HUMAN RESOURCES: 360-degree feedback can provide valuable insights

You know the drill…you schedule the meeting with your supervisor for your annual performance review. You listen to the feedback; some you find accurate, and some you suspect is based on the supervisor’s observations over the past couple of weeks, when she realized that your review was approaching. And she didn’t mention a couple of the big projects you worked on. Did she even know about those, you wonder.

To avoid the “same-old,” many national and a few Traverse-area companies are experimenting with 360-degree feedback, a multi-rater system that encompasses feedback, not just from an employee’s direct manager but also from co-workers and subordinates, which supplements the traditional review process.

“Employees don’t interact just with their supervisor, probably less so. But if they’re aware of how their behavior affects peers and subordinates, they’re more likely to succeed,” said Carol Schifman, founder and president of C.A. Schifman Consulting, a Traverse City-based human resources consultancy. “As organizations flatten, and managers supervise more and more people–you may have a manager with 15 to 20 direct reports–it’s hard to imagine that just one observer could provide valuable feedback.”

A recent study of some 230 companies by William H. Mercer found that more than 65 percent were using a multi-rater system, up from nearly 40 percent in 1995. Locally, area consultants believe that figure is significantly lower, citing only a handful of organizations that they know use a multi-rater system.

Northern Michigan’s low adoption may be due to the area’s small business orientation, consultants say. Other drawbacks to the system in general include cost (in the $300 range per reviewed employee for some systems), time spent completing surveys and collating and delivering feedback, employee concerns about anonymity and challenging implementations.

“It’s easy to say you do a 360-degree appraisal process and get supervisor’s and peer’s perspectives, but it’s not an easy thing to put in place. It takes some pre-work to determine what the competencies for the organization (to be measured) are. I’ve seen what’s been called a 360-degree system, and it can be pretty lame,” Schifman said.

On the plus side, multi-rater systems aid in employee retention, according to John Yeager of J.A. Yeager & Associates. “In this tight labor market, anything you can do to unlock talent and develop people’s strengths more fully will help with retention. It can be an objective method to identify development areas in a way that leaves a positive feeling and encourages teamwork.”

The keys to success

So what makes an effective multi-rater system? First, a large enough organizational structure, says Yeager, to get a good sampling–at least one direct manager and preferably more, at least two peers and direct reports, and a minimum of three to four co-workers in other functional areas of the company. He uses a system called CheckPoint 360 with his clients, and it accommodates up to 12 reviews per employee.

According to Karen Schultz, senior consultant with Human Resource Partners in Traverse City, the development of an action plan after receiving feedback is crucial.

“There’s no point in going through the process unless there’s a system in place for improvement. The feedback identifies the areas to improve, then employees go back to their supervisor with their ideas about how to make the plan come to life.”

Schultz also recommends that 360-degree feedback be used more as a development tool and not be tied to wage increases to minimize the “they’re just out to get me” attitude that skeptical employees might have.

“Once people understand that you’re trying to gather information to make the corporate engine run better, they feel more comfortable with it,” said Yeager, who adds that the key is getting upper management involved. “That really helps build trust. Employees say, ‘Well, if the boss can do it, then I guess so can I.'”

360-degrees in action

Great Lakes Energy of Boyne City began using a multi-rater system last summer with its senior staff, first line managers and potential candidates for supervisory positions. With career and succession planning a top priority at the company, Vice President of Human Resources Max Binkley looked toward a 360-feedback system as a tool to identify development opportunities. Employees receive feedback on a one-time basis currently, but in the future the company may tie the feedback system into its performance appraisal system, in which case it would be done on an annual basis, says Binkley.

Employee reactions have been positive, he says. “They’re taking the feedback very seriously.”

Perhaps that’s because Binkley did some pre-work. “We would sit down and explain why–that it’s a development tool, not punishment. Typically people want to move up in an organization, so they feel good that someone’s asked them to do this in most cases.”

Once all the surveys about a particular employee are completed by reviewers (sometimes selected by the employee or the supervisor or both), they’re scored and collated into a report by a third party and discussed with the employee.

“The report doesn’t use shock value. It’s very professionally done; you get feedback, not in-your-face data,” according to Binkley.

He’s already seen some positive changes as a result. “I’ve definitely noticed a tendency for people to listen and participate more, and I see some more understanding and empathy about what’s required of leaders.” BN