360-Degree Feedback for a Competitive Edge.

Executive Summary

The author uses a real-life example to show how a company redesigned its 360-degree feedback process so that it serves both developmental and evaluative functions. He concludes that using the new feedback procedures could give the company a competitive edge.

As 360-degree feedback processes become more common, organizations adopting this practice are choosing to use feedback results in vastly different ways. In simple terms, the two main purposes for this kind of feedback are development and evaluation. When the objective is development, feedback tends to be confidential, and individuals are expected to make behavioral improvements based on the feedback they receive. When the objective is evaluative, the feedback is not confidential and is used in annual performance appraisals. It can be used, for example, to determine how merit raises will be given.

Both methods have proponents and critics, pros and cons. Those who want the 360-degree feedback to be used for making personnel decisions argue that 360-degree developmental feedback does not provide individuals with enough incentive for making improvements. Furthermore, they say, refusing to consider 360 ratings in annual performance appraisals means compromising the decisions made during annual reviews. However, when responses are used for evaluation, both raters and ratees tend to be resistant, especially if the feedback is tied to merit raises. For this reason, supporters of developmental feedback say that 360 ratings must be kept confidential.

The solution may be to develop a feedback procedure that combines the benefits of both approaches. Following is a real-life example of how a practical, 360-degree feedback model can address both developmental and evaluative objectives.

A developmental and evaluative feedback model

BioTech (not the company's real name), a small Midwestern company, redesigned their 360-degree feedback process to include both developmental and evaluative objectives. BioTech had been using 360 leadership behavior assessment for developmental feedback for two years. However, the CEO and the human resources director had received complaints from team leaders and employees that some individuals were not improving their work behaviors. These employees questioned the value of completing surveys at all because not everyone was being held accountable for using the feedback to make changes. HR had difficulty addressing these problems because the 360 data were regarded as confidential and therefore could not be used in the annual performance appraisals.