Center for Effective Organizations 360-degree Assessment: Time for Reinvention Ceo Publication G 03-17 (445)

One of the most popular management development tools in use today is the 360-degree assessment instrument. In recent years, however, its popularity has led to uses beyond its original application for management development. In particular, 360-degree assessment is now replacing the traditional performance appraisal. This trend towards multiple uses especially administrative ones should raise concerns. We discuss the implications of this trend. In particular, our focus will be on dilemmas created when a feedback tool is stretched to include potentially conflicting aims. The analysis is carried out on three different levels (individual, interpersonal and organizational) using three different frames (cognitive, psychometric and game-theoretical). It leads to the conclusion that 360-degree assessment is in danger of losing its efficacy as a process to deliver honest and constructive feedback if used for multiple purposes. We suggest that it is time for reinvention of the tool and its process methodology. In particular, we argue for the development of two distinct tools – one for management development and one for performance feedback. The management development tool would rely more heavily upon qualitative feedback and competences for development. The performance appraisal feedback tool would be designed around quantitative feedback and measuring performance outcomes and performance-related behaviors. 360-Degree Assessment: Time for Reinvention A decade ago, few managers had ever heard of 360-degree feedback. After all, the boss was the traditional source of feedback. This individual made one’s promotion and pay decisions, and it seemed only appropriate that he or she be the primary source for performance and development feedback. The notion that subordinates and peers should have a say would have seemed odd. Respect for the formal hierarchy mitigated against feedback from subordinates below. One’s formal authority might be challenged if direct reports had an active voice in assessing the boss’s capabilities. Work arrangements demanding extensive collaboration with peers were fewer in number, and so it appeared that one’s co-workers were often not in a position to provide detailed feedback. It was not until the late 1980s and early 1990s that a handful of organizations began to experiment with a development tool called 360-degree feedback. This typically competence-based survey instrument solicited confidential evaluations from the full range of working relationships a manager possessed – subordinates, peers, and bosses using a quantitativelybased multi-item questionnaire. Each targeted individual in turn received a report summarizing in numerical and descriptive assessments of their capability to effectively demonstrate specific competences based on the perceptions of those assessing them. Over the last decade, several forces have conspired to radically expand interest in 360degree feedback and turn it into one of the most popular tools in the history of management development. One particularly important force has been the dramatic rise in formal leadership development programs for managers and executives. Integral to many of these programs is 360degree feedback around a set of leadership competences. Given the critical role that subordinates play in determining whether one possesses leadership capabilities or not, this group of individuals has now become an essential source for feedback . A second force driving the popularity of 360-degree feedback is the new work arrangements. Specifically, as hierarchies have flattened and more work is performed across functions and in cross-functional teams, peer input has gained in importance. Today it can be argued that peers are better positioned to give insightful feedback than a decade ago. In addition, effective leadership is defined in part around one’s capacity to build and sustain networks of relationships throughout an organization. Who better to assess this capacity than the very members of one’s network – peers. Finally, organizations, nowadays, try to measure almost everything and everyone. Performance measurement is particularly popular because it informs both employees and organizations of their effectiveness in getting results and achieving goals. The quantitative ranking associated with 360-degree assessment therefore has had great appeal as a potential performance measurement tool. Despite the dramatic rise in its popularity, the 360-degree assessment is far from perfect. A meta-analysis suggests that over one third of the feedback interventions even decreased performance (Kluger & DeNisi, 1996). Similarly, half of the ratees studied by Atwater, Waldman, Atwater, and Cartier (2000) failed to respond to feedback with improvement. Consequently, it is sensible to question whether the current form and use of 360-degree assessment is the most effective. This is a critical time to step back and assess the efficacy of feedback especially in light of a trend in organizations to substitute 360-degree assessment processes for traditional performance appraisals. Over the last several years, we have been witnessing the migration of 360-degree assessment from a developmental tool to a performance assessment tool (London & Smither, 1995; Bettenhausen & Fedor, 1997; Waldman, Atwater & Antonioni, 1998; Fletcher & Baldry, 2000;