Organisations that use 360 degree feedback as both an employee development tool and a performance appraisal tool may think they will enjoy all the benefits of a closed loop, efficient system that measures, informs and helps to develop all layers of the business, however they should think again.
As a development tool, 360 degree feedback focuses on competencies and behaviours and is designed to breed a culture of continuous improvement. Appraisals on the other hand are a measurement of overall contribution and productivity and are directly linked to salary increases, bonuses and other rewards.
Using the same tool to both develop people and be seen as a measure performance can therefore be fraught with issues. Giving employees the power to impact decisions that may affect the financial compensation of other employees is to say the least problematical.
At its worst this kind of power can corrupt the process completely. Integrating both systems together can breed a culture where employees seek to collude with potential evaluators to influence results, or report in such a way that personal feelings rather than evidence
Using 360 feedback for development is motivational and puts people firmly in control of their own outcomes. As an appraisal tool however, it can be viewed with deep suspicion and cynicism. The organisation needs to be sure that it can defend the validilty and reliability of the process. If people feel the system is not robust and “fair” then open minded, honest feedback can be difficult to attain.of competence influences compensation, thus putting not only the integrity and validity of the entire process at risk, but also corrupting the culture of the company. It can then place the organisation in a difficult moral and legal position where they are promoting “nice guys” (the ones with the most social influence) rather than the best performers.
Employees need to feel comfortable in order to engage fully and honestly with the process, and so it is vital that the organisation is clear about its objectives and ensures that it effectively and convincingly communicates how 360 degree feedback will be used for the benefit of employees. This is where it can be helpful to use a third party provider as they are perceived to be separate from the organisation and more likely to operate in an unbiased way.
At its best 360 degree development can do much to introduce a sense of momentum and achievement into the workplace and help not only with productivity, but also with attrition, motivation and alignment with corporate values. The opportunity for employees to have their say, work towards clearly defined goals and targets and get the training and support they need in order to succeed creates a positive feedback loop which can be compromised if it becomes too closely linked to financial concerns or career advancement.
So should 360 degree appraisals be used exclusively for development purposes and not as an appraisal tool? The answer is predominantly yes. Unless robust validation strategies, sufficient safe guards and excellent communication processes are put in place there are few if any significant benefits to be had from running the two processes together.