Case Study: Performance Appraisal Methods the 360 Degree Feedback

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Organizational development experts agree that performance management systems that provide timely information concerning employee performance are an essential requirement for almost any type or size of enterprise today. A number of performance evaluation methods are available for this purpose, with some being better suited to certain working environments than others. One of the more popular approaches to emerge in recent years has been multisource feedback methods such as the 360-degree feedback approach that collects survey information from a wide range of sources including supervisors, subordinates, customers, vendors and suppliers. While the 360-degree feedback approach has produced good results for some companies, others have faltered in its application for a number of reasons. Because organizations typically invest large amounts of resources in such performance evaluation systems, it is important that the information that is produced provides the type of data that is needed for informed management decisions while avoiding the potential pitfalls that accrue to their use. To identify these pitfalls and how they can be avoided in the 360-degree feedback approach, this study provides a review of the relevant juried and scholarly literature followed by a summary of the research, recommendations, ideas for future research and the limitations of the study in the concluding chapter.

Performance Appraisal Methods -- The 360 Degree Feedback Approach as a Case Study

Oh, what a great gift it is to see ourselves as others see us. -- Robert Browning

Chapter 1:

Introduction

Many organizational theorists agree that monitoring employee and supervisor performance is an essential ingredient in any performance management system, and a wide range of approaches have been developed over the years in response to this need. Besides evaluating the contribution that individual performance makes to achieving organizational goals, many performance appraisals are used by many companies to evaluate individual performance for promotion and compensation purposes as well. Therefore, it is important that the techniques that are used for measuring performance are effective and provide the timely metrics that are needed to fairly and objectively analyze individual contributions to accomplishing organizational goals. Carefully managed and applied, performance management techniques can "deliver the goods," but the entire process is fraught with opportunities for mismanagement and the potential for serious adverse outcomes is great. In some cases, the individual supervisor is in the best position to make such a performance evaluation, but a growing number of companies of all types and sizes have recognized the need for more robust analyses of performance than a single report can provide. According to Becton and Schraeder (2004), "Traditional performance appraisal systems have primarily consisted of supervisor evaluations of subordinate performance. In recent years, however, organizations have increasingly turned their attention toward gathering performance feedback from sources other than immediate supervisors" (p. 23). Not surprisingly, these more robust reports of performance provided by multisource evaluations have resulted in a number of positive outcomes, including: (a) better performance information; (b) more reliable ratings than those from a single supervisor; and (c) improved ratee performance following receipt of the feedback (Becton & Schraeder 2004, p. 23). As the term implies, multisource feedback methods, including the 360-degree feedback approach, collect information concerning individual job performance from a number of sources; depending on the organizational setting, these sources can include self- appraisal, ratings by the supervisor, subordinates, customers, vendors, as well as suppliers (Becton & Schraeder 2004). Because some traditional performance evaluation methods are marred by subjectivity when a single rating source -- typically a supervisor -- is used, proponents of the 360-degree feedback approach cite the additional feedback provided as the primary strength of the 360-degree feedback method. For instance, Becton and Schraeder emphasize that, "This feedback from multiple sources and perspectives is perhaps the most compelling strength of 360-degree feedback" (2004, p. 24).

Just as the term multisource refers to the fact that more than one source of evaluation is used, the term 360-degree is more accurately used for evaluation situations that draw on ratings from "all around" the ratee. For example, according to London (2003), "Feedback can come from any number sources. It can be visible in the tasks we do as we see the pace and quality of our work. It can come from reports, such as monthly sales figures. It also can come from other people: supervisors, subordinates, peers, and customers" (67). Therefore, all 360-degree feedback techniques are multisource but all multisource techniques are not necessarily 360-degree feedback. In this regard, London makes this minor but potentially important distinction clear: "Multisource feedback refers to ratings that can come from subordinates, peers, supervisors, internal customers, external customers, or others. When feedback comes from all the locations around a person (boss, subordinates, suppliers, customers) it is also called "360-degree" feedback" (London 2003, 67). The research shows that the 360-degree feedback approach has been implemented by a growing number of companies with mixed results, and it is these mixed results that form the background to the research undertaken herein and which is discussed further below.

Background to Research

Because 360-degree feedback approaches provide more robust and comprehensive results than single-rater approaches, some of the constraints associated with traditional performance appraisal systems are minimized or avoided entirely. In this regard, Zaccaro and Klimoski (2001) note that, "Traditional performance appraisals, particularly when tied to salary increases, are often bloated. Even when appraisals do not overrate performance, they are weak tools for comparing candidates if standards are not precisely defined and raters not specifically trained" (p. 37). When individuals receive traditional evaluations from a single rater that consistently exaggerate achievements and performance over the years, the organization is cheated out of an opportunity to provide the employee with importance feedback that could help to better align performance with organizational goals; the employee is likewise cheated out of the type of timely feedback that may be required to effect these types of changes in people. As Zaccaro and Klimoski point out, "The multiperspective, multirater, or 360-degree feedback approach gathers information from colleagues, supervisors, direct reports, and sometimes customers and suppliers. Because ratings by others are usually compared to self-ratings, individuals can gain considerable insight and motivation to develop and change" (p. 37). Just as traditional, single-rater performance evaluation methods have some drawbacks and constraints, so too does the 360-degree feedback approach, especially if the company uses this information for purposes other than performance improvement. For instance, Zaccaro and Klimoski report that, "Multirater methods are not particularly useful for selection. They can easily devolve into popularity contests, deliver damaging and blunt messages, and be corrupted by people who solicit biased ratings to take unfair advantage of the system. Multirater methods also show low levels of interrater agreement and are subject to considerable halo because raters are usually poorly trained, if at all" (Zaccaro & Klimoski 2001, p. 37).

In reality, any multisource rating scheme will be constrained by these factors, but the 360-degree feedback approach includes ways to overcome these that provide more robust results -- but at a price, which suggests the process is more appropriate for high-value executives with a diverse range of responsibilities than for line workers who may occupy identical positions within the organization. According to Zaccaro and Klimoski, "A live 360-degree assessment can introduce more rigor. This way, an executive coach or other trained, objective evaluator collects performance information by interviewing a broad range of observers" (p. 37). The "trained objective evaluation" serves as the focal point through which all of the evaluations are channeled. As an example, Zaccaro and Klimoski cite General Electric which "uses an accomplishment analysis as a concentrated way to gather performance data for its management development system. A consultant interviews the manager for several hours, meets with the manager's boss for several more hours, and interviews former associates and subordinates. The consultant summarizes the individual's achievements and development plans and makes them part of the manager's file" (2001, p. 39).Irrespective of who is interviewed, what instruments are used, and what performance metrics are assigned, when more than one rater is used, there will be a corresponding increase in the amount of resources needed to support the evaluation method, a consideration that is especially salient for the 360-degree feedback method, making an assessment of its effectiveness for this purpose equally important.

While much of the attention being directed at the 360-degree feedback approach is relatively recent, the approach itself dates back to the mid-20th century although informal or variations on the theme were in use prior to that time (Weiss & Kolberg 2003). In this regard, Weiss and Kolberg report that, "From the 1920s through the 1950s, a variety of psychological tests and surveys were developed for the purpose of selection and placement for college entrance exams for military recruitment and business hiring practices. In virtually all of these cases, the purpose of the assessment was to provide the sponsoring organization with data about the person being tested. Rarely was the client being tested shown the results of the testing" (2003, p. 73). In sharp contrast to this approach, the tenets of the 360-degree feedback approach wherein… [END OF PREVIEW]

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