As Published in Business 2 Business , October 2006

360 Degree Feedback: Mistakes Managers Make and How to Avoid Them

By Ira S Wolfe

Call them performance appraisals, reviews, or evaluations … the truth is that most employees dread receiving them almost as much as managers hate giving them. That fact is, the performance appraisal system in most organizations is broken.

That would be okay if ongoing feedback wasn’t such a driver of employee engagement.  In an August 2006 employee engagement survey completed by my firm for a $200 million insurance agency on the west coast, employee responses pointed to a direct correlation of feedback received from their manager and a positive relationship with their manager.  Consistent with other well-traveled surveys in recent years, these employees expressed a willingness to recommend their employer as a best place to work, the highest compliment a good employee can pay to their employer, only if they had a positive managerial relationship.

Still many managers have developed convenient strategies for avoiding feedback and even more disdain for the annual review.  The truth is avoiding the performance review is like ignoring a leak in a boat. It will eventually sink you. 

Quite a few managers mistakenly see performance reviews as a time to praise employees for how great they are or to criticize them for what they've been doing wrong.  Managers of the old school often believe no news is good news:  “you’ll hear from me when I’m not happy.”  But silence is not golden when managing today’s newest workforce entrants – Generation X and the Echo Boomers (also called Generation Y and millenials).

The Traditional Annual Review

Single source evaluations, the traditional once-a-year performance review (if employees are lucky to get that), are not only dreaded but ineffective too. Studies consistently show that nearly every employee receives ratings higher than their actual performance using the single source evaluation.

Supervisors have motives - although not always in the best interest of the organization - to boost ratings. These may include:

1. A belief that a higher rating might encourage the employee to perform better next time.

2. The employee has had a lot of personal problems during the last review period. He feels sorry for him and chooses to postpone dealing with the performance issues until a later time.

3. The department already has a number of vacancies. The supervisor doesn't want the employee to get angry and quit. As a result, the employee receives a "halo" to keep him/her happy.

Another problem with single source reviews is turnover - both managers and employees. Unlike the past when employees enjoyed a career with the same company for decades and managers were organically promoted over time, employees today are mobile and managers are reassigned, promoted or terminated. More often than not, managers don't work with the same employees long enough to get to know them and subsequently don't have the knowledge or motivation to give fair performance appraisals.

The result is that mediocre, even poor, performance is tolerated and superior performance is ignored. Every employee then feels entitled to a pay raise and promotion as a reward for good performance.

An alternative feedback system: Multi-rater surveys

An alternative to the annual review - multi-rater feedback, also called 360 degree feedback - is experiencing a comeback. Multi-rater assessment has been around for decades but the late 1980s and 1990s saw an increase in popularity for these programs, simultaneous with the U.S. productivity boom. Then interest waned during the dot-com boom and for a few years afterward.

But skilled labor shortages and increasing productivity demands have put a lot of pressure on managers to find more effective feedback processes. The once-a-year, single source performance review is just not cutting it any more. Managers are turning to 360 degree feedback as a more effective, equitable, and valid process for developing employees' competencies and improving performance.

Multi-rater feedback systems abound.  Just do a search on the Internet.  But one size does not fit all. 

While multi-rater feedback has its distinct advantages, it also can be a disaster if not planned and implemented carefully. The most common mistake managers make is believing that multi-rater feedback is a replacement for the annual review. That's wrong, wrong, wrong. Multi-rater feedback is a development tool: it allows an employee to get interim feedback from several sources on his behavior and skills so that he/she can improve his performance. It's like a map, guiding the employee on his improvement journey. The annual review is just the toll gate.

A second mistake is believing feedback from multiple sources will "fix" a problem employee. That too is wrong, wrong, wrong. Employees who receive low ratings or significant gaps between raters may not care about their performance, which obviously needs to be addressed quickly. Alternately, they may not know what to do or how to do it. That latter reason is the perfect opportunity to work with the employee to create and implement a performance improvement plan, identifying specific work areas, behaviors or competencies to develop.

The third biggest mistake I see is trying to evaluate too much at one time. For instance, let's say a manager has five reports. A survey is designed to assess ten core competencies, each having six behavioral statements. (see sidebar). Each questionnaire then includes a total of sixty questions. That means the manager has to respond to 300 questions for his team. This manager may also be called upon by peers to evaluate their performance. If each employee is also supposed to obtain evaluations from their peers, they too will be responding to 100s of questions. You can see where I'm going with this: responding to all the surveys becomes so time-consuming there is no time left for the feedback, which leads me up to the fourth mistake.

No time for feedback! The goal of multi-rater assessment is feedback, an opportunity for employees to understand how others view their work performance and behavior and learn what they need to do to improve. Time needs to be carved out for the employee to review his reports and meet with his direct supervisors to work on an improvement plan.

What I'm about to outline has been an effective solution to implement and execute multi-rater feedback within organizations - small and large.

1. Management buy-in and enforcement is a must. Management must require every participant to respond in a timely manner. Too often both employees and managers drag their feet at responding to surveys, frustrating many employees who get partial or no feedback.

2. The competencies selected for evaluation must be linked to organizational goals and purpose.

3. Limit the number of competencies to ten, preferably less.

4. Begin the process with a self-assessment or 180 degree. ( A 180 degree evaluations includes just the employee and his/her manager.) Allow the employee to assess his own skills and possibly get feedback from his manager.

5. After the initial assessment, each employee writes a performance development plan to improve specific core areas. Each goal for improvement should include specific actions with milestone dates for monitoring and/or completion.

6. Six month to one year after this initial assessment, the employee is ready for multi-source evaluation.

Actual implementation of 360 degree feedback includes much more planning and forethought than what I described above but it's an effective, bare-bones plan to get started.  Many of the best companies in the world utilize multi-rater feedback. It is considered a best-practice. Isn't it time to follow their lead? 

Sidebar

Avoid being judge and jury!

One example of a managerial competency is decisive judgment.  Whether or not a manager uses a 360-degree survey or not, objectivity is critical when provided performance feedback.  To keep evaluations job-focused and defensible if an employee would challenge his evaluation, competencies must be defined by behavioral statements.  For instance, the following six statements clearly describe the behavior expected by an employee as it relates decisive judgment.  Using 360 degree feedback, the employee’s peers, reports, boss and even customers will assess six different dimensions of his or her decisive judgment behavior.

1. Takes personal responsibility for making decisions.

2. Wisely considers alternatives and possible consequences.

3. Makes good decisions.

4. Decides in a timely manner.

5. Decides with conviction and does not second guess the decision without very good new information.

6. Confidently takes action based on his/her decisions.

Most often, raters evaluate the employee using a Likert scale of strongly agreeing to strongly disagreeing with the above statements.  Responses are collected anonymously and confidentially before being compiled into a feedback report.

These same behavior statements are often used to create interview questions as well.