A Culture That Supports Open, Honest Feedback. Not surprisingly, 360-degree feedback works best in companies in which the environment is participatory rather than authoritarian—where giving and receiving feedback are the norm and are seen as valuable sources of information. If the current system of supervisor-only feedback is not working due to a lack of straight talk and a hesitancy to give direct feedback, it is unlikely that adding additional sources of data will make it better.

Systems That Minimize Irrational Responses and Have Built-In Ways to Identify People Whose Ratings Are Untrustworthy. For multi-source feedback to work, employees must believe that the feedback is unbiased and objective. They must have confidence in the intentions and credibility of the raters. In order to reach this point, the system should not reward individuals who abuse it, nor should it permit any single rater to carry too much weight.

Users Who Support the System and Are Willing to Invest the Time Required to Make It Work. The addition of 360-degree feedback makes an already time-intensive appraisal process even more demanding for participants. With more data to collect and more information to sift through, employees must value the additional information, or they will not be willing to provide the data or properly use the available data. Herman Simon, a former plant manager at a Quaker pet food plant that had been using multi-source feedback as part of the appraisal process, describes a situation that illustrates the importance of this point. “In the early days, we put a fair amount of work into the appraisal process. When we started, people were honest and reasonably strict. After about ten years, it began to fall apart. Soon everybody was top-rated; everybody got good grades, unless somebody really stepped out of bounds.”¹⁵

Clear and Agreed-On Performance Measures and Behaviors. When 360-degree feedback is being used for development only, the organization may be able to make do with a list of behaviors and skills that have reasonable face validity and general support. However, the stakes are much higher when 360-degree feedback is being used to determine pay and career paths. The results and behaviors for which people will be held accountable must be clear, unambiguous, specific, observable, and agreed to by those who will be measured. In addition, there should be equal focus on what (financial performance, new products, decreasing costs) was accomplished and how (leadership style, ethics, teamwork) it was accomplished. To build a culture of success, a company must be willing to say to its employees that it is not enough to hit the number—we care how you get there.

A Sound 360-Degree Feedback Process. The requirements and procedures of a highly credible 360-degree feedback process have been discussed at length in previous chapters, for example, the validity of the model and the way the data are collected and presented. Although all these aspects are relevant, two aspects of sound 360-degree feedback procedure are particularly important for use with appraisal and compensation systems—the validity and reliability of the practices on which people will be measured and the confidentiality of the raters’ responses. If an organization is going to make pay and promotion decisions based on the feedback from a 360-degree instrument, it had better be quite certain that the instrument accurately and reliably measures what it claims to measure. And if an organization wants to ensure that the feedback is honest and accurately reflects what is observed on the job, it must protect the anonymity of all raters. Without this assurance, it is difficult to expect raters to be totally candid in their evaluations.