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Performance Appraisals - Are You Ready for a 360? part 1 - Stanford Management Consulting

Tips and Tools“Julia, we are a small company, why should I waste time doing employee appraisals – that’s for big companies!”

Why Have Performance Appraisals?

Over the last few years, the use of “360 Degree Feedback” has grown in popularity. 360 Degree Feedback is a system or process you develop in which the employees received feedback from those who work around them. This can be managers, peers, direct employees, or employees from other departments in which they interact with regularly. However, before we discuss the pros and cons of 360 Degree Feedback it is important to gain a general familiarity with performance appraisals. In particular, what are the advantages of performance appraisals?

Performance Appraisals offer several advantages to the individual, team, and to the company.


At an individual level, performance appraisals offer a number of advantages. These include:

  • Recognition of past effort
  • Developmental/training requirements can be uncovered

Research has consistently demonstrated that these items are extremely important for an individual. Without recognition for past efforts it can be difficult to consistently motivate an individual to engage in future efforts, or willingly accept developmental activities.


In addition to the benefits achieved at an individual level, a number of team benefits come straight to mind. These include:

  • Alignment of effort with objectives
  • Motivation of team members

The effectiveness of any team is clearly aligned to the team’s set of objectives. Without opportunity for feedback in a trusting and transparent setting, the team will not know where they collectively are in relation to those objectives.


The subsequent advantages to the company become evident:

  • Development of staff
  • Achievement of key objectives
  • Best and focused utilization of human resources

Overall Benefits of Appraisals

  • Increased employee performance
  • Greater control of work
  • Improved motivation and commitment
  • Increased information flow
  • Better relationships within & across the company

360 Degree Feedback is a continuous process of improvement and must be always perceived as being so.

Roles within Performance Appraisals

The simplest form of performance appraisals involves two individuals – the manager and the employee.

Manager’s Role in Performance Management

  • Set Objectives with Employees
  • Manage Rewards and Ensure Fair Compensation for an observed level of Job Performance
  • Offer Accurate, Timely, Regular & Specific Feedback

Advantages to Managers

Through Performance Appraisals, Managers can:

  • Translate business goals into individual job objectives and standards
  • Monitor performance against solid standards and offer feedback
  • Communicate and seek buy-in / agreement on objectives
  • Coach employees on how to achieve their performance objectives
  • Identify employees strengths and weaknesses
  • Generate and agree upon development plans to best serve the company’s and the individual’s needs

One of the most important advantages to performance appraisals is the employee’s role in performance management!  When employees are actively involved in their own development and set objectives with their manager, there is a natural tendency to take ownership in their own performance.

Advantages to Employees

Through Performance Appraisals, employees can:

  • Openly discuss performance with managers
  • Be provided with an opportunity to develop skills
  • Reinforce and sustain current good performance
  • Improve existing performance
  • Determine career progression goals
  • Identify training needs
  • Link rewards to performance

Eight Appraisal Techniques

Below is a list of the main performance appraisal techniques. Most companies use these forms of performance appraisals. Whatever you choose to include as part of your 360 Degree Feedback will vary depending on the type and history of your company.

Ranking Strengths Weaknesses
Appraiser ranks employees from the worst to the best based on specific characteristics or on overall job performance
  • Simple
  • Facilitates comparisons
  • Subjective
  • Poor basis for decisions
  • Degree of difference between employees difficult to specify
Paired Comparisons    
Appraiser ranks employees two at a time and decisions on which is superior are included in the final ranking order for the whole company
  • Simple
  • Ease of decision making
  • Complicated within a large workforce
  • Challenges associated with ranking
Critical Incident     
Appraiser observes incidents of good and bad performance and uses this information for judging and leading the performance appraisal
  • More objective than previous techniques
  • Job related
  • Time consuming
  • Requires skilled observation


General free-written evaluation by the appraiser
  • Flexible
  • Comparisons challenging
  • Subjective
Employee evaluates themselves based on a particular template that has been supplied by the company
  • Promotes self-analysis
  • Participative
  • Facilitates discussion
  • Employee may be more lenient
  • Conflict can occur between appraiser and employee
Assessment Center     
Employee receives a series of assessments supplied, performed and evaluated by specialized external assessors
  • Objective
  • Range of techniques employed
  • Range of dimensions analysed
  • Expensive
  • Not necessarily job specific
Appraiser evaluates the degree to which the Employee has achieved specific objectives
  • Objective
  • Job related
  • Participative
  • Requires awareness of measurable targets
Appraiser specifies on a scale to what degree relevant characteristics are possessed by the Employee.
  • Ease of comparison
  • Capacity to assess characteristics from the very simple to the complex
  • Subjective
  • Personality and behavioral traits difficult to measure

Key Implementation Areas

Before we begin to briefly examine an effective 360 Degree Feedback Process, it is important that we understand implementation areas. These are:

360 Degree & Employee Development

Within the area of employee development, 360 Degree Feedback will:

  • Focus on development of skills and competencies to meet organizational objectives
  • Identify Training & Development Needs
  • Identify Areas for Improvement
  • Develop Action Plans
  • Assist Career Development Opportunities

360 Degree & Performance Appraisals

Within the area of performance appraisals, 360 Degree Feedback will:

  • Set Performance Objectives
  • Review Past Performance
  • Improve Current Performance
  • Assist Career Development & Promotion Opportunities
  • Assess Salary/Position Levels

Stay tuned for part 2 – we’ll talk about “An Effective 360 Degree Feedback Process” and the top 10 Reasons 360 Degree Programs Fail.

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