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The Benefits and Drawbacks of 360 Reviews — and Why It May Be Time to Move On to a New Model

By Michelle Gouldsberry
7 minute read
Updated on February 10, 2024

Traditional performance reviews only incorporate the manager’s point of view, but employees may benefit from hearing multiple perspectives. One popular tool for providing a multi-faceted view of performance is the 360 performance review process, which combines feedback from a variety of people in the organization, not just the manager. This approach dates back to the 1950s and saw a resurgence of popularity in the 1990s. While it is still used today in many organizations, companies have begun to move away from 360 reviews — and for good reason. 

In Betterworks’ view, 360 reviews have multiple shortcomings. At best, they are useful in select situations. At worst, they can be time-consuming and costly for an organization and can lead to disengagement. Let’s take a look at the upsides and downsides of 360 reviews, and how you can make the best of them if your organization is committed to following the practice.

3 benefits of using the 360-degree feedback process

Although managers are the primary source of performance feedback, they aren’t the only people who can bring valuable perspectives to the conversation. Here are a few benefits of applying 360-degree reviews in your organization.

Collect multi-faceted feedback

A 360-degree feedback process theoretically contributes to a holistic view of an individual’s performance by soliciting feedback from peers, supervisors, and other co-workers, not just the employee’s boss. By combining multiple reviews and viewpoints, you should be able to get a more complete and accurate assessment of each person’s strengths and areas for improvement. In practice, however, collecting feedback that accurately reflects each person’s contributions is often challenging.

Identify development opportunities

One of 360 performance reviews’ purported strengths is the ability to surface improvement opportunities that managers might not see. For example, teammates on a cross-functional team can share a perspective on an employee’s communication and collaboration skills with greater authority than the manager, especially if the manager wasn’t directly involved with a project. Some HR leaders believe pooling information from multiple sources enables managers to create development plans for their reports that are more useful and accurate. 

Improve leadership effectiveness

Many practitioners believe that the 360-degree feedback process can help managers and executives by providing insights into their leadership style, communication skills, and ability to inspire and motivate others. Employees, especially direct reports, might not share this feedback otherwise. However, with a 360 review, this feedback can help leaders improve their impact while contributing to leadership accountability.

This is actually a strength of the 360 reviews, and these reviews can be especially effective when conducted with small cohorts of employees, primarily leaders and executives. When a neutral party facilitates these reviews, company leadership can gain valuable feedback and perspectives they might not otherwise hear directly. In such cases, highly experienced executive coaches must be able to help leaders process the feedback and develop action plans to improve their performance.

Drawbacks of the 360 review process

360 reviews provide some benefits when managing performance and developing employees. But they can introduce some challenges into your performance review process, too. Here are three drawbacks of using 360 performance reviews. 

The process is time-consuming and costly

Conducting 360 performance reviews can be a time-consuming and costly endeavor. Each 360 review requires input from multiple sources to provide a well-rounded perspective on an employee’s performance. This means that managers, peers, and direct reports are all involved in the process, contributing their insights and evaluations. Coordinating and gathering these diverse inputs within a specific time frame can be challenging, as it requires synchronized efforts from various stakeholders across the organization.

Additionally, tailoring reviews for various job roles involves a nuanced understanding of specific competencies and skills relevant to each function. Collecting, parsing, and making sense of this highly specialized data requires even more time and resources. The customization of 360 reviews, while potentially beneficial for job-specific insights, amplifies the overall costs and time investments associated with the performance evaluation process.

The feedback collected is inaccurate or biased

360 performance reviews pose challenges that lead to inaccurate or biased feedback. The reviews’ complexity may prompt participants to rush through assessments due to a high volume of requests, jeopardizing thoughtful and accurate feedback for speed. This urgency heightens the risk of manipulation, prioritizing quick completion over providing a comprehensive reflection of an individual’s performance.

Moreover, “relying on feedback requested at a specific moment in time introduces inaccuracy, as participants often depend on emotional memory rather than continuous observation of day-to-day actions,” says organizational psychologist and Betterworks Program Strategy Director Caitlin Collins. “It’s really influenced a lot by whether you like somebody — or you don’t,” she continues.

This reliance on isolated instances undermines the ability of 360 reviews to offer a holistic and accurate representation of an employee’s capabilities by potentially overlooking ongoing development or improvements over time.

“Let’s look at providing more coaching throughout the year versus this one-time review.”

Caitlin Collins, program strategy director, betterworks

Despite efforts to reduce bias through multiple raters, inherent subjectivity persists as a challenge. Each rater’s personal biases, whether conscious or unconscious, can impact the accuracy and fairness of the feedback. Despite HR’s encouragement of diverse perspectives, the combination of time constraints, the point-in-time nature of feedback, and mandatory participation heightens the risk of biased evaluations.

3 barriers to implementing 360 reviews

There are several organizational factors that can make implementing 360 reviews a hassle. Here are some barriers to adoption you might encounter.

Low organizational trust

Some organizations suffer from low trust, including among employees. Without trust, your 360-degree feedback process could struggle. Employees might fear retaliation for providing honest feedback — especially to leaders and managers. But without forthright feedback, your 360 processes will be incomplete or biased. If employees don’t trust that their anonymity will be protected, they’re more likely to give generic or unrealistically positive feedback that they think their manager wants to hear. 

Poor communication

If employees don’t understand the purpose and process of a 360-degree feedback system, they may not provide meaningful or constructive feedback. They may shy away from leaving constructive feedback, for example, even if it’s honest, to avoid hurting someone’s feelings. Or they might not take the process seriously. To employees who don’t understand the benefits of 360 performance feedback, it can seem like a waste of time.

Insufficient follow-through

Collecting feedback is only the first step of the 360 process. The most value is delivered through follow-up and action planning. But, since the process is already a heavy lift, more often than not neither next step is taken. To be successful, HR needs to publicly commit to the purpose of 360 reviews and offer support for turning the recommendations into development plans. Otherwise, employees will view the process as ineffective and possibly even demotivating.

How to evolve the 360 performance review process

Successful 360 performance review processes are planned, well-communicated, and thoughtfully implemented. Follow these steps to set up a 360 review process that supports your talent strategy and drives business results.

Focus on feedback to streamline the process

Teach people across the organization to provide constructive, growth-oriented feedback in real-time — and in alignment with your organizational structure. “Is it project-based feedback? Is it output-based?” Caitlin says. “What type of feedback would work best within that organization?” Capturing feedback at the right time and place increases its effectiveness in developing employees.

Building flows for capturing feedback throughout the year also contributes to a lighter lift for participants in your 360 performance review process. “By the time you get to like the year-end review, or the 360, there’s already all this feedback that’s starting to gather,” Caitlin says. “That piece of the 360 can be removed and it becomes more like a 180, where it’s just the manager providing a year-end review and the employee doing a self-review.”

Apply reviews to drive a coaching culture

Encourage managers to engage in more frequent developmental conversations with their direct reports. “Let’s look at providing more coaching throughout the year versus this one-time review,” Caitlin says. This would both lighten the review burden and shift the emphasis to continuous performance management and improvement over time.

As 360-degree feedback comes in, managers can take that opportunity to point to that data to coach employees. Performance feedback provides an opportunity for managers to “really dig in, to understand context and perception, and use it almost as a guide to help employees improve in certain competencies,” Caitlin says. HR plays an important role in driving these outcomes, Caitlin says: “That involves a lot of manager training to be able to understand how to have those conversations.”

Revisit and revise evaluation forms

360 review processes are often time-consuming because the evaluation forms are cumbersome. Get into the habit of reviewing performance evaluation forms with the intent of trimming questions you don’t need. Practice good hygiene. “Sit down and evaluate: What do we use each metric for? Do we use this data for anything?” Caitlin says. “If we don’t, let’s get rid of it.”

This practice will help you create a lighter review process, and refocus it on measuring the right things at the right time to drive business impact.

Apply feedback to develop employees

The 360-degree review process tends to be a lot of work, but traditionally produces little to no benefit to employees. “One of the most frustrating things for people is that very rarely does anything ever come of these 360s,” Caitlin says. “There’s no benefit; there’s no output.”

If you’re going to collect 360-degree feedback, develop processes for using the data you collect to develop employees. Often, this starts with training managers. “You need someone who understands how to interpret and apply the results,” Caitlin says. “Create learning guides and assets and train managers on how to have conversations based on those results.” 

A lot of managers, says Caitlin, don’t know how to develop a good individual development plan (IDP) to help employees reach their goals and improve their performance. They require guidance themselves to know how to structure IDPs in a way that reflects what employees are interested in accomplishing and how they want to grow.

Drive progress through evolved review processes 

While 360 reviews have long been a staple of performance management, many organizations are now seeking to evolve their processes to focus more on continuous development and improvement. This evolution allows performance to be reviewed as an ongoing, dynamic process rather than a single annual event. 

With the right guidance and training, managers can better use tools like 360 reviews to understand strengths and growth areas, and to tailor development goals for each employee. Making these changes to evolve traditionally cumbersome processes sets your organization up for higher engagement and more meaningful performance conversations.

Want to learn more? Check out The Employee’s Ultimate Guide to Giving and Receiving Feedback.

Feedback matters. Learn how to give and receive it.