Three-hundred-and-sixty-degree feedback is a management tool and performance appraisal method that gives employees the opportunity to receive feedback from multiple sources. It is called 360-degree feedback because the feedback comes from subordinates, peers, supervisors, customers, suppliers and even self-evaluations. The feedback is only as valuable as the employee decides to make it; the feedback should highlight both strengths and weaknesses of the employee and give insight to aid in her professional development.
The first known use of a multiple-source feedback method was during World War II, by the German military. Although it lacked the flashy name, the concept was exactly the same: Soldiers were evaluated by peers, supervisors and subordinates to provide insight and recommendations on how to improve performance. The U.S. military used a similar performance appraisal concept during World War I, but the feedback lacked the appraisals of subordinates that the Germans incorporated; however, both tied the merit ratings directly to compensation and promotions.
The first documented use of surveys to accomplish 360-degree feedback was in the 1950s, by the Esso Research and Engineering Company. With the increased efficiency and financial success gained from the anonymous surveys, Esso Research and Engineering was bought out, and is now under the Exxon Mobil umbrella.
The concept of 360-degree feedback grew in popularity due to the invention of the typewriter; before typewriters and computers, feedback was handwritten and complete anonymity was impossible to achieve, undercutting the entire value of the method. Furthermore, many companies began adopting the idea of 360-degree feedback after multiple famous, multinational companies had great success after the implementation of this method; the most notable success story was General Electric CEO Jack Welch’s use of 360-degree feedback. Jack Welch increased shareholder value every year at GE by using 360-degree feedback, along with a six sigma quality program, as the merit ratings used to decide the firing of the bottom 10 percent of employees each year.
The popularity of 360-degree feedback has grown quickly in the new millennium; according to Fortune magazine, it is estimated that 90 percent of all Fortune 500 companies use some sort of multi-rater feedback.
Three-hundred-and-sixty-degree feedback is often referred to as multi-rater feedback or multi-source feedback. It cannot stand by itself as a successful performance management system; it is meant to be used as a positive addition and only an aspect of the overall system.