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
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