Why 360 Assessments Are Not as Helpful as You May Think

I have spoken out against the typical performance appraisal in many online venues and in a couple of my own articles on here.  Of course, the typical organization continues to utilize these approaches rather than to find different ways to rise above mediocrity to become exceptional.  It seems that everyone does them; few do them well; and the annual ritual, itself, offers no value.  I have said this many times before, and I will say it again, the best organizations don’t just do things differently, they do different things.  Unfortunately, the growing fad of utilizing 360 degree assessments or appraisals is just another way of doing the same old thing; it isn’t something different.

I have promised in the past to address this issue of 360 assessments, but I became sidetracked with other topics and issues.  But I have seen a growing number of discussions online and in print about them, and felt that this had to be dealt with.  So here is a quick look at why 360 degree assessments aren’t as helpful as they might first appear to be.

All of the issues that I’ve discussed about conducting annual performance appraisals apply to 360 degree assessments.  Most people only focus on the most immediate performance, or, worse yet, a specific event that is not typical of performance but stood out because of its exceptionalness (good or bad).  The feedback isn’t timely so it doesn’t allow for immediate feedback and immediate adjustment so that performance is actually impacted.  And it is extremely subjective in nature, not only by one person, but now by multiple people.  Finally, there are a huge amount of resources that are involved, which is a huge expense for the organization, both in time and money.  If there was a lot of paper shuffling going on in regular performance appraisals, then just imagine how much we have when we multiply that by 4 or 5 raters per person!

These observations are not just based on my professional experience, but also on a vast amount of research.  Once again, after reviewing over 1,000 research documents, I’ve yet to find any credible research that supports the use of 360 assessments as a viable tool for increasing organizational performance.  To the contrary, I’ve found research that shares that the use of 360 assessments actually contributes to a negative impact on an organization’s financial performance.  Is it any wonder, with so many organizational resources being tied up in this endeavor and no real return for the effort?

Through the late 1990s and into the mid-2000s, Watson-Wyatt (now known as Towers Watson) conducted a series of studies on organizational performance known as the Human Capital Index Studies.  In the two studies that dealt with 360 assessments they found a negative return in both.  These studies were long-term and covered a large number of subjects, so the results are particularly chilling.   What the studies found was that when employees have the opportunity to evaluate their managers that the organization typically saw almost a 6% reduction in Total Return to Shareholder Value.  In other words, the time, expense, and other resources far outpaced the actual return that the organization got from actually conducting these assessments.  Furthermore, If staff were also allowed to evaluate their peers (i.e., managers evaluating managers; employees evaluating employees), then the impact climbed to a staggering 10.6% negative impact on the performance of the organization!

Here is what Watson-Wyatt had to say about their findings:

“Multisource feedback continues to enjoy mass popularity, and many, if not most, businesses report that they feel it is successful. Yet, when the impact on market value for evaluating superiors and evaluating peers is combined, our research suggests it is linked to a decrease of 10.6 percent. The truth is that it is a challenge to get multisource feedback right. It succeeds when an open culture is already in place. It succeeds when participants have been well trained to give and receive feedback. It succeeds when there is valid and reliable instrumentation and appropriate follow-up. When one or more of these elements is missing, multisource feedback can be a lengthy distraction that interferes with teamwork and reduces productivity and, ultimately, shareholder value.”


I have often shared that if 360 assessments work well “when an open culture is already in place,” then why do we need an instrument to help openly share information that will help people improve?  Isn’t that the very definition of an “open culture?”  In other words, when we have a culture that is founded on Trust; where mutual respect exists between employees and managers which then allows for Open and Straightforward communication; then we don’t need artificial forms to help us share the information that needs to be shared.  If these things don’t exist already, then simply filling out forms will not provide good information to take action on.  Employees will either hold back, or if they are disenfranchised and feel reasonably assured of no retaliation, then they will go overboard on their negative comments.  Neither of these situations provide really useful information to help engage employees and increase organizational performance.

Another issue is the lack of perspective about another person’s performance.  Marcus Buckingham provides a really good overview of this issue in an article in the Harvard Business Review (http://blogs.hbr.org/2011/10/the-fatal-flaw-with-360-survey/).  In essence, it is hard for you to tell me about how well I am doing in exhibiting certain behaviors, because your frame of reference is only limited to you.  Yet, this is exactly what most 360 assessments ask you to do; rate me based on you.  On the other hand, it is very easy for you to tell me how you feel based on what is happening to you and how you are impacted.  In other words, if you are going to give me some feedback, then tell me about the things that are happening around you and to you that are getting in the way of you becoming engaged and keep you from doing your job really well.  That might have something to do with how I, as your manager, am doing on various “competencies,” but it will more likely involve systemic issues that are just getting in the way of things that I, as your manager, need to adjust.

If this sounds more like an employee engagement survey, then you are correct.  A good employee engagement survey can get both managers and employees to talk about the things that are important to employees, and take the focus off of “manager bashing.”  But this only works if, in addition to the various organizational reports that management receives, that employees also get a report of their answers that have been compiled and analyzed to give them some key points to discuss with their managers about what is going on for them.  After all, while we might measure employee engagement across the organization, division, department or team, we actually engage employees one employee at a time.

Couple this individual engagement report with a “how to manage me report,” and now managers and employees can have some documentation that they can use for some ongoing, regular (weekly, if not daily) discussions on how managers can help employees become engaged and improve their individual, team, group, and organizational performance.  After all, if an increase in individual performance must translate into an increase in organizational performance if we are going to become an exceptional organization.

Now this is doing something different!


Make a Great Day!