Why 360-Degree Feedback is Essential: 10 Benefits You Need to Know

by Kylee Stone Dec 20,2022

According to Forbes, over 85% of all the Fortune 500 companies use the 360 degree feedback process as a cornerstone of their overall leadership development process.

The feedback system is often overlooked in employee management, despite being crucial. While employees typically receive feedback from their managers during quarterly or annual performance reviews, this may not be sufficient. Peer feedback is essential in enhancing employee performance as colleagues may have a better understanding of the nature of work than managers. Therefore, receiving feedback from peers is equally significant.

Why is 360 Degree Feedback Important?

10 benefits of 360 feedback in the workplace

In 360 degree or multirater feedback, managers, peers, direct reports, and sometimes even customers, consultants, and vendors are involved in the feedback process. It provides an overall analysis of the performance of the employee in the organization.

Here are the main reasons why 360-degree feedback is important in today’s workplace:

  1. Provides a comprehensive evaluation of employee performance from different perspectives
  2. Promotes a culture of openness and transparency within an organization
  3. Enables informed decision-making about employee development, promotions, and job assignments
  4. Identifies potential leaders and areas where employees need support or guidance
  5. Aligns individual goals with organizational objectives, leading to improved organizational performance and greater success.

10 Benefits of 360 Degree Feedback

360 degree feedback an employee development tool that helps in building a skilled, dynamics, engaged, and productive workforce. Due to its innumerable advantages, most of the Fortune 500 organizations are using it for workforce development. The following section talks about the benefits of 360 feedback in an organization.

1. Increases Self-Awareness

“In a study conducted by Gallup among 65,672 employees, it was discovered that those who received feedback had 15.9% better turnover rates than employees who received no feedback.”

360 feedback is a valuable tool for enhancing employee self-awareness and identifying their strengths and weaknesses. By utilizing this process, employees can gain insight into their hidden strengths and weaknesses, which they may not have been aware of previously. The comprehensive nature of the 360 degree review process allows employees to gain a better understanding of their behavior and approach to work, ultimately leading to improved performance.

2. Offers Objective Evaluation

360 degree feedback provides the employee with a scope to get multiple inputs for their role, performance styles, and ideas. It provides a well-balanced view of the behavior and skills of the employee. It helps employees to know themselves from others’ perspectives and bridges the gap between what they think of themselves and what others think of them. This feedback system is constructive and more acceptable for the employees.

Also read: 10 Best Employee Feedback Tools To Track Performance

3. Reduces Workplace Bias

In a multi rater feedback process, feedback is collected not only from the manager but also from peers, subordinates, direct reports, and sometimes even customers. As a result, the feedback received in the 360-degree review process is completely impartial as it is not based on single person assessment. It helps in reducing managerial biases, which are often prevalent in the traditional feedback system. 

4. Emphasises Employee Development

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

Every employee should prioritize professional development to progress in their career. The 360 feedback process is a useful tool for identifying employee training needs and skill development opportunities. Since employees become more self-aware through this process, they take responsibility for improving their existing skills and acquiring new ones. This not only leads to employee growth but also benefits the organization by increasing employee engagement and retention.

360 degree feedback guide

5. Improves Decision making

360-degree feedback is an excellent tool for managers to gain valuable insights into employee performance. This helps managers make informed decisions about employee development, promotions, and job assignments. With feedback coming from multiple sources, managers can identify employees’ strengths and areas for improvement.

This information helps managers provide targeted training and development programs that enable employees to grow in their roles. Additionally, 360-degree feedback highlights potential leaders and helps managers prepare them for leadership roles. This approach leads to better decision-making, improved employee performance, and organizational effectiveness.

6. Improves Work Relationships

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-to-one feedback, the one who receives feedback from superior generally has nothing to say from their side as it is one-sided. There is no sense of personal connection in this type of feedback process. But in 360 feedback, as superiors and subordinates review each other, it improves the superior-subordinate relationship. Everyone’s morale is boosted, and employees and managers work together to achieve mutual goals. 

Also read: Benefits of 360 feedback for leaders

7. Creates Open Culture

Multi rater feedback helps in promoting a sense of an open culture in the organization where it is implemented. Every employee feels that their opinion is valued as they take part in the review of their peers and managers. The feedback process becomes the medium to share their opinions without having a fear of getting repressed.

8. Promotes Team Building

In a 360 degree feedback process, peers review each other frequently. They understand each others’ weaknesses and strengths very well, which helps them to work as a strong and cohesive team. They work collectively to improve the productivity of the organization. An effective team is one where each team member knows how to use each other’s strengths and weaknesses effectively and get the result.

Also Read: How do you prepare your team for a 360 degree review process

9. Improves Customer Relationship

When customers are made part of this feedback process, they feel that they are valued and given importance. Since employees work closely with the customers, sometimes they can identify certain strengths and weaknesses that even managers, peers, and others fail to identify during the 360 feedback process. Thus, it helps in improving customer service when organizations ask customers to be a part of the process.

10. Enhances Performance

One of the most important benefits of 360 degree feedback process is enhanced performance of employees. It helps in improving employee relationships, self-accountability, and provides clarity on how to improve overall performance. This, in turn, improves the employee engagement and retention of the organization. They feel valued, since importance is given to their professional development, learning, and their opinions.

Also Read: 8 Points to Ensure an Effective 360 Feedback Process

Benefits of having 360 degree feedback in the workplace


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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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