Employees usually want to receive feedback on their performance for certain reasons such as for improving their performance. DeNisi & Kluger (2000) herald that it is widely accepted that feedback is an essential component of an effective performance improvement strategy as individuals learn on the basis of receiving feedback on their performance. Moreover, performance feedback increases job satisfaction and motivation among the employees (Hackman & Oldham, 1980). 360 degree feedback is one of the tools used for providing feedback to employees. Commentators state that it is not an entirely new process and it has been in organizations in one form or the other from a long time. However, 360 degree feedback became popular only in the 1980s and was mostly used as an executive development tool at that time (Coates, 1998). There are some reasons that organizations have switched from the traditional appraisal system to the 360 degree feedback mechanism. Firstly, the focus has shifted from management skills to leadership skills (Crystal, 1994). Moreover, due to changes in the business environment such as globalization and increase in competition, employees who felt satisfied and secure in their jobs now find themselves responsible for their career planning (Nowack, 1993). Furthermore, the transformation of organizations from having a hierarchical structure to inculcation of organizational culture has also led to the adoption of 360 degree feedback for performance management (Lepsinger and Lucia, 1998). This paper presents a review of the literature concerning 360 degree feedback in order to develop an insight into the value of 360 degree feedback for an organization. The primary focus will be on the identification of the potential benefits and pitfalls of 360 degree feedback process and ways to avoid those pitfalls to implement 360 degree feedback process effectively. Defining 360 Degree Feedback Process
There are numerous authors who propose the definition of 360 degree feedback process. Tornow (1993) observes that in a 360 degree feedback process, feedback about a target individual is solicited using a standardized instrument from significant others. Jones and Bearley (1996) refer to 360 degree feedback as the practice of gathering and processing feedback from a number of individuals and feeding back the results to the recipients. Lepsinger and Lucia (1997) indicate that the 360 degree feedback process involves collecting perceptions about a person’s behaviour from a number of rating sources. Though different commentators define the process in a different manner, they provide a common idea about the meaning of the process. This idea can be summarized as 360 degree feedback process also known as multi-rater feedback, multisource feedback, or multisource assessment which involves feedback from a number of sources including superiors, sub-ordinates and peers. It also includes self-assessment and sometimes feedback from customers and suppliers. It is an alternative to the single source assessments such as the upward appraisals which include feedback only from the sub-ordinates and the downward appraisals which include feedback only from the superiors. It is used mainly for training and developmental purposes as the research suggests that it should not be used for administrative purposes but some organizations use it for making administrative decisions.
Benefits of 360 Degree Feedback Process
There is extensive literature on 360 degree feedback and much of it accentuates the benefits of the 360 degree feedback process. Many commentators just propose the advantages of the process while others have conducted some empirical study to support their opinion. One of the most cited benefits is that 360 degree feedback provides individuals with a broader and more accurate view of their performance by offering feedback from varied...