Exploring the Future of 360-Degree Feedback: Could Personal Development and Talent Management Live Together?

The Future of 360-Degree Feedback

We estimate that of the organizations using 360-degree feedback, 95% of them use it solely for individual development. We submit that they are not gaining the full value that a 360-degree assessment could provide. Indeed, they limit its contribution to roughly one-half of its potential. From the organization and individual perspectives, the future could be much better. This article envisions a dramatically improved future for all leadership development and specifically for how we might use 360-degree feedback data.

A few organizations, such as PepsiCo, have pioneered its use to include what we will label talent management. This includes decisions about retention, promotion, selection for specific assignments, or a company-directed development process. A thoughtfully controlled, orchestrated development initiative at the corporate level contrasts the more common individually and personally managed development approach.

Other organizations, such as General Mills and Celgene (now part of Bristol Myers Squibb), made limited data available to the participant’s immediate manager. To involve the managers more, one of these organizations conveyed the participant’s three highest and lowest competencies to the immediate manager but provided no statistical data. Nor did they pass on the written comments. The troubling fact is that the people in the organization who could benefit the most by having better data are upper management and the HR function. Yet, they are the ones kept in the dark. After all, the peers and direct reports of the participants are generally aware of their leader’s strengths and shortcomings. It is upper management and HR who would most benefit from the data.

We have research to suggest that 360-degree feedback data collected with a psychometrically valid and well-constructed assessment is predictive of who will ultimately be the most effective leaders. It is more powerful than any psychometric self-assessment or traditional interviewing process. The organization has gone to the expense, trouble, and time to collect valuable data but gained only part of its potential value.

We have published data showing that those selected for company high-potential programs are occasionally in the lowest quartile of all leaders in terms of their 360-degree feedback scores and frequently in the bottom half of those assessed. That is obviously in sharp contrast to the assumption that the organization identifies the top 5%.

Why does that happen? A senior manager recommends so-called “hi-pos,” but that leader doesn’t have the benefit of any objective multi-rater or 360-degree feedback data. Further, we have research data confirming that when an organization provides even partial feedback to managers, the frequency of misassignment to the hi-po program plunges dramatically.

The Even Larger Upside to Changing Today’s Practices to Benefit Talent Management:

One of the reasons there is a lack of dramatic improvement from leadership development investments is this data is not more accessible to others. Many have lamented that the gains from leadership development initiatives, while generally positive, are modest compared to what they could and should be. But the truth is, there are seldom any “teeth” in the process. Now, only individual participants have any real visibility into their development. There are no specific monitoring mechanisms. As a result, the data is swept under the rug, lest anyone is held accountable to make the obvious changes it calls for. This can and must change.

Why Has 360-Data Not Been Shared?

Concerns have been expressed about the expanded use of 360-degree data. These arguments have been persuasive.

Roughly 80 years ago, when 360-degree feedback was first introduced, this limited sharing of data was extremely helpful in gaining acceptance for the basic idea. But the world is moving on. Are those reasons still valid? We think not.

Three significant concerns about expanding the visibility of 360-degree feedback and how it is used have been:

1. Watered down responses. The concern is that sharing the data with the manager and/or the company HR organization would result in candid data being toned down by respondents. Responses would become guarded and would lack candor.
2. Over-reliance. Managers receiving the data about direct reports would be overly influenced by this information. This data would override personal judgment.
3. Cherry-picking raters. A broader usage could influence the selection of raters. Many organizations currently encourage participants to participate in selecting raters. That generates greater confidence in the validity of the feedback they receive. A broader, more impactful usage of the data might cause participants only to select those with favorable perceptions versus those with constructive suggestions for improvement.

Navigating the Upward Path

There are several steps needed for organizations to take this upward path.

1. Determining organizational readiness. This would not be a good option for all organizations. Its success depends on a high level of trust permeating the organization. It requires management and HR sophistication regarding the sensitive issues of collecting and protecting personal data and how it is used. It also requires courage and an egalitarian approach to cross-sharing data. Organizations must abandon old hierarchical notions that “rank has its privilege.” Instead, everyone plays by the same rules.
2. Clearly differentiating the new approach. When introducing an expanded usage for 360-degree feedback data, respondents in the new 360-degree feedback and talent development process need to be absolutely clear about how it differs from the past. They need to understand that the new process will share statistical data with immediate managers and appropriate HR people. Organizations should give the process a new label—”360-degree Feedback for Talent Management and Personal Development” or any title that clearly distinguishes it from its predecessor.
3. Role modeling. When Dell Computer conducted an internal 360-degree feedback process, the senior executives received some less than flattering feedback. When Michael Dell and then-president Kevin Rollins reviewed the data, they had the same choice that all senior executives have. They could keep the data to themselves (which 99% of executives do) or publish the results on the company intranet. They chose the latter. Consider all the signals that a simple act sent:

• • No one is perfect.
  • We can all get better.
  • Own up to what needs fixing.
  • We should all play by the same rules.

4. Forcing strategies. Management sets policies and enforces their implementation. That ranges from abiding by safety protocols or handling travel expenses. Policies change thinking and behavior. Civil Rights legislation strongly influenced race relations in America. New policy Title IX profoundly impacted gender equality in women’s sports. Putting teeth into leadership development requires new policy.

We propose one such policy would be to share 360-degree feedback data in both directions in the organization. As a condition for the manager to receive information about a direct report’s 360-degree feedback results, they must share their own 360-degree feedback results with their direct reports. This creates more democratic transparency. It would encourage behavior change at all levels in the organization and do away with the traditional practice of treating people at higher levels differently.

We have, on several occasions, seen senior executives toss their 360-feedback report on top of a table and openly discuss what they had learned. There is an amazing impact on a team when the senior person shares their data with direct reports. We have seen no downsides.

We foresee that a great deal more behavior change would follow such transparency. That is part of the future for 360-degree feedback.

Addressing the Original Concerns:

1. Watered down responses. In comparing data from organizations using the approach of sharing data with immediate managers with those who do not, we see no evidence of inflated ratings.
2. Over-reliance. The solution to managers becoming overly reliant on this data suggests specific development with the managers who get this information for the first time. Messages from senior executives and HR staff can encourage managers not to substitute this information for their own judgment, but to use it as a valuable supplement in their decision-making process.
3. Cherry-picking raters. There are advantages to having participants involved in the selection of their raters. When participants help select raters, there is far less push-back on the results of their assessments.

We currently recommend that participants include all of their direct reports. The manager of the participant is nearly always a given. The place where there might be some concern is the selection of peers. Our experience is that most participants will have, on average, 14 raters. Participants could be reminded that the value of the feedback they will receive will be greatly enhanced by observations coming from raving fans and those who might have constructive suggestions. We doubt that overall results will be seriously altered.

Conclusions for the Future of 360-Degree Feedback:

Leadership development today is not as effective as it could be. We envision a dramatically different future. Organizations will be gaining much more from their investment in leadership development. Individuals will make consistent, surefooted progress in developing their leadership skills, and they will have useful metrics to measure it.

Yet, we are realists. What we have described will not be ideal for every organization. It is not for those wishing to hold onto the past. It requires a sophisticated HR organization prepared to deal with some added complexity. PepsiCo describes several major evolutions in past decades as they implemented this more expansive use of 360-degree feedback for their organization.

Like any dramatic change from the past, it will also take time for an organization to adjust. These are all decisions that need to be weighed. For many organizations, however, this is a practical aspiration. We hope many will join us on that journey.

-Jack Zenger & Joe Folkman