360 DEGREE FEEDBACK:
DEVELOPMENT ONLY?

Considerations about the use of 
Multi-Rater  Methods
For Pay, Promotion, or Layoffs vs Development only Decisions

By Christine M. Fahnestock

Multi-rater surveys -"360's" have been used long enough to be considered, by thoughtful executives, as a management tool that is able to impact management performance and productivity.  Business people, as always, drive for relevance and accountability in the use of management tools such as 360’s.  Behavioral scientists are concerned about ethical application and the tendency of business people to use 360’s for purposes beyond what they can actually do. 

 I will attempt to distill and summarize information from varied sources including the views of current literature, national conference presentations, articles, marketing materials and an independent benchmarking study [conducted by Fahnestock & Associates], which included questions about the issue of using 360’s for “development vs administrative decision-making.”  A monograph from Development Dimensions International (DDI) provided an additional useful review of data.  Also taken into consideration was information gleaned from many discussions with fellow practitioners and clients, as well as my own first hand experience.  Any quotes appearing in this article are from the a DDI monograph referenced on the last page. 

 The purposes for using 360 degree instruments are as varied as the organizations that use them, such as for:

1. Individual performance development
2. Training needs analysis in the aggregate
3. Career planning
4. Quality-service evaluation
5. Culture change
6. Team development

The benefits of 360 degree feedback are numerous, such as to:

1. Demonstrate respect for employee opinions; increase employee involvement

2. Communicate values through the dimensions chosen

3. Improve customer service

4. Build more effective work relationships

5. Form a basis for individual development planning

6. Enhance two-way communication

7. Reveal and resolve conflicts

While very informative and motivational for development, the 360 degree method has not been proved successful for decisions tied directly to pay, promotions, selection or layoffs.  Some of the reasons are as follows:

       1.  The 360 evaluations are based on observations in the natural work environment.

Some drawbacks of this are:

·        Some environments ‘dampen’ or constrain job performance

·        Performance is based on the current job role only

·        Observations are based somewhat on chance opportunities for observation

       2.  The observers in the 360 method have no special training, may use differing standards and, therefore, can have low inter-rater reliability (agreement).

For a comparison, let us consider another well known multi-rater method; the assessment center.  Assessment centers engage trained observers to watch all candidates perform the same tasks and simulated job samples.  It compares to 360 surveys as a multi-rater method as follows:

       1.  Assessment centers provide the opportunity to observe performance in situations of optimal performance

       2.  Performance is scored by trained observers who can categorize behavior 

       3.  Assessment centers “have a well established track record as strong predictors of current and future job performance.”

Summary:

In general, multi-rater methods such as assessment centers and 360 degree instruments “can complement each other, but they are not interchangeable.”  The 360 ratings “are simply averages of perceptions...[whereas] assessment centers are designed to measure proficiencies and potential”.  Further comparison is useful as follows.  The assessment center method has been researched, legally defended, and widely accepted as a valid selection and promotion tool.  The 360 degree survey method has performed spectacularly as a tool to improve self-perception and motivate individuals for development and performance improvement.  However, it has not been adequately supported as a basis for administrative decisions such as pay, promotion, selection or downsizing.

Additionally, when 360’s are used to drive decisions about pay, promotion or layoff’s, “people [who are] not in positions of accountability and authority over the target become responsible for that person’s fate…Although [360] assessments can be very helpful for performance management, this does not mean they should be tied directly to decisions about pay and promotions.  Such uses should be avoided.”  Using 360 evaluations “for downsizing is especially inappropriate and fraught with risks to everyone involved.”  These reasons make them very hard to defend when used in decisions associated with rewards or punishments.

The use of 360’s does prove very beneficial for the developmental purposes listed at the beginning of the article.  Litigation in this area has made some producers of 360 instruments, as well as many practitioners, very cautious about recommending them for use in pay, promotion or layoff decisions. 

* Multirater Assessment and Feedback: Applications, Implementation, and Implications  by Ann Howard, Ph.D., William C. Byham, Ph.D, and Patrick Hauenstein, Ph.D; Development Dimensions International; Pittsburgh, PA

Questions? cmf@fahnconsulting.com

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Last modified: November 09, 2012