The 360-Degree Evaluation

Just about every human resources journal that you pickup these days contains an article on implementing a 360 degree performance evaluation system, where by the work performance of an individual is evaluated not only by a supervisor but also by peers. subordinates, customers, and others familiar with the quality of that person's work.

The primary advantage of such a global evaluation is that it avoids the subjectivity issues associated with performance reviews conducted solely by supervisors. Most 360-degree evaluation programs are aimed at improving employee performance or developing skills. Private sector organizations also have used them to improve supervisory skills among managers, who may become more sensitive to the influence of their management styles on the performance and morale of their work units when those who report to them also review them.

In recent years, as traditional departmental structures have evolved into work teams, the 360 degree evaluation concept has become increasingly popular. Typically, 360 degree evaluations have been conducted anonymously, so that employees are unaware of how each team member or coworker has rated them. This precaution protects the evaluators from retribution for the poor ratings they may have given to teammates and ensures that the process is conducted fairly.

Only recently have 360-degree evaluations been conducted for purposes of pay determination, but several local governments have implemented programs with notable success. The design of one of these sterns is featured in this article.

New System Was Necessary in this case. the city of Bismark North Dakota, had operated Without a functioning performance evaluation system for a number of years. On paper, the city had a system in place in which personal characteristics made up the list of performance criteria: dependability, initiative, courtesy, and so forth. The city had quit using the system because employees complained that it was too subjective, supervisors were unable or unwilling to distinguish good performance from bad performance, and managers expectations were so ill defined that employees were never sure what they could do to improve.

Under the old system, it had been typical for employees to conclude from any poor scores that "my supervisor doesn't like me" or to say that "my performance was good until a couple of days before the evaluation, when my boss and I got into an argument." In short, the system wasted time and did not enhance skill development or improve performance.

As a first step toward a solution, four focus groups were organized-one group of managers and three groups of employees-to identify the key characteristics that an improved system would have. The four groups came up with similar suggestions: they wanted a system that was related to each individual's job description, a scoring equation that would distinguish between routine job tasks and those responsibilities that require more skill, and the contribution to their ratings of input from individuals other than their direct supervisors.

The system that was designed accomplished each of these objectives while establishing straightforward criteria for performance improvement First, the process was tailored to each individual's level of responsibility by making the performance evaluation form inseparable from the employee's job description. As an added benefit, job descriptions would stay current because managers and employees must get together to review and update them each year.

Second, a weighted scoring system was used to account for different levels of difficulty. Each task was assigned a "skill value" of 1 (least difficult), 2, or 3 (most difficult). These values then figured into the employee's overall performance rating. Here, too, there was an additional benefit: a built-in impetus to learn and develop new skills, achieve higher overall scores, and ultimately qualify for a performance-based pay increase.

Finally, a three-tiered process was adopted involving an employee self-evaluation, followed by anonymous evaluations by three to five peers or subordinates, and culminating in a face-to-face performance interview between employee and supervisor. Supervisors were directed to summarize the coworkers' scores and narrative comments before assigning their own scores. All evaluators used a rating scale from 1 (needs improvement) to 5 (superior performance).

Rating Performance Cumulative performance ratings were derived from the combination and weighting of the three tiers as follows: the self-evaluation and coworkers' evaluations each received 25 percent of the weight, and the supervisor evaluations received 50 percent The weighted score for each task in the employee's job description was multiplied by the skill value (1, 2, or 3) assigned to that task. The results then were divided by the perfect rating (highest possible score) to yield an overall performance rating, expressed as a percentage. A scale was designed showing the relationship of individual performance ratings with available pay increases, taking into account the employee's position within his or her salary range (See diagram A).

To ensure understanding of the 360-degree performance evaluation process among all employees, the city conducted three hours of training for subordinates and seven hours of training for supervisors. The three-hour session focused on the goals and procedures of the performance evaluation system and on how the results would help determine pay. Incorporated into the seven-hour session were supervisory tools, including legal guidelines, performance evaluation forms, instruction in the documentation process, a template for employees' performance improvement plans, statements for employees, performance evaluation interview evaluation techniques, and practice sessions focusing on appropriate employee behavior during performance reviews.

Evaluations were staggered throughout the year, as close as possible to each employee's anniversary date. This way, coworkers and supervisors would get a full 12 months to appraise an employee's performance. A staggered schedule also helps to eliminate the "buzz" that can occupy the entire office when all performance renews are held at the same time.

The Effects of the System

The city's 360-degree system has been in place for seven months and has been well received by supervisors and employees alike. Employees say that the system is more objective and gives them an opportunity to improve their scores throughout the year in fact, when it comes to scoring, employees generally are harder on themselves than their coworkers and supervisors. Peer evaluations tend to be the most generous, with supervisors scores generally falling somewhere in the middle. Supervisors have commented that the differences between employees' self-scores and the scores assigned by their peers are helpful pointers to issues that should be addressed in the performance evaluation interview.

Concerns that were voiced initially, such as whether the process would be too time-consuming, have been resolved. City staff have found, however, that with experience the evaluations take less time. Computerized forms may soon replace paper forms, further reducing the time needed to complete and route the forms and to tabulate results. As performance becomes an ever more critical factor in determining pay, the 360-degree performance evaluation will become the norm, both for private and for public sector organizations. The process is easy to use and to understand; it resolves subjectivity questions, and it can help boost morale by clarifying expectations and rewarding performance improvements.

James C Fox, Ph.D., is a partner in the firm of Fox Lawson & Associates, LLC, Roseville, Minnesota. Charles J. Klein, SPHR, is director of human resources for the city of Bismarck, North Dakota.

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