The feedback payback

by 05 Aug 2008

360-degree feedback is an established tool that assesses employee and managerial performance. Teresa Russell talks with two organisations that use different tools, in different ways, for different staff and with very different outcomes

Excuse the pun, but 360-degree feedback has been around for a long time. Susan Lyon, associate director human resources at Procter & Gamble Australia is currently here on assignment from the US and says: “I’ve been with the company for 19 years now and we have been using 360-degree feedback ever since I can remember. It’s just in our DNA. It’s how we operate – what we do,” she says.

Procter & Gamble is an FMCG global company with an impressive list of iconic brands, including Pantene, Olay, Duracell, Gillette, Oral-B, Pringles, Wella and Head & Shoulders.

It employs 450 people in Australia, mostly sales and marketing professionals. The Australian company doubled in size in 2006 after it acquired Gillette.

Victoria’s Country Fire Authority (CFA) introduced 360-degree feedback in 2002 for participants in its internal Diploma of Business program, providing feedback reports during the course’s leadership module. It then extended its use to its 31 executive officers in 2004, as one of three components to determine bonus payments.

“The decision to use 360s for our executives was made in consultation with our board’s remuneration subcommittee,” says Stuart Croom, manager, professional development. “Even so, linking 360s to bonus payments has added many complexities to the process. On the plus side, there is an incentive for all executives do it. On the down side, the development discussion might be delayed to align with timing of the performance management process.”

CFA’s 1240 brigades serve an urban and rural population of about 2.6 million and protect more than amillion dwellings, including all of Victoria’s growth corridors. Its workforce of 60,000 includes 1300 management and staff and nearly 59,000 volunteers.

Tools and process

Procter & Gamble uses a globally deployed 360- degree system that it calls “broad-based feedback”.Lyon says that the system – which is managed in-house and applied to every employ

yee from factory workers to senior management –prompts people (via email) to ask for annual feedback from four to six colleagues who are direct reports, peers, managers or internal customers.

The people provide the feedback by commenting [in narrative form] on the person’s performance, based on Procter & Gamble’s core competencies. The feedback then goes to the employee’s manager who identifies trends according to core competencies. Individual development plans for the next year are then decided.

“Both the employee and his or her manager have to answer the questions, ‘How can we leverage your strengths better and what can be done to develop your opportunities for improvement?’ It is all part of our work and development planning process,”explains Lyon.

The whole work and development planning process takes two and a half to three months at Procter & Gamble and is run at the beginning of the fiscal year.

The 360-degree feedback survey that was first used at CFA for Diploma of Business participants was based on an internal set of leadership capabilities developed at the time and updated recently. An external provider conducts the 360-degree feedback surveys and then individuals meet with their manager for a feedback session facilitated by the course consultant.

“The 360 is just the start of the process,” says Croom. “The real value comes when you discuss your results with your raters,” he says “You learn most when feedback is either a surprise to you or is something you disagree with. Facilitators are best placed to help explore these areas.”

Barbara Lewis, HR director at CFA, says that using 360s for executive reviews increases their value and the benefits. “Introducing 360s into our performance system has helped shift people’s mindsets around its importance for professional and personal development. Linking it to performance bonuses has reinforced the importance CFA places on its executives’behaviour as well as ongoing development,” she says.

CFA also runs its 360s at the beginning of the fiscal year, but before the bushfire season starts – the least busy time of the year. Croom says that the only problem with this approach is that many people also take annual leave during this time, which can present a few challenges to data collection.

Problems with previous providers

Croom is still gun-shy after some problems CFA had with its first provider. “We used a large consulting firm for the first few years – 360 was not their core business.

There were some technical issues with data one year causing reversed ratings,” he says. If an employee had been rated highly (5), it was reported as a low (1) score. “When you don’t get to see the confidential raw data or reports, you don’t know these errors have occurred until the phone starts ringing,” says Croom, who was surprised by how forgiving people were. CFA has since changed providers.

CFA appointed Full Circle Feedback after interviewing the consultant who would conduct all the feedback. “We interviewed them to assess their approach and experience. We felt there was a good organisational fit and thought they would work well with us,” says Croom, adding that the consultant was also able to manage their concerns about data accuracy.

Measuring effectiveness and ROI

At Procter & Gamble, Lyon says that because the feedback is such a qualitative process, it can’t be measured the same way other business initiatives are. “Long-term employees and new recruits like how much they learn and grow here, thanks to formalised training systems and ongoing formalised feedback. They stay at P&G because of the continual learning,” she says.

Staff turnover at Procter & Gamble in both Australia and the rest of the world is below the market rate and Lyon reports a very strong culture of promoting from within. “We do have a big enough company that people change roles every 18 months to three years, so by the next year when you do your broad -based feedback, you have different people working with you,” she says.

“People appreciate the robustness of the feedback they get, because 360 helps prevent bias. They feel they get well-rounded feedback because the process has been going for such a long time,”says Lyon.

At CFA, Croom believes the benefit of 360 is highest the first few times it is performed. “It can go stale for those people who don’t tend to do a lot with the results,” he says. As manager of professional development, Croom has noted an increased interest in development programs once people stop and reflect on their feedback.

“The other value of the 360 for executives who have the results linked to their bonus is that it is a very open and transparent process. There’s no smoke and mirrors about bonus decisions,” he adds.

360 tips

Croom says it is important to manage the number of people that employees have to rate and to try to keep it below ten, as well as ensuring executives have the time to conduct all the feedback sessions for their direct reports.

“If you are going to link it to pay, consider the extra complexities it might create,” he says. Croom reports that aggregated results for team feedback sessions were well received and he would recommend them to other organisations.

“To make it work, you have to have an organisation where it is OK to give feedback up, down and sideways,” says Lyon. “It will not be successful if your culture is not OK with that.

“Make sure your managers are open to feedback. They need to ask people ‘What could I be doing better for you?’ rather than, ‘I’m doing OK, aren’t I?’” she concludes.

Tips for participants when selecting people to give feedback

• Choose people who interact with you frequently and are in a position to give relevant and meaningful feedback

• Include enough people to ensure richness in the feedback

• Aim to include a balance of people who will be candid and constructive

• Where possible, choose all the staff who report to you

Tips for raters when asked to give feedback

• Be honest and constructive

• Be objective and fair (reflect on examples)

• Avoid the “recency” effect (giving feedback based on very recent evidence only or on a single recent event)

• Avoid the “halo” effect (answering all questions similarly and based on one trait)

• Be balanced – everyone has both strengths and challenges

• Don’t discuss your ratings and feedback with anyone

Source: Full Circle Feedback