The secret to a successful 360-degree appraisal is more than a good software package and asking the right number of questions. Verity Gough grills the experts on how to get the best out of this tried and tested method of assessment.

Bad appraisals cost the economy over £2bn a year, mainly thanks to the money wasted on ineffective implementation, unclear objectives and unmotivated respondents. Yet, while 360-degree feedback can promote an open and transparent company culture, it requires a lot of preparation and commitment from all departments.

Over half of all UK companies conduct formal appraisals, according to HR consultancy Talent Q, and 360-degree appraisals remain one of the most popular ways of gauging an individual’s development. It basically involves getting feedback from an employee’s subordinates, peers and managers, as well as the individual carrying out a self-assessment, to get a more rounded view of the person.

Psychologist and managing director of Talent Q, Steve O’Dell, believes 360s have become a key weapon in the war for talent. The holistic perspective can highlight skills that have been overlooked and help develop people internally, rather than resorting to recruiting new staff.

However, he draws a distinction between using them to appraise underlying competencies and for the purpose of dictating salary. “If it becomes contaminated with individuals thinking the results will inform their next pay increase or bonus, proper data is unlikely to be elicited in the process because the person being appraised is going to be in a self-protective mode,” O’Dell explains.

Sue Filmer, HR advisor at HR consultants Mercer, agrees. “While 360s offer an objective and well-rounded view of a performance there are also some skills such as leadership and customer experience that are best received from a wider group of people such as your peers,” she says. “If handled well, 360 feedback is harder for someone to dismiss. You can acknowledge both sides, providing the person giving the feedback can maintain that view.”

Getting to know you

However, for 360s to be effective, some ground rules need to be set from the outset to make sure all parties know what to expect before, during and after the process. For example, is it going to be totally confidential? Will it be conducted in the employees’ own time or in an open plan office, which can in itself encourage people to pressure others into giving positive feedback? Can the individual share it with their team? Will it be used as a developmental tool for the individual? All these concerns must be thrashed out before the process begins.

Company culture also has a role to play, according to Filmer. “It’s imperative to have the right sort of environment for feedback to be given in the right sort of way,” she says. “In a blame culture or when staff aren’t used to giving feedback, they can end up venting their frustrations during their appraisal.”

The most important thing is for everyone involved in the process to understand the objectives and goals, rather than simply carrying appraisals out for the sake of it. “It needs to be more than something ‘just done by HR’ or a faddish approach,” says O’Dell. “It really needs to be reasoned: is the corporate culture ready for it? Is there clarity of communication about what it’s for? What are the limitations of the use of the results and are you getting high level management support? Unless it’s got top backing, it’s not going to work.”

With the intention of making the appraisal process simpler, software packages have flooded the market in recent years. Essentially, they all operate on the same premise: providing a tool that can be built around a behaviour and competencies framework.

However, while technology can take away some of the paper burden, it is only as good as the people using it. “The key to any appraisal process is getting employee buy-in and supporting managers through what is traditionally seen as a daunting exercise,” says Iain Rhodes, managing director of appraisal software vendor Element 78.

“As with any system, if the quality of information being put in is not good, the end result will reflect that. This can be minimised by spending time to train employees and managers on the purpose of the appraisal process, how to give good feedback and how to interpret the results.”

It’s good to talk

Mercer offers one-day workshops to talk through the results of the 360 with employees. Filmer believes this is crucial as extra support can help people assimilate the information more effectively and dispel feelings of negativity. “Even if you are told the appraisal is just for personal development purposes, you still get naturally defensive,” she says.

“It’s hard to admit you are simply not very good at something, especially if in the back of your mind you are thinking you have a pay review around the corner. If an employee feels threatened, are they really going to sit there and let themselves sound bad?”

Those delivering the feedback should also be able to discuss negative comments in a constructive way and, above all, it should be kept positive. “It’s all about perceptions,” Filmer adds. “You must remind respondents that it is based on how people see others; that’s the beauty of the 360.

“If you have the right mind set and the questions are positive, such as asking what would help them be even better, you will end up boosting morale.”

360-degree appraisals: The secret to success

Purpose and objective: Ensure you have top management support and they’re involved in the communication process. Be clear about the use of the feedback after the data is collected. Make sure the timing doesn’t conflict with other business events like year-end.

Effective execution: Get a flexible, electronic questionnaire that uses competencies relevant to your business. Always use a pilot group first. Make it short and to the point. Use open text to elicit more detailed responses. Keep it positive and emphasise the importance of the feedback.

The aftermath: Use a moderator to edit responses and feedback data. Implement a plan of action for the respondent and organise company-wide feedback sessions. Engage management in the process. Don’t do a 360 too often – once a year will keep the responses fresh.