When employees suddenly begin to flee an organization, morale dips or productivity slumps, many employers launch internal investigations to pinpoint what might be behind the problem. For more than 20 years, one of the diagnostic tools employers have relied on is 360-degree feedback. These employee assessments collect data from colleagues, subordinates and clients — hence the name 360-degree appraisal — to help illuminate how well employees are performing and how individuals might need to change their behaviors to create a more productive workplace.

Just how good are 360-degree assessments? If implemented correctly, they work well, say psychologists who specialize in such assessments. Usually, the more feedback the better, says Kenneth Nowack, PhD, of Envisia Learning Inc., a behavior change company in Santa Monica, Calif. "Eight to 10 raters maximizes the reliability, based on available psychological research," says Nowack. "If you use two to three people, it's not enough to get a full perspective."

But there is a major caveat to 360-degree feedback: If it's not carefully executed — and followed up on — it can do more harm than good, says Nowack, whose latest research on the assessment is in press in the Consulting Psychology Journal: Practice and Research.

And even when that happens, companies can't expect miracles. "The magnitude of change is modest but statistically significant," says Nowack. "We have to be realistic. We can't take someone from one extreme to the other." But they can change their behavior in ways that make a difference in interactions in the work place.

How to get better results

To implement a 360-degree appraisal, a human resource manager or consulting psychologist, for example, requests a list of raters from each participant, then checks with their supervisors to develop a group of raters by mutual agreement. There is no standard way to do this, say those in the field. Rather, it depends on the purpose of the 360-degree appraisal and the organization's culture. Raters then answer questions through online links. Internet-based online survey systems such as Zoomerang or Survey Monkey are popular ways to collect self-report data, but most vendors have developed their own 360-degree feedback administration systems to streamline multi-rater data.

Once the data have been tabulated, and the individual understands and accepts it, coaching can begin. Nowack suggests a model he developed with Sandra Mashihi, PhD, called "Enlighten, Encourage, Enable," to implement behavior change. In the first step, the psychologist or coach helps the employee become aware of how he or she is perceived and determines the conditions necessary for behavior change. Then, the psychologist works with the employee to become ready to make the changes; he or she has to commit to working on change rather than just acknowledging that something is wrong.

"The employee has to be motivated to do something about it," says Nowack.

Employees also have to be prepared for the feedback. A meta-analysis by Avraham N. Kluger, PhD, Angelo S. DeNisi, PhD, and colleagues finds that while feedback interventions are usually effective, in a third of the cases, the feedback actually "lowered subsequent performance" (Psychological Bulletin, 1996). For example, if an employee's self-perception is quite different from the feedback, the employee can even become demoralized.

That means the report is not just left on a person's desk. Once an employee has his or her results, there has to be a discussion with the manager, an internal or external consultant, or a mentor in which the employee agrees to work on undesirable behaviors, Nowack says. "We create a professional development plan for them to work on something."

For example, a supervisor who has received 360-degree feedback will meet with a psychologist or an executive coach once a month to work on particular skills, tasks or style. Russell R. Day, PhD, of the executive coaching firm R.R. Day & Associates in Arlington Heights, Ill., has seen firsthand how 360-degree evaluations can lead to behavior change. "They are of great value if they are done correctly," he says.

Day offers one particularly successful example of how 360 appraisals can improve employee performance: One of his clients hired a new vice president to run the company's southwest region. The new recruit's mission was to boost profits — and he succeeded, retaining existing business, as well as adding new clients. But in the process, the vice president fired employees and changed their roles. Morale in the region sank to an all-time low. Several high performers quit, and others were looking to leave. When the human resources manager spoke to employees confidentially, all complained about the new vice president's management style: He was abrasive, condescending and overly critical, they said.

To improve the situation, the company hired Day as an executive coach, and he conducted a 360-degree appraisal that identified a problem: By focusing only on profits, the new vice president had alienated his subordinates. Several referred to him as a "dictator" or "Attila the Hun." After receiving his 360-degree appraisal results, the vice president shared them with his team, apologized publicly for his past behavior and promised to change. For a year, he worked with Day every four to six weeks on new leadership styles, specific steps to take and advice to heed. At three months, six months and eight months, Day met with the manager to discuss his progress. At the end of the year, Day conducted a second 360-degree feedback with five employees the manager supervised and five colleagues. The results showed definite improvement: The same employees who had been looking for new jobs now said that if the manager were to leave the company, they would ask to go with him.

For the regional vice president, the 360-degree assessment was a catalyst for him to change his behavior and to obtain expert advice about how to make those adjustments.

"Follow-up is everything," says Nowack.

 Harriet Edleson is a writer in New York City.