360 Evaluations and Performance Evaluation

In this article, I want to share the main characteristics and benefits of both 360-degree evaluations and performance evaluations, to then present a real case of an organization that used both evaluations to measure its employees, its conclusions and our proposal to combine both processes into a practical model for companies.

LET'S START WITH PERFORMANCE EVALUATIONS

In performance evaluation we measure the level of compliance with certain objectives set by the organization, or by their boss, for the employee over a period of time, generally once a year. In this type of evaluation we focus on measuring the WHAT (what the employee achieved in a period of time). Here is an example:

Employee Position: Sales Manager.

Their goals for the year: $100,000 in product sales, maintain at least 95% of current customers and develop 10 new customers. We assign a weight of 50% to the first objective and 25% to the other 2.

Compliance: We can say that this manager met 100% of the first two goals and 50% of new customer development.

Result: When measuring compliance with its respective weight, we have a result of 87.50%.

With the result of the performance evaluation, his boss will be able to define if this person met expectations and whether, therefore, he could have a salary increase, a bonus or a promotion.

NOW LET'S TALK ABOUT 360-DEGREE EVALUATIONS

Currently, most large organizations in the United States use 360-degree evaluations as an effective method to evaluate and develop their leaders, but also to identify their high potentials and define their succession and career plans. We could say that today, 360 is the best evaluation tool for development processes, because it allows me to see a before and after.

In a 360-degree evaluation, the leader is evaluated by his boss, his peers, his direct reports and occasionally by his internal clients, as well as a self-evaluation that allows him to compare his own perspective versus others. The evaluation is generally done with organizational competencies and those required for his position, each of them measured according to observable behaviors that evaluators rate, generally on a Likert scale of 1 to 5.

While in performance evaluations we measure WHAT the employee achieved from his goals, in 360-degree evaluations we evaluate HOW he achieved these goals.

COMPARISON BETWEEN PERFORMANCE AND 360

To better structure this analysis, let us look at the similarities and differences between these two types of evaluation:

As is generally the case, topics that involve people are not black and white, good or bad... or one or the other. In this case, understanding both approaches allows us to see the benefits of each and how we can use them as complementary processes.

Now let's look at a real example of a very well-known organization that found itself in a dilemma associated with performance evaluation and 360-degree evaluations. This will allow us to compare the two methodologies, draw some conclusions and develop an evaluation proposal that brings together the advantages of all.

EVALUATING THE WHAT AND THE HOW AT GENERAL MILLS

At General Mills they were interested in reviewing their performance evaluation process that they had used for about 10 years, they felt that the methodology they used did not allow them to clearly see performance in all its dimensions. They understood that they were evaluating the WHAT, but not the HOW.

A renowned global consulting firm proposed they do a 360-degree evaluation as a complement to the performance evaluation (in order to evaluate the HOW), to then compare the two results and see how much each process contributed and if there was any correlation between the two measurements. So they decided to do both measurements for 3 years, on 140 employees and with an interval of 4 months between each evaluation.

Main findings:

1. The correlation between the two evaluations was very low.

2. They found that people who were in the highest 10th percentile of 360 evaluations were among the 50% of people who scored highest in performance. And the lowest 10% in 360 evaluations was in the lowest 50% of performance. That is, very good or very low results in 360 predicted good or bad results in performance.

3. At the end of the study only 105 people remained. Analyzing the 35 people who left, they found a common pattern. These people had had very good results in performance with low results in 360 degrees. That is, they achieved the WHAT regardless of the HOW. They realized that only with the WHAT it was not sustainable over time and in the end they left the organization.

Important conclusions:

1. The two measurements have a different approach, which complements each other.

2. 360 evaluations are better to predict a person's success.

3. When someone focuses on achieving results (on the WHAT) but neglects HOW they do it, it is not sustainable over time.

Finally, the organization decided to continue with the 2 evaluations as part of its process and as a complement.

Our proposal for consultants working on performance issues and 360-degree evaluations: measure both things in the same process. In this way you can show the client a more complete profile of their employees and, at the same time, a tool that helps them to make decisions in career and succession plans and create training and development programs for their leaders and high potentials. This is the example of how we present the results:

Performance Evaluation (WHAT)

Competency Evaluation (HOW)

Presentation of the performance and competency matrix.