The 360 Degree Performance Evaluation Process

Managing human resource capital is now mission critical. One of the most effective tools for managing human resources is the 360-degree evaluation process. Traditionally, an employee is evaluated from a sole source (1 degree), namely the immediate supervisor or manager. However, employees interact with numerous sources: Co-workers, customers, Managers outside the employees department, vendors, contractors, and others. The 360- degree evaluation process relies on these multiple sources, providing a more balanced and objective approach to measuring employee performance. This leads to higher productivity, better customer service, and enhanced organizational performance.

"Every published report recommends multiple as opposed to single raters for performance appraisal." - John Bernardin, Author & Expert on Performance Appraisal

When you tap into an employee's circle of influence, you will have a major impact on changing employee behavior. Additionally, employees often respect the feedback of co-workers more than their respective supervisor. A survey of Coca-Cola Foundation employees indicates that over 90% of employees prefer evaluations that include both co-worker and supervisor. Only 4% of employees chose to have their performance evaluations performed by the supervisor only.

Surveys are often used for collecting the feedback used to evaluate the employee. It is very important to keep surveys short and to the point. A few open comment questions can be included. However, you need an objective way of scoring the surveys. It is also important to maintain anonymity; i.e. receivers of the surveys should not know who provided the information. Likewise, the information received must be controlled so that confidentiality is maintained.

Survey Questions for Evaluating Employee Performance :

Assign a score of 1 to 10 for each of the following questions. 1 is the lowest score (strongly disagree) and 10 is the highest score (strongly agree). N for Don't Know Score

1. Performs day to day activities in a timely and accurate manner. ____

2. Communicates effectively, both orally and in writing ____

3. Demonstrates initiative for solving problems ____

4. Directs and leads others in a positive way ____

5. Coordinates and manages time, people and other resources well ____

As with any new approach to managing people, the 360-degree approach requires careful planning. For example, training is a must since employees will be apprehensive about how this new evaluation approach will work. Training should address fundamental questions, such as what is the 360 approach, why is the organization adopting it, who will be doing the evaluations, how will the information be collected, etc.

The design of a 360-feedback process should actively enlist the employee. In fact, the employee should select their own evaluation team, consisting of no more than six targets (co-worker, supervisor, customer, etc.). Design of the surveys for feedback is also important since traditional approaches will not fit:

Traditional Survey . . . . . . . . . . . . . . . . . . . . . . . 360 Feedback Survey

Single Target Audience . . . . . . . . . . . . . . . . . . . Numerous Targets (all employees)

Numerous Responses . . . . . . . . . . . . . . . . . . . . Few Responses (5 to 7) per target

Response Rates may be low . . . . . . . . . . . . . . . Need High Response Rate for Objectivity

Respondent may be known . . . . . . . . . . . . . . . . Respondents must be anonymous

Survey may be long . . . . . . . . . . . . . . . . . . . . . .Survey must be short (less than 20 minutes)

Distributed through traditional ways . . . . . . . . . . Electronic distribution is common

Control over surveys is low . . . . . . . . . . . . . . . . Control must be high for confidentiality

Consistent rules must be adopted to make sure the process is fair for all employees. For example, you will need rules on when to throw out invalid survey responses. Some companies consider a survey as invalid when the individual response is more than 50% different than all other responses. Minimum levels are also needed for acceptance of surveys. For example, a required response rate of 75% is common where employee compensation is linked to 360 feedback results.
This article has touched on some of the basics behind the 360-feedback process. Multi-source systems, such as the 360 feedback, are more objective, accurate, creditable, and influential than traditional single source systems. By tapping into sources closet to the employee, we can better motivate and manage the employee. And since employees are at the center of organizational performance, we need fair and accurate methods for evaluating employee performance. The 360-degree feedback model is one of the best methods for driving employee performance and satisfaction.

The first step is for HR people to make the transition from "liking people" to "liking value." The sad fact is that many HR people simply don't understand or grasp concepts within value-based management (such as EVA, economic profits, etc.). Once HR people understand value-based and financial metrics, then you can move into developing a set of metrics that recognizes the relationship between human resources and finance. The primary focus is on people and how are we going to develop our human capital.

A good place to start is with a set of efficiency ratios to see how well you are managing human capital. The Society of Human Resource Management has identified ten key human capital measurements:

1. Revenue Factor = Revenue / Total Full Time Employees
2. Voluntary Separation Rate = Voluntary Separations / Headcount
3. Human Capital Value Added = (Revenue - Operating Expense - Compensation & Benefit Cost) / Total Full Time Employees
4. Human Capital Return on Investment = (Revenue - Operating Expenses - Compensation & Benefit Cost) / Compensation & Benefit Cost
5. Total Compensation Revenue Ratio = Compensation & Benefit Cost / Revenue
6. Labor Cost Revenue Ratio = (Compensation & Benefit Cost + Other Personnel Cost) / Revenue
7. Training Investment Factor = Total Training Cost / Headcount
8. Cost per Hire = (Advertising + Agency Fees + Recruiter's Salary/Benefits + Relocation + Other Expenses) / Operating Expenses
9. Health Care Costs per Employee = Total Health Care Costs / Total Employees
10. Turnover Costs = Termination Costs + Hiring Costs + Training Costs + Other Costs

It is also important to benchmark your HR metrics against past performance and other companies. For example, if you report turnover costs of $ 50,000, the CEO may think this is too high, but when you benchmark it, you are in the top 20% for lowest turnover costs. One of the best sources for HR benchmarks is the Saratoga Institute in Santa Clara , California .

HR Metrics, like other measurements within the Balanced Scorecard, should have strong connections to the strategies of the company. This will help ensure that the evaluation of HR really matters to the organization and we are working to make things happen. Listed below are some critical questions that GTE used in their award winning HR Balanced Scorecard:

Strategic Perspective

Do we have the talent we need to be successful in the future?

Are we investing in growing our HR capabilities?

Customer Perspective

Are we viewed as a great place to work?

Are we creating an environment that engages our people?

Operational Perspective

Are our HR management processes and transactions efficient and effective?

Are we using technology to improve HR efficiency?

Financial Perspective

Is our return on investment in people competitive?

Are we managing our cost of turnover?

A final point that needs to be emphasized is the correlation between human capital and the creation of value. Watson Wyatt, a major consulting firm, recently released the results of a one-year study on human resource management practices for 405 publicly traded companies. The study concluded that there is a correlation between how human resources are managed and the amount of shareholder value. According to Bruce Phau, head of Watson Wyatt's measurement division, if you can improve your human resource management in certain key areas, you can experience a 30% increase in shareholder value. The message is clear - measuring and managing human capital is a major part of creating value and it must be a key component of the Balanced Scorecard.

One of the early Supervisory training sessions I attended,before I knew that Supervisory skills were more elusive than the Holy Grail , was held at LSU (Geaux Tigers!). You know the session I'm talking about, you spend 3 or 4 days listening to truly great advice on how to manage people, motivate, inspire, etc. You return home and spend the weekend planning on how you are going to implement these brilliant ideas. You show up for work Monday morning and realize in that first hour that unless you can get all of your bosses into "Supervisory Rehab" you just wasted an entire week!During one of these sessions there was an example regarding delegation that I think really can be relevant to the budding new Stuper...er, Supervisor.
Imagine that every person who comes into your office has a monkey on his/her shoulder. Now this monkey may be a tiny Tamarin or King Kong's fecal flinging,lesser known brother, Ding Dong. The challenge for the employee is to enter your office, toss the monkey on you, then run out faster than Randy Moss at a Pro Bowl.Of course, the monkey is their problem or issue, whatever it might be, and their sole mission is to be sure that, when they leave your office, the monkey never finds it's way home again. Your mission, should you chose to accept it...and you better or you will soon find yourself in a bad remake of "Planet of the Apes" is to grab the monkey firmly by the tail, swing it around the office a few times then fling it squarely back on to the offending employees shoulders, with a certain measure of revenge toward our evolutionary cousins.
Now, not all employees are zookeepers in the making so this is where you actually use your Supervisory skills (What? no one gave you your magical bag of skills?? We will cover those in another episode.) Really the only skill you need here is the ability to just say no. Under NO circumstances do you accept the monkey. You are allowed to offer advice, hints, tips, new directions, resources, references, bananas,first born children, etc. on what to do with the monkey but you never,ever allow it to remain in your office when the employee walks out. Sound simple? It is and it isn't. You will be AMAZED at the reasoning, pleading, begging and creative suggestions that a person with a monkey can come up with for why you need a monkey of your own. Stand firm, be helpful but emphatic that, like a bad mother in law, the monkey ain't staying with you. When your employees finally realize that resistance is futile you will find that their future trips to your office will still include a monkey but this time he will be on a leash just so they can "show you" what he can do. Soon they will learn that bringing solutions rather than problems to the boss both empowers the employee and makes the bosses life much easier...Now you can both sit back and enjoy the rest of the circus.

I'm often asked to come in to organizations and give a motivational speech to their employees. I reply that I'm not a motivational speaker. Never have been. Never will be. Don't want to be. I do something else. I teach their people how to become motivational leaders. That's a far more productive endeavor.

The concept and application of motivation are misunderstood in most organizations. The motivational industry is based on a fundamental contradiction; because the focus of motivation is misplaced. After all, leaders (salespeople included) should be motivated. If they aren't, they shouldn't be leaders.

Here's where the focus should be: not on the leaders themselves but on the people they lead. Can those leaders transfer their motivation to other people so those people are as motivated as they are about the challenges they face?

Furthermore: Can those people who "catch" the motivation of their leaders then go out and motivate others -- and those others go out themselves and motivate still others.. and on and on?

Finally, can people at each phase of this "cascading of cause leaders" translate motivation into action that achieves results -- and not just average results but more results faster on a continual basis?

All my books, articles, courses, seminars, workbooks and interviews are based on that simple sequence of ideas.

I have written many articles on motivation and how to transfer your motivation to others.

But there is another way of transforming your motivation to others that doesn't take much explaining. It's surprisingly simple, easy to use, and effective. Yet few leaders I've encountered use it, and those who use it, don't use it well.

It's the Way of the Question Mark. A "way" is a course of life one undertakes to advance in a particular discipline.

So it is with the Way of the Question Mark. It is not simply a technique; you'll find it is actually a disciplined course of life. (I've been using it for years and am still a long way from mastering it. Because the question mark is often particularly appropriate in a highly charged emotional situation. However, in such situations, when strong emotions are getting the better of me, it takes practice and discipline to step back, gather my thoughts, and ask a question.)

Practicing the Way of the Question Mark can enhance your relationships with the people you lead so you get a lot more results as a leader.

From now on in all your leadership endeavors, make a conscious effort to put a question mark at what would otherwise be declarative sentences.

Asking the question rather than using a declarative is usually more effective because it gets people reflecting upon their situation. After all, we can't motivate anyone to do anything. They have to motivate themselves. And they best motivate themselves when they reflect on their character and their situation. The question prompts people to answer, and when they are answering, they may engage in such reflection. You may not like the answer; but often their answer, no matter what it is, is better in terms of advancing results than your declaration. Also, their answering the question may prompt them to think they have come up with a good idea. People are less enamored of your great ideas than they are of their ideas, even if those ideas are simply average.

For instance, your organization needs to have people to from point A to point B. An order leader might say, "Go from A to B."

Practicing the Way, one might ask: "Tell me what you think about going from A to B?" or "What's the best way for you to go from A to B?" or "Tell me how I can support you going from A to B?" or "How will you take leadership of others going from A to B?"

Mind you, I'm not talking about pandering to people's whims. I'm talking motivation, motivating people to get more results faster on a continual basis. (In fact, you can't order people to get more results faster continually. Only motivated people can do it.) I'm talking about challenging people to undertake extraordinary things, to be better than they think they are.

The question mark, as opposed to the simple declarative, opens up a world of results-producing possibilities. And it's a world predicated on their choices.

Make the Way of the Question Mark your way. Discipline yourself to ask questions rather than make statements. You'll start getting more results.