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A 360 review should involve a variety of people who regularly work with the employee in question, but don't forget to have the employee fill out a self-evaluation. — Getty Images/SDI Productions

Performance reviews are a valuable part of the employee experience. They offer an opportunity to help your team members further their professional development, provide two-way feedback, and set new performance goals. When done correctly, performance reviews can boost employee engagement and motivation.

There are many tools and methodologies to choose from when conducting performance reviews. A 360 review is one that’s comprehensive, soliciting feedback from many different stakeholders within the company. Here’s how a 360 performance review works, and why you might want to try this approach at your business.

What is a 360 performance review?

Also called “multi-directional feedback,” 360 feedback refers to a performance review that asks for constructive feedback about an employee’s work performance from several people, including the employee’s manager, peers, and customers or clients, as well as a self-appraisal. The goal is to get a holistic understanding of the employee’s impact on the overall organization.

“The goal of the feedback is to provide a balanced view to an employee of how others view their work contribution and performance in areas such as leadership, teamwork, interpersonal communication and interaction, management, contribution, work habits, accountability, and vision, depending on the employee's job,” wrote The Balance.

Benefits of a 360 performance review

A 360 performance review offers benefits for both the receiving employee and the organization as a whole. For the employee, a 360 review can provide insight into their performance from all angles. This style of feedback is valuable when someone may want to shift to a different role or take on responsibilities outside of their job description.

For the organization, a 360 review process can help uncover organizational hiring and development needs. This process will illuminate areas in which more support is needed or there’s a skill set missing.

“For example, you may discover a policy, procedure or approach that needs adjustment to help employees work more successfully, or receive insight on training needs, resulting in better planning for cross-training and cross-functional responsibilities,” wrote Indeed.

The goal is to get a holistic understanding of the employee’s impact on the overall organization.

The employee and your company also benefit from improved individual accountability and trust. Employees who know they will be evaluated by their peers have more incentive to work together responsibly.

The 360 performance review can be one of the better ways to provide feedback, as long as you follow a few best practices to make the most of this process.

[Read more: Employee Reviews: 6 Steps for Success]

Who should participate in a 360 review?

Ideally, you’ll want reviewers who have worked with the employee for six months or more. You should also choose people who work with the employee consistently. Look for people in a diversity of roles and relationships with the team member to get information on all aspects of their job performance. For instance, a client will be better positioned to describe an employee’s customer service than a manager.

How to conduct a 360 performance review

This style of review takes careful management to avoid potential pitfalls — anxiety, low morale, and stress are just a few challenges of 360 reviews. To ease the process for reviewers and recipients alike, consider the following best practices:

  • Structure your reviews. Qualtrics recommends creating a set of competencies that reviewers use to provide feedback. These competencies should be shared with your employees at the beginning of the review period so they know how they’ll be evaluated. Then, make sure these competencies are scored on a frequency scale (e.g., rarely versus all the time) to create action-oriented feedback.
  • Consider making reviews anonymous. Especially when asking for peer reviews, it can be helpful to make feedback anonymous. Reviewers may feel more comfortable sharing constructive feedback. The downside is that this can generate some distrust among your team.
  • Keep it constructive. You may need to provide some training to make sure the 360 review process is constructive and helpful. Worst case, the feedback is vague and unstructured. The goal of this process is to help everyone identify ways to work better together. Make sure your team is focused on what it needs from everyone to continue reaching its goals.

Make sure that the employee reviewed takes the time to fill out their own self-assessment. This reflective period can help them determine where they might need support. And it puts them in a growth mindset for reviewing the feedback from others in the organization.

[Read more: 5 Alternatives to Employee Reviews]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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