There is an ongoing discussion about whether 360s should be used primarily for Leadership Development or Performance Appraisal purposes.
I am not a big believer in a one-size-fits-all process, and we do have some customers who successfully use the 360 process for promotion and pay determinations. Anecdotally however, I think that most organizations have more success using 360s for development purposes.
- I believe that raters take the process seriously, and always tell their “truth.” I also believe, however, that raters may tell less of their truth if the 360 is used for promotion or pay decisions, since they may not want to feel responsible for “hurting” their manager or co-worker.
- Where possible, the participants may ask different raters for feedback if the 360 is used for compensation purposes…people who they know will rate them highly, rather than focus on who will provide them with the best possible feedback for growth.
- Global companies may have ongoing culture issues with deploying a 360 across different countries. Adding these culture issues to a 360 for promotion or pay increase decisions just complicates the entire process…will people in certain countries be rated higher by virtue of their culture? If yes, how will that be taken into account in these compensation decisions?
With the time, energy and cost of a 360 program for development purposes, the participants (people being rated) should be accountable for actions taken based upon the 360 report.
Some of our customers have developed a system where the 360 process is developmental only. In addition, however, the performance appraisal process is modified so that one item that is measured is what the participants have done with the feedback. Therefore, nothing on the performance appraisal talks about the scores of the 360, but does address the actions taken based upon the assessment. So someone who has gotten lower scores but has worked hard to change behaviors based upon the feedback in the 360 could get have a positive impact on their performance review.
To me it’s all about what participants do with the information.
No matter the objective, prior to the start of the 360 process, I firmly believe that you need to let both your participants and raters know what will happen with the output. First, who will see the report: the participant, their coach, their manager? Second, what will be done with the output from the report; will it be used for promotional considerations, pay decisions, selecting training courses, development only? And third, what is expected from the participant after the report is distributed: will they be expected to create an action plan, share the report with their raters and/or manager, work with a coach on the output of the report?