The 360 degree feedback vista

None of the above companies used a 360 tool for performance management linked to pay, bonuses or money. Instead, they preferred to apply the tool as part of management development programs and culture change initiatives.

Whether 360 degree feedback should be used to determine performance increases remains the cause of considerable debate. Gillian Taylor, director of human resources for ING DIRECT believes this form of feedback is “not seen as ‘risk free’ (if used for performance management and linked to bonuses)”. “If there is any type of retribution, I’m not sure you get integrity in the data. It’s got to be about development if you want to remove that risk.”

ING DIRECT is a branchless retail bank that offers mortgages and savings products. It has become successful in the Australian financial services market with a different business offering from that of other banks. Its staff have a different mindset and approach than its competitors. Taylor says that in order to define what beliefs and behaviours they needed, the firm used a 360 degree tool to assess the organisation’s culture so that the success could continue. Once the nature of the culture was communicated and understood, the company did another 360 across its management team, to help them understand how their own behaviours matched up with the existing and desired culture.

ING DIRECT also used other feedback mechanisms, such as staff surveys and in-depth staff interviews to assist in getting a clear picture of their culture.

Brighid Kelly, program manager organisational development for Telecom New Zealand, has used a lot of different tools before in different areas of the business. She has most recently used the 360 tool for the senior leadership population (more than 100 people) in conjunction with a motivational questionnaire and a competency-based interview conducted by a psychologist. This suite of assessments “has given us both a macro and micro view of the organisation. We have used it to assess the organisation’s leadership capability, as well as providing individuals with specific details about their performance and leadership capabilities when compared to a benchmark,” Kelly says.

Telecom New Zealand had a 360 degree tool tailored to assess specific behaviours around defined leadership competencies. These had been pre-defined by benchmarking against other telcos and industries. “Because we already had management buy-in with respect to the competencies, introducing the 360 tool became less of an event. It was in our language, was consistent with conversations in our organisation and therefore had both high face and high construct validity,” says Kelly.

Karen Hellwig is corporate communications manager for Horticulture Australia Limited and is responsible for driving the company’s corporate culture change program. The organisation manages research and development along with marketing projects for the horticulture industry, which includes fruit, vegetables, nuts and nursery.

Following a recent restructure, all six people in Horticulture Australia’s senior management team underwent a 360 degree assessment, followed by management coaching. “We used a 360 degree tool a few years ago, but it was of limited value because there was no real follow-through and it wasn’t tailored to our business,” says Hellwig. The company recently hired a consultant who tailored a 360 degree tool then dovetailed it into management coaching and full company staff feedback. “The most valuable part of this program is the executive coaching. Follow-through is the hard bit. Executive coaching forces the follow-through to the whole organisation, because managers had to share the results of the 360 with their staff,” says Hellwig.

Choosing a supplier

Each of the above companies used consultants to tailor a 360 degree feedback tool to their own organisation’s needs. There was an existing relationship with the consulting company that won Telecom New Zealand’s tender, having dealt with them previously for both senior management recruitment and development of their leadership competency model. At Horticulture Australia, Hellwing says that their consultants came via a direct referral from a board member who had used them in another company. ING DIRECT chose a well-known consultant that specialised in the tools they needed, according to Taylor. “Your vendor must be able to work with you and know what buttons to push,” she says. “A big part of what you buy is the analysis and interpretation that comes with it (the 360 degree tool). They must be able to help you to understand how to go forward, because you may not like what you are hearing.”

Taylor, Kelly and Hellwig all agree that using outside consultants to administer the 360 tool and then give impartial feedback is critical to the success of the process. Kelly likens administration of the tool to having an operation. “The surgery will only be successful if you get good post-operative care. People are quite vulnerable going through the process, so you have to make sure there is strong closure, with a thorough debrief that is not just computer generated. It’s also vital to focus on people’s strengths, rather than their weaknesses during the debrief,” she says.

The 360 degree feedback tool

All suppliers administered an online 360 degree feedback tool, which is pretty much standard operating procedure these days. This helps guarantee anonymity for the participants, boosting participation rates. Horticulture Australia had a 95 per cent response rate, while ING DIRECT had an 85 per cent response rate across the company. Both of these were considered outstanding results.

Taylor says that she worked with marketing to help promote the ‘Pulse Survey’, as it was known within ING DIRECT. “Our CEO, Vaughn Richtor, is passionate about culture and genuinely interested in his staff. The staff saw him as being excited and genuine about wanting to understand who we are and how we can make things better. The first correspondence regarding the survey was personally sent from him to all staff,” explains Taylor.

Kelly agrees that using an online tool administered by an outside consultant not only boosts staff confidence about anonymity, but outsources a skill set that is not possessed within the company.

Return on investment

Given that Telecom New Zealand has been using its 360 degree feedback tool to help develop its leadership capability, Kelly believes the only true measure of the value of the tool is whether the company will still be a leading and high performing business in ten years. ROI measurements are not required by the organisation.

Nor does ING DIRECT require an ROI calculation. Taylor says that measuring ROI on HR initiatives is very difficult. “You can only truly know how valuable the entire HR budget is if you take it away. Then you see the devastating effects. We see our culture as part of our competitive advantage and we strive to increase the difference between us and our competitors,” she says.

Areas of improvement were targeted in 2004 and that was also a successful year. Staff turnover has dropped from 20 per cent to 14 per cent and staff retention rates during probation have dramatically improved.

Hellwig says the annual employee satisfaction survey will measure the effectiveness of Horticulture Australia’s whole program over time.

Future gazing

All three companies intend to continue working with their suppliers to further develop the tools they use, as the needs of their organisations change. Hellwig hopes that the assessment of personal performance and task achievement will become an integral part of everyone’s job. Taylor adds that the tools used in the future will have to be flexible enough to provide solutions to meet an organisation’s needs as they evolve.

Telecom New Zealand’s Kelly hopes that individuals will become more comfortable receiving feedback. Before she administers any blind 360 degree feedback, she wonders whether it is contributing towards anonymous feedback or whether it is just closing off the possibility of honest conversations among teams.