Jack McCann, Betsy Sparks, & Thomas Kohntopp

Abstract

Performance appraisal is a continuous process of monitoring, managing, and correcting the individual performance of an organization’s workforce. 360° feedback is used as a yardstick of the performance appraisal process, which helps reduce and change the traditional supervisor-based appraisal method. A 360° performance appraisal, also known as 360° feedback or multi-rater feedback, is when employers evaluate employees, especially manager performance from as many sources as possible, instead of only one-on-one feedback from a direct manager. Once all the feedback is collected, it is used to measure employee strengths, weaknesses, and skills and can provide a well-rounded performance review. If the 360° performance appraisal is well designed, it can boost team performance, promote self-awareness, and create transparent communication. However, there are also challenges to the 360° appraisal method if it is not executed properly. This research examined leader perspectives on 360° performance appraisal as a tool for organizational and leader performance improvement and leader-subordinate relationships.

Keywords: Performance Appraisal, Performance Evaluation, 360° Performance, Appraisal, Performance Feedback

360° Performance Appraisal: A Tool for Improving Leader Performance

The concept of 360° feedback may be new to many in organizations, but forms of 360° feedback can be followed back to 100 years ago when the American military employed multi-rater feedback among their soldiers during World War I. Even though this feedback took opinions from many different sources, it did not include input from subordinates (Organisation Development and Research Limited n.d.). Hedge, Borman, and Birkeland (2001) discovered that several developments occurred in the field of performance evaluation during World War II. According to Fleenor and Prince (1997), real 360° feedback did not begin until WWII when the German military introduced assessment centers as a way of assessing their soldier’s performance through consideration of the opinions of their supervisors, peers, and subordinates. The information was then used to determine payment and promotions. They recognized the value of gaining performance insights from multiple perspectives.

Bracken, Rose, and Church (2016) stated that 360° feedback was first introduced into the world of business in the 1950s and has become embedded in many human resources (HR) processes applied at individual, group, and organizational levels. The Esso Research and Engineering Group (Currently known as ExxonMobil) became the first company that documented the use of multisource surveys used to evaluate their employees. Productivity soon increased from that point on and the demand for 360° feedback exploded resulting in the sale of Esso. 

A growing body of research has been addressing the issue of whether human resources management (HRM) policies and practices, in general, can affect aspects of organizational performance (Becker and Gerhart 1996). Traditionally, HRM has been linked to efficiency outcomes, such as managing HR in an attempt to reduce turnover and its associated expenses, designing compensation systems to minimize payroll costs, and staffing reduction methods. Delery and Doty (1996) proposed that researchers take a more configurable perspective. That is, theory and research should consider the pattern of strategic, organizational, and HR-related factors that need to come together if 360° feedback is to be linked to organizational performance. The purpose of this research was to determine leader perspectives on 360° performance appraisal as a tool for performance improvement.

Literature Review

Performance feedback is a fundamental communication tool in employee performance management (DeNisi and Murphy 2017). Constructive feedback is needed for providing directions, exchanging information, creating meaningfulness in the job, and showing a genuine interest in the personal development of an employee. However, looking at today’s organizations, many firms struggle to implement the right employee performance appraisal system and do not realize its value, leading to dissatisfied employees (Cook and Crossman 2004; Iqbal and Kureshi 2016; Thompson and Dalton 1970). Performance feedback usually revolves around giving directions, thus undermining its potential for constructive feedback, and often resulting in low-performance feedback satisfaction rates. Reduced feedback satisfaction can be expressed in lower performance and poorer job satisfaction, as two consequences. Furthermore, employees might even resent feedback itself and develop a negative, fearful attitude towards it, instead of approaching it as an opportunity for growth.

Alvero, Bucklin, and Austin (2001) underlined the essential role of performance feedback in improving performance by citing fundamental studies in the field of organizational behavior by Komaki, Barwick, and Scott (1978) and Sulzer-Azaroff (1980) and discussing its use in various organizational settings. The authors cited different definitions of performance feedback. This paper will adopt the definition by Rummler and Brache (1995), defining performance feedback as “information that tells performers what and how well they are doing” (Alvero, Bucklin and Austin 2001: 5).

The 360° process is not a new method of assessment. It has been used for decades in various applications (Kohntopp 1981). At first, it was an arduous process involving multiple raters filling out paper-pencil forms. A more recent and extensive review and critique of 360° feedback applications have been offered by Bracken, Rose, and Church (2016). The authors took a critical look at the onset of the 360° and how it has been used, appropriately or not. They categorized the primary applications of 360° feedback as assessment only, development only, assessment and development, organization change, and program evaluation.

Historically, instrumentation used by companies to collect 360° performance was generally developed in-house by HR professionals, sometimes in conjunction with organizational consultants conducting assessment centers designed for manager selection (Jaffee, Frank, and Rollins 1976). The eventual increase in the 360° application undoubtedly coincided with the automation of many human resources functions in the workplace, which helped to organize the process and ease data management. More than 25 years ago, Atwater and Waldman (1998) discussed the expanded interest that the 360° method was receiving in companies. They suspected that thousands (maybe millions) of managers had been the focus of a 360° review. Interest in the 360° review remains keen.

The 360° method is versatile in how it can be applied. Assessment of leadership performance provides relevant information that can be used for traditional appraisals as those often conducted annually in most companies. Occasionally it may be used for manager selection and promotion. However, it is typically applied to gather information as feedback for professional development and growth.

The present status of the 360° process is sophisticated as compared to applications from 40 or more years ago. Companies have developed instruments that measure a variety of dimensions, and the feedback process goes beyond “Here are your scores.” Examples from Multi-Health Systems (2023) are offered for senior/executive managers and mid-level managers. Data from a boss, direct reports, peers, and self are collected. Following a frame of reference for emotional intelligence, top-level manager results are compiled for a) Self-Perception, b) Self-Expression, c) Decision-Making, d) Interpersonal Perspective, and e) Stress Management. Mid-level managers are assessed in a) Direction and Strategy, b) Follow Through and Accountability, c) Communication and Influence, d) Developing and Mentoring Others, e) Self-Management, f) Business Management, g) Team Management, h) Change and Innovation, i) Trust and Integrity, and j) Decision Making and Problem-Solving. Everyone who gets assessed receives an in-depth report that is individualized to their results. Plus, if the process is followed according to plan, each leader receives a detailed one-on-one feedback briefing with a trained facilitator who explains results, answers questions, and guides ideas for improvement. It is an appropriately conducted executive coaching session. Uses of the 360° review and feedback process with be presented for Organizational Performance, Leader performance, and Leaders-Subordinate Relations.

Organizational Performance

This research reviewed in this section led to the development of Research Question 1: How does using 360° performance evaluation impact organization performance? 

Strategic human resources (HR) have an integrated focus. HR functions are incorporated into strategic aspects of the organization to enhance company success. The value of 360° methods is intended to enhance a manager’s performance through rater feedback, which eventually improves company performance (Garg 2018). In this regard, many strategic HR initiatives about manager performance would benefit from the information gleaned from 360° assessments.

Bracken, Rose, and Church (2016: 772) examined the 360° process in the context of strategic applications intended to enhance organizational performance. They emphasized that “360° Feedback has been used for a wider and wider range of decisions beyond [individual/manager] development, including performance management, staffing, promotions, high-potential identification, succession planning, and talent management.” The authors believed that strategic human resources processes could greatly benefit from using 360° methods in certain situations. Their perspective and experience with 360° feedback are that it works quite well in many applications. For the future, the question is not whether it is working, but what can be done to improve the method.

Leader Performance

The research reviewed in this section led to the development of Research Question 2: How does the use of 360° feedback influence leader performance?

Weiss (2021) offered a thorough perspective on leadership assessments and inventories. His experience with the 360° method was very favorable in several instances where the resulting data were used to guide professional growth and development. He highly endorsed the method in this capacity. Some cautions were reported, though. One problem was the difficulty of getting a complete acceptance into the process from managers being rated. Reluctance to being “judged” by multiple people may make a rater feel psychologically vulnerable or threatened. Another problem related to inviting a preponderance of positively biased individuals to complete a 360° questionnaire. Managers being rated may tend to only ask friendly colleagues or those with known favorable opinions to complete a questionnaire. In this case, validity may be questioned. An additional concern pertained to the acceptance of feedback by the rated manager. Weiss (2021: 113) described this reluctance, “Individuals may experience denial as it relates to their potential areas for improvement, which can then be followed by anger or resentment. Individuals may bargain with you [feedback facilitator] as they make sense of the meaning of the results.”

A study that investigated group coaching in developing leadership was conducted by Mbokota and Reid (2022). The setting was a business school leadership development program. The authors incorporated the 360° method of assessment as the source of feedback used in coaching sessions designed to improve leader effectiveness. They relied on the 360° method following Nicholls’ (1994: 2) model that examined different aspects or themes of leadership. “Head themes set the direction, the heart themes deal with leaders’ emotional intelligence and the hands themes relate to the achievement of goals.” The 360° method was repeated after the program to determine if the coaching regimen enhanced leader performance. In this investigation, the robust nature of the 360° method demonstrated its value when the goal was to improve leadership performance. The 360° served as an assessment of baseline leader performance and also as a post-program evaluation. 

Zenger and Folkman (2020: 2) considered how the 360° feedback process should be used to help enhance leader performance. In their opinion, well-meaning attempts to use 360° assessment often fall short of expectations with minimal follow-through. In contrast to half-hearted efforts, they suggest the following actions be taken.

• The leader helps choose who among their colleagues should respond to the survey.
• The leader personally communicates with those respondents, asking them to provide their candid observations.
• The report is presented to the leader, either in a group setting (if multiple people are taking the instrument at the same time) or in a one-on-one coaching conversation.
• The leader is provided with context and guidance to understand the data.
• The leader also receives a customized set of developmental recommendations, mapped to the company’s leadership competencies, to help them create a personal development plan.
• There is follow-up from the talent professionals to ensure accountability.

Taking these steps tends to result in greater self-awareness of the leader who was assessed. Individuals with low self-awareness often question the 360° feedback because they frankly are out of touch to such an extent that anything contrary to their self-perception is doubtful or wrong. A person who questions the validity of feedback will take no steps to improve and may invest time in finding personal examples of self-behavior that contradict the feedback received. In addition to enhanced self-awareness, the likelihood of change/improvement increases.

Leader-Subordinate Relations

The research reviewed in this section led to the formulation of Research Question 3: How does 360° feedback impact leader relationships with subordinates?

Improved leader performance as a result of 360 feedback also helps to improve subordinate interaction and performance. This outcome is directly due to feedback on the current state of relations between the manager and direct reports (Zenger and Folkman 2020: 5). Effective managers generally have employees who are more engaged in their work (e.g., satisfaction, commitment). The authors aggregated research findings from 97,617 assessments. Examining leader effectiveness with employee engagement revealed that “for every decile of improvement in overall leadership effectiveness, engagement increases by more than five percentile points.”

Theoretical Framework

According to Bandyopadhyay and Srivastava (2019), much has been focused on the works of Huselid (1995), Arthur (1992), Delery and Doty (1996), Guthrie (2001), Ichniowski, Shaw, and Prennushi (1997), Koch and McGrath (1996), and MacDuffie (1995). In general, their positions are based on the logic that doing/implementing more human resource management (HRM) leads to better company performance. Bakator et al. (2019) found that a large body of literature addresses the HRM-business performance link. In their meta-analysis, 212 articles were analyzed and 187 were removed through several steps in the review process. The findings indicate that there is a positive relationship between HRM practices and overall business performance. In addition, HRM has a positive influence on employee well-being, productivity, and organizational climate.

Walker and Smither (2004) asserted that the decision to provide multi-rater feedback or 360° feedback assumes that the feedback will improve the performance of the person being rated. Kluger and DeNisi (1996) found in their meta-analysis that even though feedback sometimes improved performance, in over one-third of the studies they reviewed, feedback sometimes had a detrimental effect on performance. They found that people can respond to gaps between their goals and feedback in many ways, like changing their behavior, changing their goals, rejecting the feedback, or leaving the situation. Negative feedback may lead the person to avoid the tasks or people from which they came. This implies that investigation and research are needed for understanding “how” 360° influences firm performance relationships. 

Less emphasis has been devoted to HRM as a means of value creation for organizations. In other words, do certain HRM policies and practices have the potential to increase quality, market share, revenue, and so forth for a company? We believe that 360° feedback has such potential, although the linkages may be difficult to form.

Research Questions

The present study provides a review of the impact that 360° performance evaluation has on organizational performance, leader performance, and leader-subordinate relationships. It focuses on answering three research questions.

1. How does using 360° performance evaluation impact organizational performance? 

2. How does the use of 360° feedback influence leader performance?

3. How does 360° feedback impact leader relationships with subordinates?

Research Methodology

A quantitative field survey was conducted to determine the perceptions of a broad cross-section of manufacturing managers in the United States using Amazon MTurk. The survey instrument was a six-question survey developed by the researchers that asked participants if they felt whether 360° performance evaluations improved or impeded organizational performance, leader performance, and relationships with subordinates. Two additional demographic questions about age category and management level were also asked.

We used G*Power 3.1.9.7 to calculate the required number of participants (Faul et al. 2009) to determine if a difference existed in the perceptions of the 360° performance evaluations and management level. Based on a two-tail a priori G*Power analysis with a power of .80 and α = .50, the required sample size for each group was 64.

To examine how manufacturing managers perceived 360° performance evaluations, we conducted an online web-based survey using Amazon MTurk as a requester to recruit participants. The target population was managers over the age of 18 years who worked in United States manufacturing organizations. Amazon MTurk has panels known as “workers” that can be selected using premium qualifications employed in manufacturing and management. Our research attempted to target 200 participants meeting these qualifications. In addition to descriptive statistics about 360° performance evaluations, we also examined the differences in 360° performance evaluations between first-level supervisory front-line and mid-level managers. Our responses only included first level and mid-level managers, which could be due to the nature of the Amazon MTurk panel, as fewer executives participate in the panels. We paid Amazon MTurk their fee for obtaining participants and the amount for the rewards for participants completing the survey by specifying the number of participants desired and the premium qualifications, which was $1.10 per completed response. Amazon MTurk contacted panel participants “workers” about the availability of the survey, the link to the survey, and the reward for completion. If participants did not consent to participate or had not used a 360° performance evaluation, they could not proceed with the survey. At the end of the survey, a code established in Amazon MTurk to verify completion was designated. Participants were not allowed to advance in the survey until they answered each question, so there were no incomplete responses. If participants chose not to answer, they could exit from the survey. After the participant answered the last question, they were given the survey code to enter into their Amazon MTurk “worker” account. Amazon MTurk then paid the participants with the correct code from the funds collected from the researchers before the survey commenced. The researchers funded the cost of this research. 

No identifying information, other than the participant’s age group and management level, which was explained to the participants, was collected. We also advised participants that responses would not be shared with Amazon. In addition, Amazon would not have access to the survey responses because the survey was conducted on the QuestionPro platform. There were 181 complete responses. The demographics of the survey respondents are shown in Table 1, including sample sizes, and percentages.

Table 1

Demographics of Survey Participants

Characteristic	n	%
Age Group
18-24	4	2.21
25-34	152	83.98
35-44	15	8.29
45-54	5	2.76
55-64	4	2.21
65-74	1	.55
Management Level
First Level (Supervisory, Front-line manager)	85	46.96
Mid-Level (Second-level level manager, supervises first-level managers or supervisors)	93	51.38
Upper Level (Third level manager, VP, C-level)	3	1.66

Data Analysis

The data analysis included descriptive and inferential statistics. Table 2 shows the 360° performance evaluation measure with responses employing a 5-point Likert scale. Sample sizes and percentages are presented.

Table 2

360° Performance Evaluation Measure with Responses

A 360° performance evaluation for leaders…	Strongly Disagree		Disagree		Neutral		Agree		Strongly Agree
	n	%	n	%	n	%	n	%	n	%
Improves organizational performance	4	2.21	1	.55	51	28.18	93	51.38	32	17.68
Impedes organizational performance	1	.55	2	1.10	46	25.41	101	55.80	31	17.13
Improves leader performance	3	1.66	0	0	56	30.94	88	48.62	34	18.78
Impedes leader performance	3	1.66	2	1.10	48	26.52	98	54.14	30	16.57
Improves relationships with subordinates	4	2.21	0	0	57	31.49	86	47.51	34	18.78
Impedes relationships with subordinates	2	1.10	3	1.66	43	23.76	104	57.46	29	16.02

As shown in Table 2, 69.06% of the 181 manufacturing managers surveyed either agreed or strongly agreed that 360° performance evaluations for leaders improved organizational performance. However, in a somewhat contradictory perspective, 72.93% of the respondents agreed or strongly agreed that 360° performance evaluations for leaders impeded organizational performance from the aspect of delaying organizational performance. For leader performance, 67.40% felt that the 360° performance evaluation improved leader performance (Agree or Strongly Agree), and 70.71% felt it impeded leader performance (Agree or Strongly Agree). The 360° performance evaluation was also found to improve relationships with subordinates (66.29% Agree or Strongly Agree) while at the same time impeding those relationships (73.48%, Agree or Strongly Agree) by the majority of manufacturing managers surveyed.

A Mann-Whitney U test was conducted to examine the differences in responses between first- and middle-level and above managers. A t-test could not be used because the dependent variables (scores on survey items) were not normally distributed. Table 3 shows the results of the Mann-Whitney U analysis for each survey question. 

Table 3

Mann-Whitney U Analysis of Differences in Responses by Management Level

A 360° performance evaluation for leaders…	Management Level	n	M	M Rank	U	p
Improves organizational performance	First	85	3.75	87.28	4396.50	.33
	Middle/Upper	96	3.87	94.30
Impedes organizational performance	First	85	3.87	89.52	4206.00	.69
	Middle/Upper	96	3.89	92.31
Improves leader performance	First	85	3.84	91.62	4027.50	.87
	Middle/Upper	96	3.82	90.45
Impedes leader performance	First	85	3.89	94.88	3767.00	.33
	Middle/Upper	96	3.77	87.74
Improves relationships with subordinates	First	85	3.76	87.38	4388.00	.34
	Middle/Upper	96	3.84	94.21
Impedes relationships with subordinates	First	85	3.86	89.05	4245.50	.60
	Middle/Upper	96	3.85	92.72

As shown in Table 3, there were no significant differences in the responses based on management level for any of the survey items. 

The assumptions for using a Mann-Whitney U test were met using the conditions outlined by Field (2009). There was a continuous dependent variable. The independent variable was categorical, with two groups. Observations were independent of each other, and the two distributions had the same shape.

Discussion

One aspect of this research showed that most manufacturing managers found benefits such as improving organizational and leader performance and relationships with subordinates. However, the 360° performance evaluations were also reported to impede organizational and leader performance and relationships with subordinates. While it may seem contradictory that the majority of participants believed that 360° performance evaluations both helped and impeded organizational performance, there is a possible explanation for this. Leadership style and company expectations for managers could produce contradictory results. Since 360° performance evaluations consist of input from subordinates, peers, and supervisory managers one or two levels above the employee evaluated, the organizational culture could affect the perception of the managers who are being rated. For example, supervisors who ardently follow policy and established procedures requiring workers to consistently perform their assignments by meeting or exceeding productivity and safety goals may not score well on the evaluations from their subordinates. The rated supervisor’s style could be reinforced by others like peers and upper management who encourage or demand structured planning and meeting company benchmarks. In this case, the supervisor may perceive the evaluations from subordinates as impeding the organizational performance. If the upper-level leadership puts a strong emphasis on the evaluations, a supervisor could spend much time addressing their evaluation at the expense of focusing on key tasks that affect organizational performance.

Management Implications and Limitation

The value of 360° performance evaluations to individuals and organizations can be noteworthy. Data from multiple perspectives provide substantial feedback to those who were rated. Depending on how 360° information is used, companies will be in a position to evaluate and promote individuals and help participants more appropriately create relevant professional development plans. Information from 360° performance evaluations can be useful to participants in the long term, too.

The process of implementing 360° performance evaluations can be daunting. From the outset, it will be quite time-consuming and expensive. Plus, without proper execution, enthusiasm can quickly be replaced by regret. Taylor (2011) has identified some concerns that should be considered. Thorough planning and proper implementation are essential to a successful 360° experience. Those who will be evaluated must have a clear understanding of the process and what to expect. It is also important that the assessment instrument addresses competencies and skills that are relevant to the organization and the candidates being rated. For valid results, it is important that raters have sufficient exposure to candidates who are to be rated. Asking peers to judge the effectiveness of how direct reports are managed may be as vague as asking direct reports to judge how well the candidate keeps their boss apprised of problems.

Another challenge presented by Taylor (2011) is the proper handling and delivery of results, the feedback. Merely giving the rated candidate a feedback report will generate more questions and possibly outright confusion. Initial feedback should be given in a thoughtful manner by someone familiar with the 360° process. A trained executive coach is someone who may fulfill this need. It is also important to help the candidate not unduly focus on a few poor ratings on individual items. Generally, feedback addressing broader themes or categories is more productive than dwelling on a few low ratings. Finally, using results to make decisions about promotions should be approached differently than giving feedback for creating a professional development plan. 

Future Research

The researchers felt that there were opportunities to add to this research and to provide additional depth to this study in the future. Adding qualitative questions to learn more about the manager’s perceptions of the 360° performance evaluation is needed. In addition, future research could involve employee perceptions to compare with management findings. Demographics should also be considered in future studies. Studying different fields could bring additional perspectives and ideas to the research.

Conclusion

Performance feedback is a fundamental tool in the employee performance management system of an organization. This research examined performance appraisal and the 360° feedback method as a continuous process of monitoring, managing, and correcting leader performance in an organizational setting. This research also examined leader perspectives on 360° performance appraisal as a tool for organizational and leader performance improvement and leader-subordinate relationships.

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Further Reading

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