360 Degree Feedback: The Benefits And Challenges

by Kylee Stone Mar 26,2021

The People Strategy Leaders Podcast

with Srikant Chellappa, CEO

An article in Forbes highlights that 360 degree feedback is used as a cornerstone of leadership development processes in more than 85% of all the Fortune 500 companies.

Feedback is imperative to employee growth and development. Traditionally, employees received feedback only from their managers or superiors. But it was subjective, biased, and offered only a single perspective about the employee. So was this feedback enough? No, they needed more comprehensive and balanced feedback for their overall development. Often, peers and direct reports know the nature of work and the employees better than their managers, so receiving feedback from them is equally important.

360 degree feedback, multirater feedback, or multirater assessment is a type of feedback methodology in which all the stakeholders share feedback about the employee. A group of 6-10 members from a list of peers, managers, direct reports, vendors, and customers share anonymous and confidential feedback about the employee.

Also Read: Important Of Continuous Feedback In The Post Covid Era

In this article, we have shared some of the benefits and challenges of 360 degree feedback which will act as a guide for you this review season.

Here are some of the benefits of 360 degree feedback.

Improved Self-Awareness And Insight

360 degree feedback or multirater feedback helps employees by improving their self-awareness. Through the lens of 360 feedback, they can identify their hidden strengths, weaknesses, blind spots, and gaps. It helps them understand why and how they work and give them a better insight into their work.

Overall Development

“According to the 2017 Skills Gap Report, nearly 80% of Americans agree there is a skills gap, and more than a third (35%) say it affects them personally.”

Personal and professional development is crucial for every employee. The 360 feedback process acts as a great tool for identifying their training and development needs. As the process makes them self-aware, they take up the responsibility to hone their skills. Employees get an opportunity to work not only on their hard skills but soft skills too. When employees are happy with their own development, they tend to stay with the same company for a longer time. As a result, it improves engagement and retention.

Also Read: Top Five Common OKR Challenges

Feedback From Multiple Sources

In a 360 degree feedback, employees get the opportunity to receive feedback from many sources. Managers, peers, direct reports, customers, vendors, and everyone with whom an employee has worked is part of the process. As a result, employees get a comprehensive and balanced overview of their role, performance styles, behavior, skills, and ideas. It helps them to understand themselves from a different perspective. It is more balanced and objective and is more acceptable by everyone.

Improved Work Relationships and Team Building

“In a study of 530 organizations, Gallup reported that managers who received feedback showed an increase in 8.9% profitability and 12.5 % productivity.”

In traditional one-on-one feedback, employees generally receive feedback from their managers or superiors. It is often one-sided, and the reviewee does not have much to say. There is only unidirectional communication, and as a result, they fail to establish a personal connection. But in 360 degree feedback, superiors and subordinates both review each other. It initiates two-way communication and improves the superior-subordinate relationship.

Not only it improves the superior-subordinate relationship, but it also helps in building a strong bond among peers. It helps them work as a cohesive team as they know each other’s strengths and weaknesses well. An effective team is one where each member knows how to explore each others’ strengths and weaknesses effectively to get the results. This helps in increasing productivity and building a strong team.

Also Read: Know How You Can Build A High Performing Team

Promotes Open Culture

360 degree feedback helps in promoting a sense of an open culture in the organization. Every employee feels that their opinion is valuable as they take part in reviewing their peers, as well as their managers. The feedback process becomes the medium to share their opinions and concerns freely.

Strengthen Customer Relationship

When customers are part of the 360 degree feedback process, they feel valued and important. Since employees work closely with the customers, sometimes they can identify certain strengths and weaknesses that even managers, peers, and others fail to identify. In return, it helps in improving customer service.

The benefits of 360 degree feedback make it a valuable tool to improve employee and organization productivity, improve employee relationships, self-accountability, and provide overall clarity. But there are few challenges associated with it that can’t be overlooked at any cost.

Now let us take a look at some of the challenges.

Halo Or Horn Effect

At times employees have preconceived notions about their leaders and other employees. These perceptions about others tend to hamper the ratings of the employee in a 360 degree feedback process. Those reviewed will receive ratings as per the perception they have created on the reviewers.

Also Read: Don’t Let Recency Biases Affect Your Performance Discussions

Unwanted Competition

Peers who are competing for promotion may try to bring each other down by giving poor ratings in the 360 feedback process. If the employees know that this rating will affect their peers’ promotion and salary packages, then the human race, being naturally competitive, will deliberately give low ratings to others. As they have the idea in their mind that this will help them stay ahead in the competition.


Peers, when they belong to the same group, have an emotional connection with each other. Thus when reviewing each other, they tend to give higher ratings so that the group is intact. This again spoils the ratings in the review process.

Often the case of biases also arises when employees judge each other by their recent actions. They tend to ignore the overall performance during the review process.

Also Read: Tips For Employee Recognition And Rewards

Raters Lack Of Experience

360 degree feedback is still a new concept for many, some of the reviewers who are part of the process may be inexperienced. They do not have the correct idea of which points to focus on and on which to not, while giving the reviews. This causes the 360 degree review process to fail completely.

360-degree Feedback

Are you planning to implement 360 degree feedback in your organization? Then request for a live demo.

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Kylee Stone

Kylee Stone supports the professional services team as a CX intern and psychology SME. She leverages her innate creativity with extensive background in psychology to support client experience and organizational functions. Kylee is completing her master’s degree in Industrial-Organizational psychology at the University of Missouri Science and Technology emphasizing in Applied workplace psychology and Statistical Methods.

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