Monday, September 22, 2008

A 360° Savior?

It can help, but if you're expecting 360° feedback to drive improvement, your wait may be long and frustrating

Those who have read W. Edwards Deming’s books [1,2] or experienced one of his 4-day seminars undoubtedly learned about the destructive effects that performance review systems have on people and organizations. Despite the warnings from Deming and others about the detrimental effects of the practice, however, many managers continue to cling to the process because they don’t know of anything with which to replace it (which, it should be noted, is no excuse to continue a practice that, at best, has no value to the organization). Now that we have 360° feedback systems our problems are solved, right? Probably. . . not.

A 360° feedback system is a process that enables an individual to receive feedback from his or her supervisor, subordinates and co-workers (hence the name, 360°). The process has gained considerable attention in recent years as a way to overcome the problems associated with a traditional performance review system. Although in theory the process makes sense, when implemented in an improper culture it can be just as destructive as traditional reviews. Just like many other performance improvement tools, 360° feedback is only effective when implemented in an improvement-focused environment where the leaders understand and support the theory behind the concept.

As with other organizational improvement tools used over the years, 360° feedback has been over-hyped and promised to deliver much more than it actually can. Because of this, expectations are high when an organization embarks on a mission to implement the system. Unfortunately, this often leads to frustration, disappointment and further distrust of improvement initiatives, which is something that we have too much of in organizations already.

To align expectations and make sure the company’s culture is advanced enough to benefit from a 360° review system, it is important to understand what the system can and cannot do. By itself, a 360° review will do nothing. It will not improve performance, teamwork or communication, and without total confidentiality of results, it also will not lead to employee development.

What the system can do, however, is provide valuable input to a personal development plan. The development plan pulls together the 360° feedback along with other information, including the person’s career objectives, and new skills related to corporate directives (e.g., new safety initiatives, organization-wide training programs, etc.). The plan becomes a commitment to, as well as a roadmap for improvement. It also becomes a basis for dialogue between an employee and his or her supervisor.

If the system does not include some type of personal development plan and relies solely on the person receiving the feedback to act on the results, very little will change. Personal development is unfortunately a low priority in today’s business world because
people are too busy and many lack the knowledge necessary to improve themselves. When emphasized and regularly reviewed, however, the development plan adds credibility to the process and validates the importance of personal growth to the organization.

The 360° review is obviously a key input to the development plan because the
feedback comes from a person’s internal customers and suppliers. Organizations are becoming increasingly complex and success is heavily dependent on the quality of the interactions between people. As these interactions improve, an organization’s performance improves. By receiving and acting on the feedback from those with whom a
person interacts throughout the course of business, the interactions, and hence the
operation can improve.

There are several elements that are necessary to help create an environment in which a 360° system can succeed. Unless these elements are present, the process has little chance of aiding the improvement effort.

Confidentiality of Results The first requirement is to keep the results of the feedback completely confidential. This means that, unless a person decides to share the feedback with others, nobody has access to the information; not even the person’s supervisor. This is a difficult concept for many managers to accept because of a loss of perceived control. Some managers have become so accustomed to judging the people who work for them that they feel entitled to this type of information. Without complete confidentiality, however, the 360° process will experience many of the same problems as a traditional performance evaluation system. People will become defensive about the results and those providing the feedback will be less open and honest if they believe the exercise will result in negative consequences for the person receiving the information.

As with any activity, people will be more likely to willingly participate if the process results in positive action, but shy away from it if it leads to negative consequences. Basically, without complete confidentiality of results, a lot of energy will get directed toward things other than improvement.

A common concern about keeping feedback confidential relates to a lack of documentation for protection against dismissal-related lawsuits. The objective of a 360° system, however, is improvement. It is not a tool to fire people. Documenting a problem with an employee needs to happen when the problem occurs rather than waiting until the next review, which may not occur for several months later. This, along with the high level of subjectivity involved in performance evaluations, and the fact that people often
use evaluations to document general issues rather than specific instances of problems, makes them virtually useless in defending the company against lawsuits anyway. In a survey of labor attorneys reported by Tom Coens and Mary Jenkins[3], it was found that 7 out of 10 attorneys did not find performance appraisals beneficial in defending companies against wrongful discharge suits. It should also be noted that “problem” employees generally result from ineffective hiring practices, poor leadership, or both.

Customer Focus A second element of an effective 360° process is a customer focus throughout the organization. This means that everyone understands their role in serving customers, both inside and outside of the organization. Without a customer focus, people will direct their efforts toward satisfying the needs of the boss rather than those of the customer. This will cause the feedback received from internal customers to be ignored (or reduced in importance), resulting in frustration and an overall lack of interest in the 360° process, and a lack of improvement activity.

Maturity & Teamwork Another vital element of an effective 360° system is a high level of maturity and teamwork throughout the organization. If there is internal competition and frequent conflict between people and teams, the feedback will tend to be more negative and personal than constructive. To be useful for improvement, the feedback needs to be actionable by the person. The more negative and personal the information, the less the person will be able to identify specific steps to be taken to improve.

Careful Selection of Respondents To prevent 360° overload within the organization, the respondent group needs to include a sampling of the subject’s internal customers, rather than everyone with whom the person interacts.

There are many organizations that utilize the process by having the entire management team provide feedback to each other. This practice becomes extremely burdensome for people who are already overloaded and turns people off of the process.

To keep the time drain on people to a minimum, nobody should be selected to provide feedback to more than three other people during a given period of time. The only exception, of course, is a manager who is required to provide feedback to everyone on his or her team, regardless of the number of people involved (the feedback exercises need to be staggered, if necessary, to keep the process from overloading the manager).

Depending on the size of the organization, the HR department may need to get involved to keep anyone from being selected for more than three assessments. If managers are not willing to take the time necessary to plan the selection activity, it is better not to embark on the 360° process at all.

Coaching and Guidance The final element necessary for success in the process is the ability to understand the feedback and provide guidance to people in the development of an improvement plan. Although it sounds basic, there are many companies that focus so heavily on implementing the surveys that they don’t know what to do to help people act on the results. When this happens, the unfortunate result is a lot of money and time spent on a tool that provides no value to the organization.

Taking the time to assess the organization’s readiness for a 360° system before attempting implementation can save the company a lot of time, money and frustration. It
is also important to understand that, like many of the tools used in an organizational development process, a 360° process cannot by itself drive improvement. When
implemented correctly in an environment where improvement is part of the culture and driven by the organization’s leaders, however, the process can help people better understand who their internal customers are, what they want, and what they need to do to better contribute to the organization’s success.

[1] Deming, W. Edwards, The New Economics, Massachusetts Institute of Technology—Center for Advanced Engineering Study, Cambridge, MA, 1993.
[2] Deming, W. Edwards, Out of the Crisis, Massachusetts Institute of Technology – Center for Advanced Engineering Study, Cambridge, MA, 1982.
[3] Coens, Tom and Jenkins, Mary, Say Goodbye to the Performance Review: Why Dr. Deming Was Right All Along, The Human Element, Human Development and Leadership Division of the American Society for Quality, Fall 2001.
Stocker, Gregg, Avoiding the Corporate Death Spiral: Recognizing & Eliminating the Signs of Decline, Quality Press, Milwaukee, WI, 2006.

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