Is your organisation ready for 360-degree appraisal?

Vinita Gupta finds out the right time and process for implementing the 360-degree appraisal system.

Appraisal is a developmental process and also a tool for salary increment or at times punishment (if the appraisal is not good). It is a mechanism using which organizations strive to achieve complete development of an individual. Therefore, the organization should make sure that the appraisal process is transparent and bias free to make sure that no injustice is done.

In an IT organization, employees are the biggest asset and hence the 360-degree appraisal system is a widespread phenomenon and is applauded as a great development tool by many experts. 360-degree appraisals are founded on the idea that any employee’s performance is seen by many others—the manager, peers, direct reports, customers, etc.

Evaluation is done combining the feedbacks received from many people who see different parts of an employee’s performance. Also known as multi-perspective and peer-to-peer feedback, managers, supervisors and employees have found it to be effective in improving their performance.

Right culture is essential

Many organizations always speculate on when is the right time to start implementing the 360-degree appraisal system. Any time is perfect, the more important thing is doing it right the first time. If organizations have the scale and size to implement it while preserving the anonymity of the participants, it should consider the same.

Naresh Shah, Managing Director, India Development Centre (IDC) in Bangalore, Novell feels that for this kind of an appraisal system, there should be at least four to six peer-level responses and six to ten direct-report responses to be able to implement the process.

Vikram Shah, President India Operations, NetApp points out that appraisals should not be looked at only from result point of view. A good amount of emphasis should be laid on the process too. A matured organization will always take into account the process involved to derive complete learning out of the appraisal for the employee and the organization. 

NetApp deploys a development tool based on research done from studying a 360 assessment of 200,000 employees from different industries. This study and subsequent tool was developed by an external agency.

“While it is true that this system serves as an excellent purpose since it reduces biases, however it may not always be successful. Hence it is necessary to create the right culture in the company before introducing the system. If many people at that time in the organization are unhappy or their morale is low the situation can backfire,” says Chetan Shah, Managing Director, Synygy India.

Encourages teamwork

In today’s global world, no objective or a result is delivered individually. Any endeavor towards the achievement of a goal primarily affects and involves team work. The biggest advantage of 360-degree appraisal is that it creates accountability at all levels. If you know that you will be evaluated by peers and subordinates, it ensures a working culture that respects and encourages team-work. If done properly, the 360-degree appraisal programme can be a very positive experience for an employee.

Chetan Shah believes that a 360-degree review provides employees with valuable feedback on their job performance and their work habits, as viewed by their managers, co-workers, and subordinates. From a management perspective, it also provides another perspective on an employee’s performance.

He adds, “Most of the times, it is the co-workers who are the first to realize that there is a performance problem with a team member, so the 360-degree evaluation can help to find that out. In addition, it provides good data about managers too. If you review their evaluations, it will point to the strengths and weaknesses as perceived by their subordinates/peers.” Synygy has a 360-degree appraisal system for all the 500 global employees, including the top management.

LogicaCMG’s Global Service Delivery centre in India too follows this appraisal system. Prabodh Sirur, the Staff Operations Manager at the centre feels that 360-degree appraisals are an effective way of understanding the operational style of the individual being appraised. It is however not a measure of the overall management style.  These appraisals are meant for change, to help individuals leverage their strengths and work on their weaknesses. It also helps an organization map its training and development activities for an individual based on feedback.

Sirur adds, “360-degree evaluations can act as an early warning for potential problems as when someone gets consistent poor rating from many people, we identify this as a case where training/hand-holding is required for the person.”

This appraisal helps team members learn to work more effectively together. Teams know more about how team members are performing than their supervisor. The feedback makes team members more accountable to each other as they share the knowledge and inputs provided on each member’s performance. A well-planned process can improve communication and team development, believes Naresh Shah.

But for starters, giving effective appraisals is a difficult task. The main disadvantage is misusing of such a system. If co-workers or subordinates are using this system to get back at other co-workers, it will defeat the purpose. Also, if not done in the right way, it could lead to conflict amongst team members.

The pitfalls

360-degree appraisal is a little complex process where adherence to process and record-keeping will consume a lot of time. Cost could also be one of the stumbling blocks, especially if the process is conducted through an external agency.

No doubt it reduces biases but is not free from pitfalls. Hence a 360-degree feedback programme is doomed if the HR is its only champion. It needs buy-in from senior management as well. Companies should train people in giving and receiving feedback. Companies that implement 360-degree feedback without first developing good managers who can give feedback correctly risk serious damage to teamwork and morale. Providing constructive feedback calls for instruction, training and practice.

Chetan Shah adds, “While training individuals to give and receive feedback may temporarily increase the expense associated with 360-degree feedback programmes, the gains will outweigh the higher costs as the feedback delivered to participants becomes more focused, targeting the behaviors most closely associated with value creation and destruction. Ultimately, the goal should be to create a culture in which individuals feel comfortable giving and receiving feedback, both positive and negative, on a real-time basis, rather than waiting for an annual review.”

Presenting the results of the appraisal to managers in a constructive way is critical to the success of the process, reveals Naresh Shah. “The process of 360-degree appraisal has been used by more than 90 percent of Fortune 1000 companies for the past 10 years. It is a boon to the corporate world though it has its drawbacks. As opposed to the conventional appraisal system, wherein the immediate supervisor provides the employee with unidirectional comments, the 360-degree relies on multi-dimensional feedback. We at Novell have a 360-degree appraisal for managers and above, wherein there is scope of getting feedback from more than five peers,” he adds.

Confidentiality is also important because it will ensure that everyone can participate in the process. Some individuals are comfortable writing their names in the comments sections, some are not. So, by making it anonymous, one can ensure maximum participation. However, at Synygy they have used a blended approach. The managers’ appraisal is not confidential/anonymous. However, all the other appraisals are confidential. The company believes that a manager should have an open relationship with his subordinates and so anything they write, should not be a surprise to the employee.