Arsenal had grown rapidly since its inception, and the firm wanted to ensure it would be able to sustain that growth while staying true to the core principals that made it successful in the first place. In addition, Arsenal’s approach to enhancing the performance of its portfolio companies included helping them build strong management teams. Arsenal understood that, in addition to the support the firm provided in the areas of strategy, planning, operations, and execution, a strong management team was a key factor in a portfolio company’s performance and had been proven to add to the value potential buyers saw in the portfolio company.

In response to these two challenges, Joelle Marquis, the principal responsible for human resource management at Arsenal, introduced a 360-degree feedback process. Joelle decided that a 360 survey would be the best way to determine whether, as they grew, they were drifting away from the behaviors Arsenal felt were essential to its success. It would answer the questions, “Are we accomplishing things in a way that is consistent with our values?”

Arsenal developed a set of competencies that outlined the behaviors that were consistent with the firm’s culture and contributed to the firm’s performance. They used a self-administered online 360 survey tool to distribute the questionnaires and prepare individual reports for each managing partner and principal. Each person gets a copy of his or her report and meets with Joelle and the senior partners to discuss the results. As an output of these meetings each person identifies areas to work on and integrates them into his or her goals for the year.

“The key to the process’ success is the follow-up,” says Joelle. “At the monthly operating committee meeting time is set aside for each person to review goals and give a progress report. Each member of the operating committee is also held accountable for following up on each of his or her direct reports’ 360 results. In addition, twice a year the senior managers go over everyone’s performance including progress toward the goals that came out of the 360 process.”

The same process is mandated for the CEO’s and leadership teams of each portfolio company. There is little resistance because the partners and principles were able to build trust and demonstrate their positive intent by doing it themselves.

Joelle and the rest of Arsenal’s principals believe the 360 process has been a great success. “The firm has been able to clarify its expectations for leader behavior and develop a shared picture of ‘what good looks like’ as well as measure progress toward agreed-upon goals,” says Joelle. “All this helps ensure people do not lose sight of the firm’s core principles as they pursue aggressive growth targets.”