Advantages of 360-Degree Feedback System For Employee Performance Management
Introduction
360-degree feedback, also known as multi-rater feedback, is a method of appraisal in which HR takes feedback from all the people who closely work with that employee, like the reportees, immediate managers, peers, customers, etc. Often, it also includes self-appraisal. In this technique, reviews from all the stakeholders across multiple areas through an elaborate questionnaire and a rating scale give a holistic picture of employee performance and conduct. Also, since there are many reviews, it reduces the chances of biased outcomes
Today, most well-established, mid to large companies use this feedback mechanism while assessing employee performance, appraisal process, and deciding the increment. It has proved instrumental in guiding HR to evaluate the overall performance of the employees and reward them appropriately.
Advantages of 360-degree appraisal system
- Better self-awareness
- Healthier work relationships
- Increased transparency
- Areas of improvement
- Empowerment
- Holistic approach
- Fair and Just
- Higher Accountability
- Insight into work as well as relationships
- Helps to measure how work is done
- Increased productivity
- Improved client relationships
1. Better self-awareness
Self Appraisal is an integral process within 360-degree feedback. In this, the employee reviews their performance and gives themselves a rating over different areas and multiple questions. While doing this, the employees need to introspect and dwell on their process and performance. It leads to a higher level of self-awareness. Often, they realize how they could have avoided certain situations, performed better, or driven higher results. This self-realization is very important to drive future performance. Self-motivation or intrinsic motivation is the best way to increase performance.
2. Healthier work relationships
Although kept anonymous, constructive feedback from the team, associates, superiors, etc. helps to improve work relationships. It builds empathy, and everyone strives to help each other get better. It sends a message that everyone is part of a team and is not there to compete with each other but help complete each other. Such an attitude goes a long way in team building. These healthier work relationships improve the entire company culture and enhance the performance of the entire organization. Not to forget, it also builds the company’s brand image and helps attract a more qualified and elite pool of talent.
3. Increased transparency
Self-appraisal, peer as well as reviewing the performance of your superiors have increased the transparency in the entire organization structure. No longer are appraisals carried out discreetly where no one has any idea how the outcomes arrive. It is a healthy practice that engages all the employees and brings trust and faith to the appraisal system. This transparency also ensures that everyone is mindful of their behavior towards not just their seniors and peers, but also their reportees. It creates a more conscious and healthy culture in the organization.
4. Areas of improvement
The main objective of 360-degree feedback is to identify areas of improvement and provide the right tools for training and development to enhance performance. Constructive feedback that is received from this process forms the basis of skill gap analysis for each employee. Whether soft skills or hard skills, employees are provided with the necessary courses and training to get better, leading to improved organizational performance.
5. Empowerment
Being a part of the appraisal process for self, as well as others, motivates the employees and makes them feel empowered. It engages them and communicates to them that their feedback is valuable. It sends out a message that their views matter and that they are an integral part of the organization. This sentiment helps to bring positivity and belongingness leading to loyalty. It also motivates employees to give their best to help the business grow.
6. Holistic approach
As the name suggests, a 360-degree feedback mechanism is a holistic approach toward employee performance evaluation and measurement. It takes feedback from many people who closely interact with the employees on a daily basis. These people spend a lot of time with the employee and hence, know them well enough to provide genuine feedback on their behavior and many other qualitative factors. Also, it is broad enough as it covers peers, subordinates, superiors, and even customers in many cases. The result is a review of performance from all different perspectives.
7. Fair and Just
Traditionally, performance appraisal was carried out by the HR team, and only the results were declared. There was no clarity on how the results were arrived at in the case of roles that were measured on qualitative parameters. Since HR had limited opportunities to deal with every employee, they gathered feedback mostly from their superiors. Superiors, on the other hand, would give reviews based on their relationships with the employee. Hence, there was a high scope of bias and unfair results. 360-degree feedback eliminates this possibility creating a more fair and just mechanism to evaluate performance and carry out staff appraisals.
8. Higher Accountability
In 360-degree feedback, when you rate your juniors and yourself, you realize how crucial your role is as their leader and manager. Most organizational goals are achieved successfully when there is much collaboration between multiple teams, leave alone cohesiveness within a single team. This accountability for improving the performance of the entire team you lead is crucial for success.
9. Insight into qualitative areas, including relationships
Most of the methods of employee performance measurement and management will give you deep insight into goal achievements that are more tangible and quantitative. We all know that measuring qualitative parameters of employee performance is very challenging and complex. However, 360 degrees feedback is a technique to provide a holistic perspective and performance assessment for more intangible areas like interpersonal relationships, communications skills, respect, etc.
10. Helps to measure how work is done
‘What work is done’ and ‘how much work is done’ are easy to measure and evaluate. But qualitative aspects of work that define how it is done, become challenging. 360-degree feedback is efficient in measuring these aspects of work done. Measuring this helps to determine the efficiency and define the scope of improving productivity.
11. Increased productivity
The whole effort behind measuring and managing performance is to improve employee, team, and organization productivity. Easier said than done, performance management is a continuous process and a time-consuming one. 360-degree feedback is one of the impactful tools that help businesses achieve this ambition by providing multiple feedback from multiple sources. It directly points out the skills that need improvement and is to be followed with an upskilling program to overcome the same. Only then will it be able to increase productivity.
12. Improved client relationships
Many industries are highly customer-centric. Client servicing is essential in their business. In fact, organizational performance includes customer satisfaction and delight as fundamental organizational objectives. With 360-degree feedback techniques where employees know that customers would rate them and impact their performance measurement, they are more likely to ensure good client relationships.
Conclusion
We have seen above how 360-degree feedback benefits the employees, teams, and the company. However, this does not mean that there are no shortcomings or disadvantages of the same. It is crucial to be aware of both pros and cons of this performance appraisal method before you decide on the next steps for your company.