If appraisals are on your to-do list, you’ve probably started to consider what sort of appraisal to conduct. 360 appraisals are becoming more commonplace, and there’s been a lot of talk regarding the value of them. But what about the tried and true traditional performance review? If you’re trying to decide which option is the best fit for you, the first thing you need to realize is that you’re not comparing apples and apples here. Depending on what you want to achieve, you may decide on using one over the other, or you might decide on using both in conjunction. Here are some of the key differences you should consider.
Two parties will be involved in a traditional performance review: the employee and a direct manager. The manager will share observations on performance and the review will focus on achievements and setbacks within a specified timeframe – usually in the time since the last review was conducted. Often the employee’s input will also be considered and the review will conclude with both parties agreeing upon goals for the upcoming review period. These goals will form the basis for evaluation on the next performance review.
A 360 assessment requests input from a number of people. The participant will complete a self-assessment and feedback will also be requested from their manager, peers and direct reports. A 360 review is not concerned with any specific pre-set goals like a performance review is. Instead, it looks at the overall skill and competency of the individual as it relates to their job.
Pro Tip: Wondering how to make the most of your 360 tool? Forbes has a great collection of tips & tricks.
As described above, a traditional performance review looks at pre-set, objective criteria and measures an employee’s performance up against that criteria. So ultimately the goal of a traditional performance review is to measure an employee’s progress and achievement against a set of pre-set goals. This can be useful, but it doesn’t necessarily consider the overall development of the employee. Of course, this can be considered in the discussion, but traditional performance reviews tend to stick to the basics: did the employee complete the tasks they set out to achieve?
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A 360 assessment, on the other hand, is all about development. With so many people involved in a 360, a lot of information is collected and the feedback can be extraordinarily valuable, but the volume can be overwhelming. It’s important to plan to have a debrief meeting with the participant in order to help translate all of that feedback into an actionable development strategy. By de-emphasizing the performance aspect and focusing on development, 360 reviews ask a different question. It’s not “did the employee complete their tasks,” but rather, “what can an employee do to become even more effective at their job?”
Performance reviews are objective measures of success and they tend to result in pay increases (or decreases), promotions, demotions, or transfers. By their very nature, performance reviews are competitive, since they have employees vying for the prize to be won. This can be great if a competitive environment is what your employees crave. Performance reviews can be an effective tool to kick-start productivity, and it’s often clear what the consequences – both positive and negative – will be, based on the results of the review. However, the stress of being reviewed can take a toll on employees’ mental health, and too much competition can negatively impact your corporate culture as a whole.
With a 360 assessment, there’s no prize to be won other than information that can translate into an opportunity for personal development. The final outcome should be an actionable plan for future development. An effective 360 starts from a position of accomplishment (here’s what the employee is currently doing well) and builds on those accomplishments (here’s how the employee could do even better). Because of the focus on ongoing development, we recommend that organization don’t use their 360 as part of their performance review, and we also recommend that the 360 is never associated with compensation. Investing in a 360 should indicate that you’re investing more in your employees’ growth, and by tying consequences back to the results, you’d be stifling that indication of investment.
So while they’re both valuable tools when rolled out correctly, performance reviews and 360s are completely different beasts. Consider the goals your organization has around employee performance and development before implementing one or the other. Remember – 360 reviews should never be used as a replacement for a performance review, and should never be tied back to compensation. Your employees’ development is critical, and by keeping your 360 independent of compensation or anything else, you’ll really be walking the walk when it comes to investing in your team.