Performance Appraisal Methods 101: A 360-Degree Process

How to implement 360-degree feedback at your small or midsize business

Performance appraisals are an important part of any organization's talent management strategy. They help employees understand their strengths and weaknesses, set goals for improvement, and receive feedback from their managers and peers.

However, not all performance appraisal methods are equally effective. Traditional, top-down reviews often fail to provide well-rounded insights into employee development and growth, and many appraisal processes are simply outdated, biased, or inconsistent.

According to Gartner,  only 55% of employees consider their performance evaluations to be fair and accurate.^[1]

But what if you could expand beyond the limited manager-employee dynamic? By embracing 360-degree feedback, you can shift from the traditional top-down approach to a more inclusive and multi-perspective assessment.

How 360-degree feedback differs from other performance appraisal methods

Traditional performance reviews typically follow a top-down, manager-centric structure. The manager provides feedback and evaluates the employee's work over a period of time, focusing solely on their own perspective. This singular viewpoint can be limited.

In contrast, 360-degree feedback introduces a more inclusive and comprehensive approach to performance appraisal. This method seeks input from multiple sources, including peers, direct reports, and even customers. By gathering feedback from a diverse range of individuals who interact with the employee, you can obtain a more holistic and accurate assessment of their performance.

Another key difference between 360-degree feedback and traditional performance appraisals is that 360-degree feedback is typically gathered anonymously. This encourages people to be more honest and open in their feedback, as they do not have to worry about repercussions from the employee being appraised.

360-degree feedback is also typically used for developmental purposes, rather than for making decisions about pay or promotions. This is because it provides a more holistic view of the employee's strengths and weaknesses, which can be used to create a personalized development plan.

Benefits of using 360-degree feedback include:

• It covers a wider range of competencies and perspectives than other methods

• It encourages honest and open feedback

• It reduces the potential for bias and favoritism from a single source of feedback

• It helps employees identify their strengths and weaknesses

• It encourages employees to take ownership of their development and improvement

How to get started with a 360-degree feedback process

If you're looking to improve the effectiveness of your performance appraisal process, implementing a 360-degree feedback process can be a game changer. But where do you start? The six steps below will help you launch an effective 360-degree feedback program.

Step 1: Invest in 360-degree feedback software

Investing in the right 360-degree feedback software is important to the success of your program. The right software can help you:

• Create custom feedback surveys that are tailored to your organization's needs.

• Collect feedback from employees anonymously.

• Generate reports that show how your employees are performing and where they can improve.

• Track progress over time.

Step 2: Have managers establish criteria for employees to be rated upon

By first establishing criteria that employees will be rated on, managers can help to ensure that feedback is consistent and objective. When establishing criteria for employee ratings, managers should consider the following:

• The employee's job role and responsibilities

• The organization's goals and objectives

• The employee's individual development goals

Once a manager has determined the employee's role in the business's advancement as well as their own growth, rating criteria can be established. Here are some examples:

• Communication: Does the employee communicate effectively with their colleagues, manager, and customers?

• Collaboration: Does the employee work well with others and contribute to the success of the team?

• Problem-solving: Is the employee able to identify and solve problems effectively?

• Decision-making: Is the employee able to make sound decisions under pressure?

• Time management: Is the employee able to manage their time effectively and meet deadlines?

• Customer service: Does the employee provide excellent customer service?

Step 3: Provide training for those who will be giving feedback

To make sure that the information gathered through your 360-degree feedback process is accurate and constructive, it's essential to provide training for those who will be giving the feedback. This includes managers, peers, direct reports, and customers.

This training should cover the following topics:

• The purpose of the feedback: Make sure that those giving feedback understand the purpose of the 360-degree feedback process and how it fits into your organization's performance management strategy.

• How to give constructive feedback: Provide guidance on how to give feedback that is specific, actionable, and focused on behaviors rather than personality traits.

• Confidentiality: Emphasize the importance of confidentiality and ensure that those giving feedback understand the consequences of sharing feedback outside of the process.

This training can be delivered through a variety of methods, including in-person training sessions, online courses, and coaching.

Step 4: Request feedback from relevant coworkers

Once the groundwork is laid, it's time to start gathering feedback. When selecting coworkers to give the feedback, here are some factors to consider:

• Relationship to the employee: The co-workers who give feedback should have a close working relationship with the employee they are evaluating. This will help them provide accurate and insightful assessments.

• Role and responsibilities: The peers who supply the feedback should understand what the employee does. Without knowing this, it will be hard for them to provide feedback on the employee's performance in all areas of their job.

• Perspective: The people providing feedback for the employee should have diverse perspectives on the employee's work. This will help to make the assessment balanced and well-rounded.

Once you have chosen your reviewers, leverage your 360-degree software to anonymously send rating forms to them. You should set a deadline for the feedback but also provide ample time for raters to finish it. Two to three weeks is a good time frame. Once the deadline gets close, make sure to send reminders to maximize participation, or set up automatic reminders with your software.

Step 5: Review feedback with employees

Once all the ratings have been collected, it's time to share the results. Schedule one-on-one meetings with each employee to review their 360-degree feedback report. During this meeting, the manager should:

• Provide an overview of the feedback: Compile the feedback into a summary to serve as a starting point and to structure the conversation.

• Discuss specific feedback: Talk about specific feedback in detail, focusing on behaviors rather than personality traits. Provide examples of specific situations where the employee demonstrated the behaviors being discussed.

• Encourage the employee to reflect: Ask them to consider how the feedback aligns with their own self-perception. Encourage them to identify patterns in the feedback and to think critically about areas where they can enhance their performance or develop new skills.

• Develop a plan: Collaborate with the employee to develop action steps based on the feedback received. Help them identify specific goals and strategies to address their areas for improvement and break down the action steps into manageable tasks.

Step 6: Follow up with employees to determine how they’ve progressed

Following up with employees is important to make sure they are making progress toward their goals. Managers should schedule regular check-ins with employees to discuss how they are improving. Here are some things that should happen at those check-ins:

• Review progress: Assess the employee's advancement toward their objectives since the previous evaluation.

• Discuss challenges: Address any difficulties or obstacles the employee has faced and collaborate to devise ways to overcome them.

• Provide feedback: Continually provide feedback and guidance to support the employee's ongoing growth in their skills and behaviors.

• Adjust the plan: If necessary, make adjustments to the action plan for reaching the employee's goals based on their progress and the feedback received.

Now: Find a tool that makes performance management possible

360-degree feedback delivers a lot of value as a performance management strategy. Compared to standard reviews, 360-degree feedback shines a light on blind spots and uncovers actionable areas for improvement.

By gathering insights from an employee's entire work ecosystem, you gain a multidimensional view of their strengths, growth areas, and capabilities. This can lead to better-informed coaching and development, which can lead to even more benefits, including higher engagement, productivity, job satisfaction, and retention.

Your next step is to find a tool that works for your business in Capterra's directory of 360 degree feedback software. When evaluating software options, consider the following factors:

• User-friendly interface: Participants should be able to navigate the software easily and provide feedback without encountering unnecessary complexities.

• Customizable evaluation forms: Customizable forms ensure that the feedback collected aligns with your unique performance criteria.

• Anonymity and confidentiality: Confidentiality is important for fostering open and honest feedback.

• Reporting and analytics: Built-in analytics should enable you to identify patterns, strengths, and areas for improvement across individuals and teams.

• Integration with existing systems: Integration with your existing HR system and processes can streamline data management, reduce manual effort, and ensure a seamless experience.