In 2001 Watson Wyatt published its ongoing study of the linkages between specific Human Resource practices and shareholder value at 750 large publicly traded companies. Bottom line they found that 360-degree feedback programs were associated in a 10.6% decrease in shareholder value.
While the 360 concept can deliver valuable feedback there may be some problems with validity and effectiveness. This article will focus on potential issues causing a negative impact on the organization and some potential solutions.
THE ISSUES
CHALLENGE # 1 – Lack of congruence between company goals, culture and the 360 instrument that is used. How the behaviors for each competency are phrased may or may not support the culture or goals of the organization.
To take that concept a step further, let’s say that for a specific competency there are six behaviors and half of the behaviors were supportive of a culture or the company’s objectives, and the other half were not. If a subject received fair feedback on those that were supportive and negative feedback on those that were not, the subject would get an overall negative result on the competency, but not know why.
CHALLENGE # 2 – Lack of specific job relatedness to the position assessed. Many off-the-shelf instruments are designed to measure a universe of competencies. The problem is little or no insight on which competencies are most important for success in the subject’s specific position .versus assessing only a few specific essential competencies.
The challenge that the subject now faces is that few people can do everything well, so they get some negative feedback on a couple of competencies. Because there has been no validation on which competencies are important for success, the subject begins to focus on developing his or her skills in those areas, and the competencies may not even be important to success in their job.
CHALLENGE # 3 – Time and cost can also be an issue. Many off-the-shelf 360 tools are designed to measure a universe of competencies. Raters must spend time rating 200 or more behaviors that require an hour or more to effectively rate.
For example, if a Subject, Boss, five Peers, and five Subordinates, participate in completing an instrument, 12 people are involved in spending an hour each of company time, hence an investment of 12 hours. Maybe not a big deal, but multiply that by 10’s or 100’ more repetitions on other individuals and now there are 100’s and 1000’s of hours of time invested.
Then there is the feedback and development plan. If a subject selects a number of competencies to develop and money is spent in training and coaching when the competencies are not important to success, more time and money is wasted.
Hence for Human Resource systems to be considered useful the return needs to be greater than the investment.
Lack of an on going development, support, and coaching process that focuses on and reinforces the key competencies, results in all this effort being tossed aside. A waste of time, money, and often having a negative impact on the subject’s morale and relationship with those that provided the feedback.
Possible Solutions
The culture of the company should be right for 360 assessment. Implementing 360 feedback in the wrong culture would do more harm than good.
360 feedback should be limited to baseline and maybe milestone assessment for developmental purposes only.
Involve job experts in the design of the instruments, so the competencies measured are relevant and the importance of specific behaviors is understood and agreed on.
Train people in giving and receiving feedback. Provide a support structure. Plus ongoing coaching and development where needed.
Train managers to be coaches, providing ideas and opportunities for developing competencies.
Make the instruments short 30 to 50 items max. Use technology to deliver and complete instruments electronically.
Have instruments processed by a third party for processing in order to protect the anonymity of the raters.
Moral: Is there such thing as too much of a good thing? When it comes to 360 assessment there can be. 360 assessment can deliver a positive return on investment, you just need to implement thoughtfully and continuously monitor the results.
About The Author:
Stephen Moulton is the Chief Consultant of Action Insight, author, software inventor, and competency guru. He can be reached at 303-439-2001 or
http://www.actioninsight.com.
