury Publishing.
Taylor, S. (2018) Resourcing and Talent Management. Kogan Page Publishers.