Not every management trend withstands the test of time—how does 360-degree feedback miss the mark?
Several performance management tools and techniques are employed by companies worldwide to monitor and promote effective performance. Some of these are recently developed, while others have been in use for many years and remain popular despite studies demonstrating their drawbacks. This blog will explore the concept of 360-degree feedback, discussing why we believe it is a management trend likely to decline in popularity in the coming years. We’ll also examine why continuous feedback is a much better option for fostering a healthier feedback culture.
What is 360-degree feedback?
Known alternatively as multi-source and multi-rater feedback, 360-degree feedback has its roots in the 1950s and rapidly became popular. By the 1990s, it was being utilised by most organisations. Nevertheless, several issues have emerged over time, questioning its effectiveness.
This feedback approach aims to offer employees insights from a broad range of sources, including peers, clients, and managers, to create a more comprehensive, well-rounded and balanced performance review. Today, modern companies use advanced software and detailed forms to facilitate this feedback process.
Let’s look at some common reasons why this approach fails to deliver on its promises.
1. It pits employees against each other
A healthy atmosphere that fosters teamwork and collaboration is absolutely necessary to create and maintain healthy morale among employees and within the company. However, 360-degree feedback can unintentionally undermine this atmosphere and has been criticised as being “from the same Godzilla world as Forced Ranking and Bell Curve Performance Reviews and all that garbage.”
A New York Times article highlighted how 360-degree feedback can sometimes lead to hurtful and unproductive personal comments, such as “stop using your looks and personality to get things done” and “I never really liked you.” The article also notes that employees being considered for promotion might receive biased and damaging feedback driven by others' agendas. Additionally, individuals with personal grievances might use this feedback process as a means of retribution, while managers might exploit it to assert their dominance. Such issues undermine the effectiveness of 360-degree feedback in providing an accurate assessment of an employee's performance.
2. It is a very time-consuming process
Time is money and is very critical resource for any organisation. Underscoring this very reason, annual appraisals are becoming less popular. Similarly, 360-degree feedback is also viewed as a poor allocation of company time.
Given the timescale, every manager should be aware that communicating the purpose of the 360-degree feedback, along with a thorough explanation of the process and how feedback will be gathered and assessed, typically takes 1 to 3 weeks. Selecting raters requires an additional 1 to 2 weeks. Distributing surveys takes around one week and completing the 360-degree questionnaires can take approximately 2 to 4 weeks. Following this, generating reports usually takes 1 to 2 days, and conducting feedback meetings requires about 1 to 2 hours per participant. Finally, creating a development plan can take another 1 to 2 weeks. Altogether, the entire process can extend from 6 to 12 weeks. This demonstrates the substantial amount of man-hours involved, especially for a process that needs to be repeated annually.
3. Confidentiality concerns
Confidentiality is a crucial aspect of 360-degree feedback. Reviewers are expected to provide open and honest feedback without worrying about the potential consequences that might hurt or anger a close colleague or friend. To ensure this, anonymity is practiced; however, this anonymity comes with certain challenges. For example, if the process is entirely anonymous, there is a risk that employees may leave unhelpful comments or false feedback aimed at targeting coworkers with whom they have personal conflicts.
Moreover, due to this anonymity, employees are unable to respond to feedback they perceive as unfair or unhelpful. There is also no opportunity to seek further clarification or additional comments, leaving little to no room for making significant improvements based on the feedback received.
4. Challenges of maintaining objectivity
Objectivity is a persistent challenge in performance evaluations. You might think that involving multiple viewpoints on someone's behaviour would address or lessen this issue. Surely, any lack of objectivity by one person would be made up for by the opinions of many. But this just isn’t the case. Every individual rater is human and equally unreliable. As a result, the feedback often yields poor data, which isn't particularly useful to the employee, the manager, or the company.
5. The burden of overwhelming change expectations
One major issue with 360-degree feedback is the overwhelming volume of data employees receive after the questionnaires are collected and the information is disseminated. Employees are often left with numerous suggestions on how to improve their performance. Implementing all these changes at once can be challenging and counterproductive. While employees can certainly work on changing ingrained habits, attempting to tackle too many changes simultaneously can lead to frustration and ineffectiveness. A more effective approach is for employees to set simple, SMART objectives that they can gradually work towards and monitor their progress.
6. Data from 360-degree feedback is often unreliable
Despite the lengthy and multi-faceted nature of the 360-degree feedback process, which involves numerous participants, the expected outcome of reliable and informative data is often not achieved. As noted by a Harvard Business Review article, “data generated from a 360 survey is bad. It’s always bad.” The article further criticises it stating “360-degree surveys are, at best, a waste of everyone’s time, and at worst actively damaging to both the individual and the organisation.”
Even the US military has criticised its own use of 360-degree feedback, citing ongoing problems in regard to its reliability and validity. Research indicates that the accuracy of a 360 review is significantly influenced by how long the rater has known the employee being evaluated. Reviews are generally accurate for employees known for “one to three years,” but those known for less than a year or for a very long time tend to receive less accurate feedback. In the latter cases, raters often resort to generalised evaluations, either favourably or unfavourably.
7. No proven impact of 360 reviews on company performance
Given the persistent issues with objectivity and data accuracy, it's no surprise that there is no concrete evidence proving that 360 reviews effectively improve overall company performance. On the contrary, one study found that such feedback was associated with a 10.6% decrease in market value. The study further elaborated that 'there is no data showing that [360-degree feedback] actually improves productivity, increases retention, decreases grievances, or is superior to forced ranking and standard performance appraisal systems.”
8. Overemphasis on negatives
Managers should concentrate on the positive during coaching conversations. Positive feedback is associated with better performance and higher productivity. Sadly, 360-degree feedback often focuses excessively on the negative, with employees typically ignoring their strengths. This usually comes from a place of good intention—employees want to address their weaknesses. However, an overwhelming amount of negativity is not the best way to motivate and uplift employees, particularly when they feel vulnerable and judged.
Continuous feedback: A better alternative for 360-degree feedback
Continuous performance management presents as an excellent alternative to 360 feedback. By avoiding the complexity of multiple opinions and suggestions, employees and managers can frequently meet to devise a performance action plan with precise SMART goals and learning objectives. This strategy builds a healthier feedback culture in the long run, resulting in more confident, capable, and content employees.
OneAdvanced’s Performance & Talent can help you revitalise and update your performance management system. To find out how our performance review software can help you, book a free demo today.