Traditional performance appraisals, as discussed above, can be both subjective and simplistic. At times, they can also be deemed to be “political”. In an attempt to improve this methodology, some companies have turned to 360-degree appraisals. 360 appraisals pool feedback from a department’s internal and external customers to ensure a broader, more accurate perspective of an employee’s performance.
360-degree performance appraisal is an attempt to answer the question: “How can a supervisor evaluate an employee he or she sees only a few hours each week?”
Using internal and external clients
360-degree performance appraisals offer an alternative by which organizations may gain more useful performance information about employees. Because all clients/customers an employee comes into contact with can conceivably have input into the performance appraisal, this methodology can also makes them more accountable to their customers. Using a courtroom metaphor, one could say that, rather than having a single person play judge, a 360-degree appraisal acts more like a jury. People who actually deal with the employee each day have an opportunity to create a pool of information from which the appraisal is written. Internal clients may include supervisors, subordinates, co-workers, and representatives from other departments. External customers may include clients, suppliers, consultants and customers.
Perceived fairness
Given the use of a wide variety of sources for information in the 360-appraisal process, this method provides a broader view of the employee’s performance. Frequently, the employee on whom the appraisal is being done (the ratee) will feel that the process is more fair.
Validity
Very often, an employee’s peers know their behaviors best. Consequently, employees cannot hide as easily in 360-degree appraisals.
Employee development
360-degree appraisal enables an employee to compare his or her own perceptions of their work performance with the perception of others. As such, the method facilitates employee self-development. Feedback from one’s peers is more likely to lead to changed behaviors.
Accountability to customers
A 360-degree appraisal process provides a formalized communication link between the employee being evaluated and their customers. These people now have feedback into the employee’s performance rating. As such, the process is likely to make the employee more accountable to his or her various internal and external customers. Furthermore, organizations can also use this feedback to create more customer-oriented goals for the following year.
The raters: how many and who?
One issue employers must solve in implementing a 360-degree appraisal program is determining how many raters should be involved. Next, the organization must decide who should do the rating. Generally speaking, less than five raters limits the perspective while more than ten raters is likely to make the appraisal system complex and time consuming. A firm would be well advised to develop a workable definition of what constitutes a peer, an internal customer, an external customer, a supervisor, etc. For example, to be useful, the customer ought to be one who has significant interactions with the ratee.
Some organizations permit the ratee to develop a list of key internal and external customers that he or she interacts with. The ratee then recommends five to ten of these individuals to serve as raters. In this process, the supervisor still retains the ultimate responsibility for the appraisal and therefore ensures that appropriate raters are selected. The ratee is thus prevented from stacking the deck with supportive customers.
Another option has the raters selected at random from the ratee’s team by a computer-generated system. Those selected are then notified by E-mail to participate in the appraisal.
Limitations on the use of external clients
An organization contemplating the use of the 360-degree process must keep in mind that reviewing that organization’s employees’ performance is not the customer’s business. To ensure the customers’ cooperation, the process should be a mutually beneficial process.
Furthermore, the various external customers would ideally evaluate the ratee only on the behaviors or work incidents that they have directly observed. This, of course, also holds for internal raters.
Summarizing the data
Once all raters have supplied their appraisals, the employee’s supervisor is generally responsible for summarizing the data and determining the final performance rating. After summarizing the data, the supervisor conducts the formal appraisal interview with the ratee.
Another variation of the summary process makes the ratee responsible for summarizing the feedback data from the raters. The ratee then submits a summary analysis to his or her supervisor. The ratee and the supervisor then meet to determine the ratee’s final performance rating and development plan.
Rater confidentiality
Organizations must decide whether the feedback from the various raters should be kept anonymous or be identified to the employee. Sometimes raters give fuzzy feedback because of the fear that the feedback might come back to them.
One rule rule might be that no rater can give negative feedback in the appraisal unless that rater has previously given the feedback directly to the ratee. Most organizations should start with a policy of confidentiality until sufficient understanding, maturity and organizational trust is achieved