Full Circle Feedback: Unpacking the Power of 360 Performance Reviews

We’ve all had performance reviews that felt like reading a horoscope — vague, flattering, and rarely an accurate reflection of reality. Only 14% of workers agree that annual reviews inspire them to improve. What’s worse, 90% of HR professionals feel that these reviews don’t yield accurate results.

This inability to truly assess employee performance is why many companies, including 85% of Fortune 500 companies, have turned to 360-degree reviews for more accurate and holistic employee evaluation and development.

In this article, we will discuss the components of a 360 performance review, its benefits and drawbacks, and provide tips for implementing it within your organization.

What’s The Difference Between a Traditional Performance Review And A 360 Review?

A performance review is traditionally an annual, manager-led evaluation focusing on employee job performance and goal achievement. In contrast, a 360-degree review gathers feedback from multiple sources (managers, peers, subordinates, and sometimes clients) to assess an employee’s impact more comprehensively.

Noreen explains in the webinar that traditional top-down evaluations originated from the Industrial Revolution and were based on the number of products or widgets someone could produce on the manufacturing floor.

But now, more people are turning to 360-degree evaluations to bring “humanity” to HR — or rather, bring compassion and empathy into the employee experience.

Real World Example: Performance Review vs. 360 Evaluation

Let's examine an example to better understand the differences between a traditional performance review and a 360-degree review.

Traditional performance review: Sarah is a mid-level marketing manager at a tech company. During her annual performance review, her boss focuses on Sarah's achievement of her key performance indicators (KPIs):

• Lead generation: Sarah exceeded her target by 15%.
• Campaign ROI: She achieved a 5% increase in ROI.
• Project deadlines: She met 90% of deadlines.

360 review: For Sarah's 360 review, feedback is collected from multiple sources, including:

• John (Sarah's boss): Suggests improvement in executive presentations.
• Team members (3 direct reports): Appreciate Sarah's creativity and supportive nature.
• Peers (2 other department managers): Praises Sarah's collaborative spirit.
• Self-assessment (Sarah): Proud of meeting KPIs and fostering creativity in her team and acknowledges the need to improve time management skills.

The Benefits and Drawbacks of 360 Reviews

360 performance feedback is typically more comprehensive than traditional reviews. But that level of detail comes with a few drawbacks.

Benefits Of 360 Degree Appraisal

A 360-degree review has several advantages. When done well, they can:

• Cultivate a strengths-based culture: 360 reviews, more than traditional ones, help employers go beyond strictly position-based KPI measurement to identify and cultivate underutilized strengths.
  
• Address diverse career paths: Long gone are the days of simply climbing the ladder. Today, employees don’t always have the same career aspirations. With a 360 evaluation, employers can help create more specific employee development plans and direct them to other opportunities, perhaps outside their role-specific trajectory.
  
• Improve employee retention: While it’s probably no surprise to HR leaders that employees want feedback, recent research shows that younger generations — the emerging workforce — are even more keen on it. In fact, receiving regular feedback is so important that  73% say they’re more likely to quit if they don’t receive frequent feedback and communication from their managers. The 360 evaluation, which can happen multiple times a year, is a great solution.
  
• Reduce bias: Traditional performance evaluations are more prone to biases. For example, research from Textio found that women get 22% more feedback based on their personality than men, such as being called abrasive or opinionated. The 360 evaluation helps mitigate individual biases by incorporating input from multiple stakeholders on a variety of performance markers.
  
• Bolster engagement: The 360 evolution is all about identifying strengths beyond work outputs and seeing employees holistically, which can enhance employee engagement and enthusiasm.
  
• Foster success: When leaders can provide employees with more constructive feedback, they ultimately help foster better individual development and team collaboration, enhancing overall organizational culture.

Drawbacks Of 360 Degree Feedback

Of course, 360 reviews can come with a few downsides, mainly due to their complexity. These kinds of feedback mechanisms can:

• Become time-consuming, complex, and costly: Gathering and analyzing feedback from multiple sources is complex. The 360 evaluation requires meticulous planning and execution to be effective and can often be costly to implement.
  
• Introduce conflicting feedback: Because 360 evaluations depend on multi-rater feedback, different participants may have contradictory opinions. This can be confusing for recipients.
  
• Cause anonymity concerns: Despite assurances, some participants may worry about confidentiality when feedback is spread among multiple sources, some of whom may be outside their formal chain of command.

How to Conduct a 360 Performance Review in 5 Steps

Do 360 evaluations seem like the right choice for your organization? Here are a few essential steps to implement them effectively and mitigate the drawbacks.

1. Define The Purpose and Scope

Before jumping into creating and deploying the evaluations, clearly articulate the goals of the review process in alignment with your overall performance management strategy (e.g., performance improvement, leadership development, etc.).

Determine which employees will be reviewed (e.g., all managers, specific departments), and decide how often you’ll review them (quarterly, semi-annually, etc).

2. Get The Right Tools

Performance evaluations require extensive documentation and data capture, especially in 360 reviews where input is gathered from multiple parties. Having the right tools in place is essential to keep the process organized and efficient.

Make sure your solution hits on two essential elements: integration and flexibility.

• Integration: A performance management system should seamlessly connect with your HRIS, streamlining implementation and providing centralized access to data. This ensures smoother workflows and better data visibility.
• Flexibility: Customization is key. Your system should allow for tailored performance reviews, goal setting, and check-ins that fit different roles and work styles, enabling employees and managers to have meaningful, metric-driven conversations throughout the year.

3. Choose Participants and Prepare Them

For a balanced perspective, select six to 10 reviewers per employee, including the employee's direct manager, two to three peers, two to three direct reports (if applicable), and one to two clients or cross-functional colleagues.

For relevancy, pick reviewers who have worked closely with the employee for at least six months.

Prepare participants so they understand expectations for the review. This might include providing written guidelines for constructive feedback, offering training on avoiding common biases (e.g., recency bias, halo effect), and emphasizing the importance of specific, behavior-based feedback.

4. Develop The 360 Evaluation Questions

In collaboration with your HR team and other leadership, identify five to seven key competencies relevant to the roles and employees you’ll be assessing (e.g., communication, collaboration, leadership, technical skills, etc.) and build out questions based on them.

5. Conduct Feedback Sessions and Create a Plan

Once you’ve received the result, schedule 60- to 90-minute sessions with each reviewed employee to go over the feedback, including their strengths and weaknesses.

Once you’ve discussed the outcomes, collaborate on an individual development plan  with two to three specific, measurable goals. Offer tools like mentoring, online resources, or training programs for ongoing development.

Sample 360 Performance Review Template

Need inspiration for your 360 review? Try this sample evaluation.