Many organizations would like to integrate 360 feedback into their performance management system. And why not? Appraisal and development systems are aligned. They should feed into each other. The 360 data should be applicable in many ways.

We believe the logic of this argument is sound and that multi-source feedback does have the potential to enhance employee engagement, promotion and retention. However, five conditions need to be in place if the technique is to be used successfully. To discover what they are, read on.

1. A Culture That Supports Open and Honest Feedback

Not surprisingly, 360 feedback works best in companies where giving and receiving feedback is the norm and is seen as a valuable source of information. In a system in which only the supervisor does the appraising, there is usually a lack of straight talk and a hesitancy by employees to give direct feedback, making it difficult to provide guidance or improve performance.

2. Clear, Agreed Upon Performance Measures and Behaviors

When 360 feedback is being used for development only, the organization may be able to settle for a list of behaviors that are generally supported, such as communication or team building. However, when the feedback is being used in performance ratings, the behaviors for which people are being held accountable must be clear, unambiguous, specific, observable and agreed to by all those who will be reviewed. Employees and supervisors alike must understand the standards by which they are being judged.

In addition, there should be equal focus on what was accomplished (key performance targets and metrics) and how it was accomplished (leadership style and behavior). A company must be willing to say to its people that it’s not enough to hit the numbers; we care how you got there and where you are going.

3. Systems that Minimize Irrational Responses and Identify Untrustworthy Ratings

For multi-source feedback to work, employees need to believe that the data is unbiased and objective. They need to have confidence in the intentions and credibility of the raters. The system should not reward individuals who abuse it, nor should it permit any single rater to carry too much weight.

4. Users who Support the System and Are Willing to Invest the Time Required

The addition of 360 feedback makes an already time intensive appraisal process even more demanding. It means more data to collect and more information to sift through. Employees and their supervisors must value the additional feedback or they will not be willing to provide the data or properly use the information.

5. A sound 360 Feedback Process

While the validity of the model and the way the data are collected are always important, two aspects of a sound 360 feedback procedure are particularly relevant when the data are used for appraisal purposes.

First, consider the validity and reliability of the process by which people will be measured and the confidentiality of the rater’s responses. If an organization is going to make critical human resource decisions based on the 360 feedback, it had better be certain that the instrument accurately measures what it claims to measure and that the things it does measure actually correlate with superior performance on the job.

Second, if an organization wants to ensure the feedback is honest and accurately reflects what is observed on the job, it must protect the anonymity of all raters. Without this assurance, raters are unlikely to be total candid in their evaluations.

Are You Ready for 360 Feedback in Your Organization?

If these conditions do not yet exist in your organization, you can work toward establishing them before you integrate 360 feedback into your appraisal system. With this sort of effort, as with so many HR initiatives, readiness is everything.