A performance appraisal system is one of the most important parts of any organization’s financial success and development. It is a mechanism that helps to evaluate and support employees and provide the necessary feedback for further strategic plans and objectives. For many years firms have tried to create a fair appraisal system that reflects the organization’s culture and forms deep bonds among the workforce. 360-degree feedback is a concept of assessment based on different sources such as colleagues, supervisors, and subordinates. The effectiveness of the system varies, depending on the particular firm and how it is applied. 360-degree feedback is a method that may be used to its full potential and at the same time slow down the company. Thus, it is important to know the possible profits and drawbacks of this system and its impact on stakeholder groups.
The concept that focuses on collecting behavioral-based feedback to encourage decision-making and increase self-awareness is not new. According to Church et al. (2018), 360-degree feedback was first introduced in the 1960s, but it gained popularity only in the 90s. It may be applied both for decision-making and development-only purposes. It may be used to give rewards based on performance, such as promotions or bonuses. It also plays an important role in job placement positions and may boost employees’ self-esteem. As Karkoulian, Assaker, and Hallak (2016) mentioned, the modern assessment process includes feedback from customers, peers, supervisors, and the individual under evaluation to form a well-rounded and balanced view of the performance. The 360-degree method has various applications as a performance appraisal system.
The advantage of using 360-degree feedback lies in the fact that the information about an individual’s performance is much more reliable and holistic, coming from different sources. Surveys conducted by multiple raters tend to have better structure and accuracy, as Church et al. (2018) claimed. The method tends to be of great use for developmental purposes as employees become aware of different perceptions. The feedback from such evaluation may increase work effectiveness and the employee’s involvement in the culture of the organization, and help a firm meet clients’ expectations.
The main challenge for the performance appraisal system is the issue of fairness and equity. The method may fail if there is inequity in the evaluation that causes laborers’ dissatisfaction and frustration. Peng and Zeng (2017) dwell on the problem of ostracism which is the result of the failed appraisal system and manifests in social exclusion and rejection. For example, less favorable evaluations from colleagues may influence an employee’s self-esteem and prevent them from moving up the corporate ladder. Thus, ostracized employees feel insecure and have fewer opportunities to be successful at work, which influences the organization’s overall productivity. The program may be sabotaged or used for some shady deals when coworkers agree to evaluate each other highly to trick the system. It happens because of the fear of negative appraisal and willingness to work not for the company but one’s financial gain. Lastly, there is an issue of privacy when evaluators may discuss an employee’s merits and weaknesses, breaking the trust.
To increase positive work attitude and job satisfaction, it is important to maintain high levels of organizational justice.
It means the corporate authorities’ fair treatment of the employees. It is important to preserve clarity during the assessment when all parties know how to interpret the scores. Managers and supervisors may provide special training to enhance employees’ self-awareness and self-criticism. Proper orientation should be provided before the method’s implementation concerning its purposes and profits. It may be a good idea to form a pilot group to observe the system’s possible outcomes in a particular firm. The questionnaire should not belong, or raters may experience fatigue or boredom during the appraisal, leading to less fair scores. It may also be appropriate to create a shorter variant of the questionnaire for the customers to increase the number of reviews. The nature of questions should align with the firm’s projects, ideas, and purposes and not be a general one.
The 360-degree feedback system should be integrated into development or training programs so that laborers would not lose motivation after the appraisal. It is also important to keep the evaluation anonymous so that the recipient does not know the rater. It will lower the chance of possible tensions and accusations of discrimination, as well as provide ground for the firm to escape unnecessary legal issues. Instead, evaluation should come from raters with different job functions and backgrounds to avoid appraisal based on recent interactions. The main components of the 360-degree appraisal are self-appraisal, peer-appraisal, superior appraisal, and subordinate appraisal. Self-appraisal gives a chance to a laborer to look at their strengths and weaknesses and serves as a motivation for personal development. A superior appraisal is a traditional part of assessment methods where the performance is judged by managers and supervisors who may provide bonuses if they are pleased. The subordinate appraisal helps to evaluate such abilities as communication and leadership and express an honest opinion of the people dependent on the laborer. Peer-appraisal, which is usually a form of customer’s opinion, helps to apprehend worker’s cooperation and sensitivity and involve clients in the company’s business.
In conclusion, the 360-degree feedback assessment may involve both positive and negative consequences after its implementation. If done right, it may enhance interpersonal relationships, ensure self-development, and create an accurate picture of the laborer’s performance. Conversely, employees may become ostracized, which negatively impacts both organization’s productivity and the client’s expectations. While using this method, it is important to utilize the data correctly and focus on the right developmental priorities.
Church, A. H., Dawson, L. M., Barden, K. L., Fleck, C. R., Rotolo, C. T., & Tuller, M. (2018). Enhancing 360-degree feedback for individual assessment and organization development: Methods and lessons from the field. Research in Organizational Change and Development, 26, 47–97.
Karkoulian, S., Assaker, G., & Hallak, R. (2016). An empirical study of 360-degree feedback, organizational justice, and firm sustainability. Journal of Business Research, 69(5), 1862–1867.
Peng, A. C., & Zeng, W. (2017). Workplace ostracism and deviant and helping behaviors: The moderating role of 360-degree feedback. Journal of Organizational Behavior, 38(6), 833–855.