If a single e-mail can send the pulse racing, it’s the one from human resources announcing that it’s time for another round of 360-degree feedback. In and of itself, this type of appraisal isn’t bad. Indeed, many business people would argue that over the past decade, it has revolutionized performance management for the better.
But one aspect of 360-degree feedback consistently stymies executives: peer appraisal. More times than not, it exacerbates bureaucracy, heightens political tensions, and consumes enormous numbers of hours. No wonder so many executives wonder if peer appraisal is worth the effort.
For the past ten years, my research has focused on the theory behind, and practice of, 360-degree feedback. Most recently, I studied its implementation at 17 companies varying in size-from startups of a few dozen people to Fortune 500 firms-and industry-from high-tech manufacturing to professional services firms.
I was looking for answers to several questions. Under what circumstances does peer appraisal improve performance? Why does peer appraisal work well in some cases and fail miserably in others? And finally, how can executives fashion peer appraisal programs to be less anxiety provoking and more productive for the organization?
My research produced a discomforting conclusion: peer appraisal is difficult because it has to be. Four inescapable paradoxes are embedded in the process:
- The Paradox of Roles: You cannot be both a peer and a judge.
- The Paradox of Group Performance: Focusing on individuals puts the entire group at risk.
- The Measurement Paradox: The easier feedback is to gather, the harder it is to apply.
- The Paradox of Rewards: When peer appraisal counts the most, it helps the least.
Performance management isn’t easy under any circumstances. But certain clarity exists in the traditional form of performance review, when a boss evaluates a subordinate. The novelty and ambiguity of peer appraisal, on the other hand, give rise to its paradoxes. Fortunately, managers can, with some forward thinking and a deeper understanding of their dynamics, ease the discomfort. Let’s consider each paradox in detail.
The Paradox of Roles
Peer appraisal begins with a simple premise: the people best suited to judge the performance of others are those who work most closely with them. In flatter organizations with looser hierarchies, bosses may no longer have all the information they need to appraise subordinates. But it doesn’t necessarily follow that peers will eagerly step into the breach.
Some people feared that providing negative feedback would damage relationships and ultimately hurt their own careers and those of their friends and colleagues. Others resisted because they preferred to give feedback informally rather than making it a matter of record.
When the Paradox of Roles is at play, people are torn between being supportive colleagues or hard-nosed judges.
When the Paradox of Roles is at play, people are torn between being supportive colleagues or hard-nosed judges. Their natural inclination is to offer counsel and encouragement, and yet they’ve been asked to pass judgment on a colleague’s performance. Unless this conflict is addressed early on, peer appraisal will go nowhere fast-and cause stress and resentment along the way.
The Paradox of Group Performance
Most peer appraisal programs can’t reveal what makes a great group tick. The members considered themselves a highly independent group and believed they were already fully aware of their performance, both individually and in project teams.
To their way of thinking, they had already created a collegian and cohesive environment that delivered extraordinary results for the company, so why couldn’t the bank just leave them alone? The group’s finely honed balance of status and responsibilities was threatened by the prospect of individual peer appraisals.
Although they halfheartedly participated in one round of 360-degree feedback, over time they simply stopped completing the evaluation forms, thus registering their contempt for (and possibly their fear of) the program.
Low-performing groups also often greet peer appraisal enthusiastically. At a professional services firm, I met with the partners in charge of a practice that had suffered a long, slow decline in profitability. They saw peer appraisal as a veiled attempt by the rest of the organization to assess blame.
As a form of passive protest, this group provided few comments when evaluating one another, and when pressed to discuss results, they resisted. So great was the threat implied by peer appraisal that eventually they refused outright to discuss any feedback they had received, and the process shut down altogether.
Rather than cultivating a sense of shared ownership and responsibility, the process can breed deep cynicism, suspicion, and an “us-against-them” mentality-the exact opposite of the values most companies espouse.
The Measurement Paradox
It seems logical that simple, objective, straightforward rating systems should generate the most useful appraisals. Number or letter grades make it easier for managers to gather, aggregate, and compare ratings across individuals and groups, and they often just seem like the right way to proceed (after all, most of us have been getting report cards since kindergarten).
But ratings by themselves don’t yield the detailed, qualitative comments and insights that can help a colleague improve performance. In fact, the simpler the measures and the fewer dimensions on which an individual is measured, the less useful the evaluation.
One media company I observed was especially proud of its performance measurement program, which involved elaborate rounds of evaluations by peers and bosses.
It’s comforting to know I’m an A-plus, one person reported, but where do I go from here?
Simple ratings are not always bad, but most of the time they are not enough. Of course, qualitative feedback is more difficult and time-consuming to generate and is not as easily compared and aggregated.
The Paradox of Rewards
Most people are keenly attuned to peer appraisal when it affects salary reviews and promotions. In the short term, employees may take steps to improve performance (a perpetual latecomer may start showing up on time).
But most people focus virtually all their attention on reward outcomes (“Am I going to get a raise or not?”), ignoring the more constructive feedback that peer appraisal generates.
Ironically, it is precisely this overlooked feedback that could help to improve performance. In these instances, peer appraisal poses a threat to feelings of self-worth-not to mention net worth.
Is the solution, then, to take rewards out of the equation? My research suggests that the answer is not nearly so straightforward. Consider this contradiction: in many organizations I surveyed, raters expressed reservations about providing critical feedback when they knew it would directly influence another’s salary. One participant put it, “You could destroy somebody and not even know it.
With the Paradox of Rewards, managers find themselves in a catch-22. When rewards are on the line, peer appraisal may generate a lot of activity but usually delivers only short-term improvements in performance from feedback that may be conservative or incomplete.
Managing Through the Paradoxes
Indeed, one of the most significant findings from my research is the pivotal role that managers play in successful peer appraisal. My field notebooks are full of comments from participants about their managers-some commending bosses for active participation and others condemning behavior that undermined the process.
The best managers, on the other hand, act as constructive critics, role models, and willing participants. (See the sidebar “Managing the ‘Peer’ in Peer Appraisal.”)
Managing the “Peer” in Peer Appraisal
Most managers are still not accustomed to giving in-depth, constructive feedback. But by learning how to give feedback.
The nature of a paradox isn’t easily changed, but the way it is viewed can be.
Purpose.
In most cases, the purpose of peer appraisal is to provide timely and useful feedback to help individuals improve their performance. Detailed, qualitative feedback from peers accompanied by coaching and supportive counseling from a manager are essential.
If, however, the purpose of peer appraisal is simply to check that things are going smoothly and to head off major conflicts, a quick and dirty evaluation using only a few numbers will suffice.
This practice worked because its purpose was explicit-to catch conflicts before they turned into full-blown crises-and because the CEO’s visibility actively mitigated the effects of the Measurement Paradox.
Occasionally, peer appraisal is used to improve ties between groups. In these cases, managers should focus the appraisal effort on the entire group rather than on particular members.
At first, the feedback was terse and critical, but when each group saw that the company was using the feedback not to reward or punish individuals but to highlight the problems between the two groups, the feedback became more extensive and constructive. Eventually, peer evaluation became a regular channel of communication to identify and resolve conflicts between these groups.
I have also seen peer appraisal programs introduced as part of larger empowerment programs aimed at distributing authority and responsibility more broadly throughout an organization.
In one manufacturing company I studied, a group of factory workers designed its own peer evaluation process. Instead of seeing conflict in the new roles, group members saw peer appraisal as a continuation of the other responsibilities they had assumed. The Paradox of Roles was barely evident.
Scope.
In the name of inclusion, many organizations feel compelled to roll out these programs everywhere.
The process resulted in widely celebrated improvements and better relations between the front-office groups, so much so that other groups in the company wanted to join in. But when the firm introduced the same program to the additional thousand-plus employees, the program collapsed under its own weight.
By trying to provide substantial, but in many cases unnecessary, feedback to all, the company compromised its ability to function.
In choosing rating criteria for peer appraisal, it’s also important to remember that all jobs are not the same.
Most organizations are notoriously bad at this, often touting teamwork and group performance while assiduously rewarding only individual outcomes.
Companies that have success with these programs tend to be open to learning and willing to experiment. They are led by executives who are direct about the expected benefits as well as the challenges and who actively demonstrate support for the process.
By laying themselves open to praise and criticism from all directions and inviting others to do the same, they guide their organizations to new capacities for continuous improvement.
