Team

Performance Application of team-based

Management
4,5
360° feedback systems
Simon Hurley
202 Center for the Study of Work Teams, University of North Texas,
Denton, Texas, USA

In the last ten years, business organizations have seen some dramatic changes
in the way they are organized and run. Traditional management techniques are
not as effective as they once were, and companies are looking for new ways to
effectively manage their employees. To stay competitive within their particular
marketplaces, companies need to attain the highest productivity ratings
possible. This requires high-quality performance from their employees, and for
an increasing number of companies, the best way to achieve this is by
assembling them into work teams. However, among other things, these teams
require specific support structures, leadership, and performance management
to function at their highest level and ensure both employee and organizational
satisfaction. One such performance management technique that can readily and
successfully be applied to a team environment is 360° feedback.
The term “360° feedback®” is actually a registered trademark of TEAMS,
Inc., a company that did some pioneering work on the theory and its application
(Edwards and Ewen, 1996). The term, like Band-Aid®, Kleenex®, and Xerox®,
has become such a common phrase in modern business that it has taken over
from its original phrasing, though whether this occurred before or after it was
trademarked is unclear. The original terms for this type of process were multi-
rater appraisal (MRA) or multi-source appraisal (MSA). MRA is virtually
synonymous with 360 feedback, though MSA can also include other types of
performance measures apart from co-worker assessments, such as internal and
external customers (Edwards and Ewen, 1996). The term 360° appraisal can
also be applied to a similar process; however, 360° feedback implies that not
only is assessment performed, but the results are shared with the individual
being assessed/rated (the ratee).
360° feedback can be distinguished from other, more traditional types of
performance feedback systems in several ways. First and foremost, it utilizes
multi-rater assessments, meaning that information on an individual and his or
her performance is gathered from more than one source or person. Secondly, the
individuals who perform the rating (the raters) have some degree of familiarity
with the person being rated (the ratee) – they know the ratee, interact with him
(or her) frequently and are qualified to assess him and his performance. This
provides more comprehensive feedback information than most traditional
Team Performance Management,
Vol. 4 No. 5, 1998, pp. 202-210.
methods (Waldman, 1997). In most cases the ratings are multi-directional – they
© MCB University Press, 1352-7592 can come from the ratee’s superiors and co-workers (peer assessment), internal
and external customers (customer assessment), and/or subordinates (upward Application of
assessment) (Waldman, 1997). When used effectively, 360° feedback can team-based 360°
improve leadership and management abilities, increase communication and feedback
learning, assist employee and organizational development, improve customer
service, promote teamwork and organizational change, and increase systems
productivity and efficiency (Edwards and Ewen, 1996; Yukl and Lepsinger,
1995). When performed correctly, it is also efficient (about 15 minutes per 203
survey to complete), equitable, balanced, and participative (Edwards and Ewen,
1996).

Theoretical basis
360° feedback is based upon two main theoretical principles. The first is that
utilizing multiple sources yields higher quality, more valid, more reliable
information than single source appraisal (Church and Bracken, 1997). The
information gathered is usually more reliable, since with three or more different
raters there is less chance of positive or negative bias. The information is
usually more thorough, because when several different sets of feedback are
combined they provide more information than just one. It is also more
extensive, since there are several different people contributing their
perspectives and each interacts with the ratee in a different manner or capacity.
The second theory that serves as a basis for 360° feedback states that
individuals can change their behavior by enhancing their self-awareness
(Church and Bracken, 1997). By examining the feedback provided by others,
individuals can better understand their strengths and weaknesses, and others’
perceptions of them and their work, and can develop and modify their
performance and interaction with others accordingly.
Additionally, expectancy theory of motivation can play a role in the quality
of results obtained from a 360° feedback system. A rater’s choice of
participation, and the level of effort put into providing accurate and insightful
feedback is affected by that individual’s perception of the benefits and costs of
that participation (Westerman and Rosse, 1997).
However, despite the fact that standardized surveys are the tool most
commonly utilized in 360° feedback, it is ultimately based upon subjective
assessment by individuals, and thus has limitations as to its validity (Jones and
Bearly, 1996). The raters are likely be affected by a number of common rating
problems, such as halo effect (rating someone overly positive or overly negative
based on the rater’s opinion of the ratee), and attribution errors (overall opinions
in one area affecting ratings on individual items in that area) (Yukl and
Lepsinger, 1995). This, in turn, limits the applications of 360° feedback. Due to
legal issues, information gathered from 360° feedback methods would not be
recommended for the basis of compensation, since any selection or
compensation methods must be scientifically proven to be unbiased and
statistically sound (Gebelein et al., 1998).
Also, 360° feedback may not always have positive effects. According to meta-
analysis studies conducted by Kluger and DeNisi (1996, cited in London et al.,
Team 1997), while it has been demonstrated that in most cases the process does affect
Performance the behavior of the individual being assessed, in nearly one third of the cases
Management studied the effect was negative (London et al., 1997). This was, however, mainly
due to incorrect implementation of the process (London et al., 1997). Also,
4,5 incorrect implementation or application of 360° feedback can cause employees
to feel vulnerable, uncomfortable, defensive, or overly competitive
204 (Bettenhausen and Fedor, 1997). These problems can be minimized, however, by
using the process for developmental rather than administrative purposes
(Bettenhausen and Fedor, 1997). Some common mistakes and areas of difficulty
in implementing 360° feedback are discussed below.

360° rating methodology

There are three main groups of people for whom 360° feedback is appropriate.
The first group includes managers and supervisors, using the upward
appraisal method. This involves the managers (or supervisors) being rated by
their subordinates in areas such as employee interaction, communication,
effectiveness as a leaders, etc. The second group includes most employees,
utilizing the peer appraisal method. The employees are assessed by their co-
workers and supervisor(s), and are rated on their performance in particular
tasks, their interaction with others, etc. The third group includes work teams,
whose members can be rated individually and as a group. Group rating systems
involve their own particular effects and difficulties. Additionally, internal
and/or external customer appraisals can also be used in any of these three
methods when conducting a multi-source assessment (as opposed to an multi-
rater assessment).
In order to implement a successful team-based 360° feedback system, the
first step is to determine exactly what the need for and the purpose is of the
360° feedback system (Jones and Bearly, 1996). Goals and objectives are
established, and specific competencies which are to be studied must be clearly
established, and aligned with the organization’s vision and mission. Perhaps the
most important question to be addressed, however, is the use of the results –
how will the organization utilize the information gathered from 360° feedback?
(Edwards and Ewen, 1996)
The next step is to ensure commitment and support from the executive-level
management in the organization (Edwards and Ewen, 1996). Resources,
including time, funding, personnel, assistance from outside experts, facilities,
materials, etc., must all be provided by the organization and this must be clearly
defined and guaranteed up front. This must also include resources to pursue
development and further assessment in the future, as needed. Development of a
360° feedback process will involve a paradigm shift in the organizational
culture, and the management must be prepared for the costs and effects of that
change (Chlebos et al., 1996).
Then, commitment from the employees who will be rating and be rated must
be obtained. This involves a certain degree of trust between the employees, the
organization, and the entity that is conducting the feedback system. The best
method to ensure this trust is to utilize an outside source, such as a consulting Application of
firm, to conduct the surveys and compile the results (Jones and Bearly, 1996). team-based 360°
Confidentiality must be maintained, and those involved must be assured of their feedback
anonymity in order to ensure honest and informative responses. It is useful for
the ratee to complete a survey as well, for comparison to the rater’s scores and systems
to help him understand the dimensions being assessed (Yukl and Lepsinger,
1995). This self-rating may require a separate version of the questionnaire form 205
to be constructed, since the individual being assessed would not require the
degree of anonymity as other raters, and could assess themselves on a larger
range of dimensions than an individual rater who only interacts with them in a
specific area (Jones and Bearly, 1996).
When the organization’s support of the initiative has been obtained, the next
step is to construct the survey instrument that will be used for information
collection. Selecting which areas to place emphasis on can be a difficult
determination to make, since employees and supervisors may have different
ideas about which areas are most important (Salam et al., 1997). The best way
to ensure that the survey instrument will contain valid and specific questions
relating to the ratee’s job is to base the questions on job-specific criteria, such as
that generated by a job analysis (Edwards and Ewen, 1996; Yukl and Lepsinger,
1995). For cross-functional teams, generating these questions becomes more
complicated, since each individual job will involve a different set of tasks and
will require an individual job analysis. The questions should be specific,
behavioral in nature, and should relate to personal interaction between the rater
and the ratee (Yukl and Lepsinger, 1995). Questions that deal with end results
the rater may not directly observe, and those which ask about general
interaction styles of the ratee are likely to produce answers which are
speculative, vague, and generally less useful. The questions should be couched
in positive terms, dealing with actions taken by the ratee rather than actions not
performed (Yukl and Lepsinger, 1995). The questions should also prompt for
suggestions for improvement, in order to clarify and assist in development and
change (London et al., 1997). A consistent rating scale must be applied to the
entire form, and it should have a simple, easily understandable layout (Jones
and Bearly, 1996).
Additionally, weights must be assigned to each source of input according to
how much bearing that source is to have on the final product (Jones and Bearly,
1996). This can greatly complicate the process, however, and it is recommended
that one either weight each source equally, or use a simple method of weighting,
such as 50 percent of input from supervisor, 50 percent from co-workers
(Edwards and Ewen, 1996: Jones and Bearly, 1996).
Next, the selection of raters must be performed. Raters must be individuals
who have frequent opportunity to directly observe the ratee to whom they are
providing feedback (Westerman and Rosse, 1997). Edwards and Ewen (1996) of
TEAMS, Inc., recommend that the ratees be allowed to select their own raters,
within certain guidelines. While this may seem to be conducive to a positive
bias on the part of the raters, it has been found that in most cases, employees
Team friends will not only know them better, and thus be able to provide more
Performance specific, accurate, and useful feedback, but that friends will usually provide
Management honest feedback as long as they believe their responses will be held in
confidence (Yukl and Lepsinger, 1995). They also recommend that the managers
4,5 contribute to the selection process, but only to add raters and not remove any
from the group. To obtain a meaningful set of information, it is recommended
206 that at least three sets of surveys must be returned, which may involve sending
out more than three if some are not completed (Yukl and Lepsinger, 1995).
When the surveys have been conducted, the information collected for each
individual being rated must be compiled, and averages generated for each item
on the survey. These items are best presented in a graphical format that
compares them to the norms and shows both the average and the range of
responses for each item, in addition to the question itself (Edwards and Ewen,
1996; Yukl and Lepsinger, 1995). When utilizing survey results from several
different sources, such as supervisors, customers, co-workers, and other team
members, it is desirable to report the results from each group separately, as long
as confidentiality can be maintained (Yukl and Lepsinger, 1995). This provides
specific feedback to the ratees which not only demonstrate differences in
perceptions of their interaction with various groups but also where their
strengths and weaknesses lie in relation to the tasks associated with those
groups.
Following the compilation and presentation of the data to the ratee,
individual development must be encouraged to ensure behavioral change. One
way to do this is through a series of facilitated debriefing sessions, where a
trained coach or facilitator (from an outside entity) reviews the response data
with the ratee (Gebelein et al., 1998; Yukl and Lepsinger, 1995). The response
averages are compared to the statistical and organization norms and the ratees’
own responses from their self-evaluation. The ratees are assisted in
constructing individual development plans, through which goals are set and
they plot a course of action to best utilize their strengths and work on
improving their weaknesses (Gebelein et al., 1998). This can be accomplished
over time through training, workshops, etc. (or possibly counseling in extreme
cases). These plans should be aligned with the company’s vision, mission, and
organizational culture (Edwards and Ewen, 1996). Without this necessary
follow-up to the presentation of the information, there is a good chance that
there will be little or no benefit from the process, wasting a great deal of time
and resources (Yukl and Lepsinger, 1995).
Lastly, the executive management should be informed of group trends and
commonalties within the organization (Jones and Bearly, 1996). This
information can be a trigger for organizational development, change,
alignment, and employee satisfaction. In situations where employee ratings
vary widely, this is often an indication of turbulent, changing environments, an
issue which needs to be addressed (Salam et al., 1997).
Several additional issues need to be addressed during the process of
designing, constructing, and implementing the 360° feedback process. The
subject of accountability is vitally important to the success of the system Application of
(London et al., 1997). The raters must be accountable for the quality of feedback team-based 360°
they produce, but this is difficult to monitor without violating the feedback
confidentiality of the rater (London et al., 1997).
Rater participation levels also have a high positive or negative effect on the systems
quality of the information gathered, and can severely limit its effectiveness
(Westerman and Rosse, 1997). Participation, in turn, is influenced by the 207
employees attitudes and assessment of the face validity toward the rating
instrument (Westerman and Rosse, 1997). Employees must be made aware that
they have a responsibility to provide accurate feedback, and that it is in their
best interests to do so (Gebelein et al., 1998). However, employee participation is
also greatly affected by factors which cannot be controlled, such as personality
types of the raters, employee attitudes, corporate culture and history, and
external/internal situational factors (Funderburg and Levy, 1997). These
factors must be taken into account when examining both the design and the
results from the process.
Implementing a 360° feedback system is just that – a system. As such, it
must function within the confines of the organization, and its design must
include a systems-view methodology to take into account its impact and
ramifications on the rest of the organization (Jones and Bearly, 1996). Most
successful 360° feedback systems are performed on a regular basis, not as a
one-time occurrence, and this must be taken into consideration in terms of its
financial, cultural, and process effects on the organization (Yukl and Lepsinger,
1995). The effects of the process must be assessed on an organizational level,
and changes made when necessary. If applied properly, the process should have
lasting effects on the organization, including increased communication,
encouragement of a feedback-rich environment, increased employee initiative
toward development, and increased employee involvement (Gebelein et al.,
1998).

Application of results
The information gathered from a 360° feedback process can be applied to
nearly all HR systems, including team selection, training and development,
recognition, and job assignments (Edwards and Ewen, 1996). Due to possible
negative legal ramifications, however, care must be taken in utilizing the results
for compensation or selection criteria, and this is generally not recommended
(Gebelein et al., 1998). Additionally, the information cannot be used in any way
that would compromise the confidentiality of the raters (Gebelein et al., 1998;
Yukl and Lepsinger, 1995).

Team application
According to Church and Bracken (1997), the use of 360° feedback in team
settings has evolved from a “nice-to-have” technique to a “must-have” tool for
team building and assessment. When teams and teamwork are not only
involved in an organization’s culture but are highly stressed, and even
Team formalized as work teams, the logical choice for feedback is from peer
Performance appraisals (Waldman, 1997). This is especially true in cross-functional/matrix
Management designs where employees report to multiple supervisors, for the supervisors
tend to take on more of a coaching role than a judgmental one (Edwards and
4,5 Ewen, 1996). However, in a team setting, 360° feedback involves some particular
modifications and considerations.
208 In work team applications, unlike the more traditional organizational
structures, the team leader or coach will often deliver the feedback to the team
members, though the data must still be collected and compiled through a third
party source to maintain confidentiality (Severin and Black, 1997). In small
teams, confidentiality can be difficult to maintain, since particular interactions
can be limited to a few or even one individual, and survey questions must be
modified accordingly to compensate, sometimes at the loss of information.
Just (1996) recommended that, as in individual 360° feedback practices, team
members need to be encouraged to set personal development goals which
correspond to team goals and needs, and additionally report on those goals
during team meetings.
According to a study done by Axis Performance Advisors, in a team
situation, feedback should be provided to the team members at least once a
year, preferably three to four times (Hitchcock, 1996). The best sources of
feedback come from customer appraisals (when available), then from team
members, then from management (Hitchcock, 1996). The best time to implement
the peer appraisal process was 1.7 years (on average) after the inception of the
team (Hitchcock, 1996). Additionally, doing peer reviews in a team setting
showed a much higher employee satisfaction score (80 percent) than when
performed in an individual setting (50 percent), and a somewhat higher score
when peer reviews replaced traditional appraisal systems (67 percent) instead
of supplementing them (56 percent) (Hitchcock, 1996). However, ranking team
members was perceived as very unsatisfactory, as was linking scores to
individual pay (Hitchcock, 1996). Satisfaction with team compensation was
unclear. In short, there are a number of factors that must be considered when
deciding when and how to implement a 360° feedback system, especially in a
team setting.
When work is performed in a team-focused environment, it will greatly affect
the likelihood of employees accepting non-traditional performance
management techniques such as 360° (Waldman, 1997). In integrating 360°
feedback into existing teams, caution must be taken. If employees are satisfied
with existing performance measurement techniques, they are likely to be
resistant to new ones (Waldman, 1997). Ability to integrate 360° feedback into
the team process is also dependent on the level of readiness of the team (Severin
and Black, 1997). Critical factors such as level of development and maturity,
trust, team stability, and management commitment can all impact team
readiness positively or negatively (Severin and Black, 1997). Team members
should not be forced to evaluate each other – it takes time for them to get to
know each other and become comfortable in providing each other feedback,
even anonymously (McGee, 1996). Additionally, the larger the team, the more Application of
difficult it becomes to get quality feedback information from each member team-based 360°
(Nord et al., 1996). As in individual applications, the overall results of the feedback
feedback should be presented to the management, and modifications to the
system be made where necessary (Nord et al., 1996).
systems

Further research 209

A great deal of research and refinement of the 360° feedback process still needs
to be done. Samples in existing research are too small, necessitating larger-scale
research done on corporate-wide 360° feedback efforts (Church and Bracken,
1997). Process information is incomplete in a number of studies, including
history of feedback within organizations, intended use of feedback, cultural
issues, rater training methods and effectiveness (Church and Bracken, 1997).
More information is needed to assess the readiness of any given company to
implement a 360° feedback process (Funderburg and Levy, 1997). Also, the keys
to sustaining the feedback process need to be identified and examined, as some
factors assist the feedback process and others can destroy it (Church and
Bracken, 1997).

Conclusion
360° feedback is a highly useful system which, when implemented correctly,
can have a wide variety of positive effects on an organization, especially one
which employs work teams. There are many aspects of the process that must be
successfully addressed and included in the design and implementation of 360°
feedback, and assistance from specialists in the area is highly recommended. As
more and more organizations turn to 360° feedback systems in the future, it
seems likely that more research and analysis will be conducted to better
understand its ramifications and further refine the process of this highly
versatile and useful tool.

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