In general, most companies these days use 360 degree feedback systems in one of two ways:
Development
The first way in which 360 degree feedback can be used is as a development tool to help employees recognise their own strengths and weaknesses. This is because the anonymity afforded by 360 degree appraisals gives employees the opportunity to provide honest feedback to co-workers which they might normally be reticent to give. This provides recipients with genuine insight into how they are perceived them and engenders them to not only adapt their current behaviours but also to develop new skills.
Performance
In addition to development, 360 feedback can also be used as a performance appraisal tool to measure employee proficiency. Indeed, using this type of feedback system for performance appraisal is common practice these days; however, this is not to say that it is always a good idea. In truth, it can actually be quite difficult to structure a 360 appraisal that will deliver an atmosphere of trust when it is to be used as a way of measuring performance. Furthermore, 360 evaluations typically focus on behaviours and competencies rather than on basic skills, job requirements, and performance objectives (aspects which are traditionally addressed by an employee and their manager as part of an annual review and performance appraisal process). So, whilst 360 appraisals can indeed be incorporated successfully into a larger performance management process, it is not always wise to use them as an exclusive performance appraisal tool.
