(360) Performance Review Best Practices That Help You Turn Reviews into Revenue

Are you ready to revolutionize your performance review process and drive organizational success? Then, look no further than a well-executed 360 performance review.

You've probably already heard about the importance of regular performance reviews. 

But how do you organize them? 

What best practices will help you squeeze the productivity juice of the performance review lemons? 

Wrongly used, performance reviews are costly and can negatively impact teams by creating tension and conflict. Rightly used, they are a direct determinant of productivity and output. 

Unlock the full potential of your business with these 360 performance review best practices that turn feedback into a powerful tool for driving revenue and success.

Note: While other feedback and evaluation systems exist, we recommend and focus on 360 reviews. 

🤯 7 Challenges of running meaningful and efficient performance reviews

The most obvious challenge with performance reviews is that they are subjective. In 360 performance reviews, where everyone in a team evaluates everyone else, personal preference can color the ratings. 

There's also the risk of misalignment between the intent of the review questions and the interest of the performance management. 

The organization of the reviews can be complex and time-consuming for the HR/People Department. 

Performance reviews can create stress and anxiety among employees. It can lower the atmosphere and make people compete with each other.

Some performance evaluation software is hard to use. 

Psychological biases such as the Halo error, central tendency, and similarity error can distort results.

⚠️ Learn why you should take feedback bias seriously and how to overcome it.

Finally, there's the risk of ineffectively using and communicating the information gathered about an employee. 

Do any of these challenges sound familiar? Know you're not alone. 

So, are you ready to boost productivity, increase employee engagement, and drive revenue growth in your organization? 

Unlock the full potential of your business with these 360 performance review best practices that turn feedback into a powerful tool for driving revenue and success.

🤝 Best practices for strategic performance reviews

1. Alignment

Performance management does not exist in a vacuum. Instead, it is interlinked with your other people policies and strategy.

When developing your feedback performance process, consider other HR systems, like compensation and promotion. 

Aligning the business and talent management strategies will take your initiatives to the next level. 

2. Compliance 

Feedback reviews must comply with your company culture to guarantee a positive employee reception and get the most value out of them.

For example, companies promoting open communication and having a high level of trust may be more successful with 360 feedback reviews.

See the below example from Netflix for an application of this point.

3. Scope 

You should clearly define the scope and intent of the policies, procedures, and use of data. 

Who has access to what data? How will you use the data? Strictly for measuring performance? For succession planning? Your employees should be in the loop.

4. Cohesion

You should link the questions in the feedback review to the organizational business goals and strategies.

Again, for feedback to be truly strategic, it should not stop at the individual level but offer a larger picture of how well-equipped your people are to drive business results and innovation. 

5. Management

We know we're stating the obvious here, but your top management must be on board with your choice of feedback and performance review process.

The last thing you want is to send mixed messages to your employees. Top management and the people team have to act in sync and deliver coherent messages. 

🔍 Best practices for what to measure in a performance review

What should you measure in a performance review process? 

1. Measure factors related to employee performance goals.

This recommendation ties to the need for cohesion between feedback questions and business goals. 

Ideally, you want the employee performance goals to align with business goals. 

But that sure sounds easier said than done. 

🎯 Learn how to align employees with company goals and skyrocket performance in 14 effective steps.

2. We recommend that the factors measured are as role-specific as possible.

At Zavvy, we use competencies for role cards (our terminology for role expectations) and career frameworks. When we create performance review cycles, we integrate the role cards and display them to all reviewers. 

In this way, whoever shares feedback can easily check the competencies required for each role and leave feedback accordingly.

But we know that creating role cards takes time, effort, and much coordination. So we created a comprehensive competency database that includes descriptions for 36 base competencies across five levels of mastery.

3. Stray away from collecting feedback on traits such as likeability.

Personal traits are vulnerable, highly biased, and hard to measure objectively. 

Plus, charisma is not precisely a measure of performance, is it?

4. What you measure should be within the employee's control to improve upon. 

5. The items you measure should be clear and easy to understand for everyone involved – employees and managers. 

You need to make sure that there is a unanimous interpretation of what you're asking for. Otherwise, your data will not be accurate.

6. Your questions should collect reliable data.

This includes having consistent measuring scales and good statistical properties. 

For example, "on a scale of 1 to 10" could be seen as more reliable and statistically relevant than more arbitrary measures like "always, often, sometimes, never."

📏 Best practices for rating performance

1. You must train your raters in the review process

If you are using rating scales, consider the following questions: 

• What does each scale mean? 
• How how can they differentiate between the levels? (I.e., between someone meeting expectations and someone exceeding expectations?)

Another element to consider is the kind of feedback your reviewers should share. 

For example, you can recommend that your raters give a smaller share of positive feedback and a larger share of constructive feedback. This way, the feedback focuses on improvement rather than restating what an employee excels at. 

Another approach would be to consider a strength-based approach to feedback. 

Regardless of your path, you must ensure everyone is on the same page. 

2. Employees receiving feedback need training as well

Knowing how to receive feedback is just as important as knowing how to give it. 

One might not be aware of how peers perceive specific behaviors but should be open to understanding others' perspectives. 

It's OK for your employees to ask for clarifications. However, what is not ok is an outright rejection of external perspectives and the lifting of a defensive barrier. This attitude would get in the way of achieving change post-review. 

3. Managers also need training to interpret 360 results 

Remember – the real value of feedback reviews lies in taking action according to the results. 

Simply doing the reviews with 0 follow-ups won't make any difference. 

In fact, we'd argue the opposite: a waste of time and money and useless employee stress. 

4. Your reviewees should receive accurate and satisfactory answers to all questions from the raters

While scales are great for generating quick reports, they do not provide the context for why someone meets or does not meet performance expectations. Also, only collecting ratings leaves no room for constructive feedback and suggestions for improvement. 

🧑 Best practices for choosing your reviewers

Don't fall into the trap of being so focused on the process that you forget about people. 

No matter how perfect your questions are, a 360 review won't be successful if you don't choose the raters carefully. 

Let's take an example. Person A might have done an excellent job, but if person B hasn't worked close to them, they won't be able to give an accurate rating. Or, person A has underperformed but is a close friend of person B – so the rating might be biased. Remember, the whole point is to collect reliable and objective data. 

Performance reviews should not be a popularity contest.  

Some companies let the appraisee nominate whom they want a peer review from. This approach is particularly true for larger teams where everyone can't rate everyone else. The HR team and manager then approve the peers who get to review.

So, for example, biased raters, as described below, would be disqualified.

Here are some critical aspects when choosing reviewers:

1. You should choose raters from different groups – peers, managers, and clients – to give a multidimensional view of performance and show all sides of the appraisee. 

If you leave one group out, you will miss vital information. For example, a person may be great at communicating with managers and taking the initiative – less so at collaborating or handling customers.

2. You should include self-ratings in the feedback process. 

The power of regular feedback in the form of 360 reviews is that it encourages people to take accountability for their development. 

As a result, your employees will get into the habit of constantly assessing themselves and their work, which will spill over into the day-to-day work.

3. You should only share the rater's name if it is relevant to know the rater for a specific question. Otherwise, the standard for 360 performance reviews is to keep the raters anonymous.

To ensure anonymity in regular feedback reviews, having a relatively large number of raters is the best practice. 

🤫 Are you still torn between anonymizing feedback or not? We have compiled five cases for and five against anonymous feedback. Plus, we included real-life examples from companies to drive the arguments home.  

4. To avoid bias, you should use a standardized process when selecting raters. 

You should watch out for "gaming the system" – people who might have a biased view of the reviewee due to competition, friendship, personal disputes, etc. 

This point proves how important it is for the person who makes the selection to know the participants well. 

One way to weed out "gaming the system" tendencies is to add a couple of questions at the end, such as: 

Do you spend time with this person outside of work?

How long have you worked together?

Do you have a relationship beyond the professional?

🧰 Best practices for administering performance reviews

The administration of 360 performance reviews can make or break its power. 

Poorly used, they cost organizations time and, thus, money. 

Correctly used, 360 performance reviews can pace professional development: more frequent check-ins directly result in faster growth. 

1. As an HR professional, you should act as an administrator and facilitator in the feedback process. You are the owners of the process, the game masters. 

2. Use standardized procedures for administration. Zavvy makes standardized procedures and automations a breeze.

3. Hold 360 performance reviews regularly. Conduct them close in time to personnel decisions, such as pay raises, to have an accurate and fair basis for your decisions.

4. Ensure that the feedback and related data are strictly confidential. 

5. In case of questions or complaints, ensure a qualified person can offer support. Ideally, this person, such as the manager, should not be a part of the process. 

6. You should ensure that everyone has access to full support and is treated with respect, regardless of their performance or ratings received.

📈 Best practices for interpreting performance feedback

1. You should provide everyone with the same guidance on interpreting the feedback. Include instructions, graphics, and any other supporting materials if necessary. 

Again, you wouldn't want some managers to interpret results in one way and others entirely differently. It would make your review process feel arbitrary and subjective. 

2. You should interpret the results of a 360 feedback review with consideration to biasing factors.

Here are some factors you should consider: 

• the opportunity to perform; 
• unexpected events; 
• differences in feedback from different source groups and between self and others.

3. You can contextualize the results by including information on how the employee has fared relative to other employees. 

A second strategy is to include objective performance data, such as sales volume, to identify where to concentrate your efforts to improve future productivity.

4. You should also use the results to pinpoint high-performing individuals and spotlight them as role models. 

Identifying and recognizing high-performing individuals can be a powerful motivator for the entire team. 

Plus, seeing others excel and be recognized for their efforts can inspire others to strive for similar achievements.

High-performing individuals demonstrate how to effectively implement feedback and improve performance, which can help improve the entire team's performance.

5. You should coach your employees on using 360 feedback and how to implement the feedback. 

You should include training around the purpose and gains with 360 feedback to increase employee motivation and openness to receiving feedback and driving behavioral change. 

Plus, you can consider coaching as a more individualized method of training. 

6. Especially in cases of negative feedback, you should provide additional support.

Ideally, you should include absolute performance evaluation (related to a standard) and relative (compared to other appraisees) in the feedback.

7. When concluding each individual's performance report, you should include objective performance data relevant to the question and relative data (individual results compared with other reviewees' in the same role/team, etc.)

In practice, you should consider objective factors such as sales, profits, and errors, in addition to how the individual employee has fared in comparison to peers in the same/ a similar position.

8. Do not skip discussing the results of the performance review. 

Managers should host the performance review conversation at the end of the cycle to interpret the results and create action plans. 

9. Encourage reviewees to share their report with anyone who can assist with their development, such as a manager/team lead or a trusted mentor.

However, you should never reveal the contents of the feedback report to anyone without the consent of the appraisee.

🌱 Best practices for developmental performance reviews

Developmental performance reviews focus on learning and growth rather than productivity and results. You can see them as a plan for future performance vs. evaluating past performance.

A developmental performance review aims to identify where the employee wants to grow and create an action plan for getting there. 

• Developmental performance reviews are particularly beneficial in cases requiring performance improvements. But any improvement plan needs co-ownership from the employee. Refrain from prescribing actions. Instead, consult and suggest options and be on standby with support when needed. 
• The developmental performance review can be part of the ordinary performance review. It should ideally contain goal-setting and a plan for future employee development. 

Developmental performance reviews are part of performance management trends that have emerged lately. 

🔍 Learn more about developmental vs. evaluative feedback so that you can decide on the best approach for your organization. 

🏢 Best practices from 4 global companies: Netflix, Cisco, Facebook, and Google

From research papers to real life – our final set of best practices is borrowed directly from companies. The following companies have in some way inspired us to share their take on 360 feedback reviews:

Netflix

Netflix has embraced the importance of conducting 360 performance reviews in harmony with the company culture, even if it contradicts commonly accepted best practices. 

Their approach to feedback anonymity is relevant here. 

At Netflix, the management started with anonymous performance reviews as its standard. 

However, to their surprise, employees voiced they would prefer signed feedback forms. 

Why? The overall feedback culture at Netflix is one of transparency and openness – and employees found it strange that they would give verbal feedback to their peers only to avoid signing the 360 reviews.

🎥 Want to learn more from Netflix's approach to performance reviews? Our complete Netflix employee performance case study is waiting for you. 

Cisco

Cisco is an inspiring company overall. As of 2022, they ranked #1 in the "Fortune 100 Best Companies to Work For" list! 

In their feedback review process, they collect performance data continuously and measure performance against live data.

📡 Learn all the steps to the performance review process at Cisco.

Facebook 

Calibrating the ratings is one of the highlights of Facebook's performance reviews. 

During this process, managers discuss the reviews and eliminate outliers to avoid confusing or misleading results. 

💬 Something for your team to adopt? Learn more from our Facebook case study. 

Google 

While performance reviews often focus on the employees, employee performance reviews at Google are just part of the puzzle – as much focus rests on manager performance. 

A team is never stronger than its weakest player – including the manager. 

An underperforming manager translates into an underperforming team. So Google makes sure to build stellar managers that drive high-performance teams.

➡️ Drive high employee performance with Zavvy

Zavvy helps you save time – and thus money – by letting you automate performance reviews. This will help drive high employee performance.

Free yourself from repetitive admin tasks and focus on the people side of things with our flexible automations! 

Our performance review software enables reviews that are unbiased and fair.

Plus, if you got inspired by some examples above, you can use a template from one of our successful companies (such as Netflix) and copy and paste their performance review setup.

Try out our platform for employee growth and development through our demo.