What if you run your business in such a way that everyone was accountable to everyone else, including top management? Accountability can be measured in many ways, but one that most companies use is performance appraisal, and there is no better approach to it than the 360 degree appraisal.
What it simply means is that when it comes to appraisal time, everyone in the organizational chart is able to appraise everyone with whom they work, including those who supervise them – its all round and thus the term 360 degrees.
What it encourages is a workplace where employees treat their colleagues as customers – you want your customer to always say the best things about you so you do the best for them.
More importantly, and especially for shareholder satisfaction, 360 degree appraisal means that top managers get appraised by those who work for them, and this means that they are careful to do the best in terms of management that they can.
Small companies should also encourage it as much as possible. In a small company, it’s critical to work as a team because that’s the only way to grow. Without all employees appraising each other, you may find one who is a bottleneck and who will never be found out simply because they are the boss.
Too many managers emphasise performance – after all, it’s what they are judged on. But studies have shown that the better people relations there are among employees, the better the employees are likely to perform. Richard Branson, one of the most brilliant and successful entrepreneurs in the world today says that his employees are his most valued customers; he knows that if they are happy, the rest will come naturally. They will work better and there will be a better bottom line at the end of the day. And to run this theme through all his businesses, he uses 360 degree appraisal.
It works for people on the same level of the organizational chart as well. There may be an employee who is not delivered simply because his colleague does not deliver information to him on time or does not do what he is supposed to do. When you use the 360 degree appraisal to get employees appraising each other, these kinds of details will emerge.
It’s also a great way to end intimidation and encourage co-operation; knowing that your appraisal will be done by so many people makes you want to work better with them, foster better relationships so that your appraisal looks good. Better relations will naturally lead to better performance.
A lot of companies, especially in the US, have top line managers that in a sense appraise themselves. Their performance is always affected, not by themselves but by the prevailing market or the competitors (or so they will claim). That’s how companies come crashing down and the man who held the helm walks home with a pocket lined with cash. What if there was a solid system in place to make sure that the top man is regularly appraised by those directly below him, and maybe even 2 or 3 ranks below that? It would definitely reveal disasters before they happen.
That’s what 360 degree appraisal is all about. You will get to know who the right fit is, who gets along well in the team and who frustrates the other employees. This single person can affect the bottom line significantly, especially if they are in top management. And depending on your company policy, you can either help them get better or let them go. Either way, you will have known where it’s broke so you can fix it.