Why Most 360° Evaluations are Guaranteed to Give You the Run-Around
Salespeople and HR people are completely different breeds. There couldn’t be two more opposite set of assumptions about work and success as exist between these two disciplines. Successful HR professionals tend to be cooperative and empathetic, careful consensus builders who value intrinsic rewards. Successful salespeople on the other hand tend to be competitive, persuasive risk-takers motivated by extrinsic rewards. So, it’s not surprising that in many organizations, these two departments find it difficult to understand each other and communicate effectively.
Because HR is tasked with the hiring and development of salespeople, they often turn to outside sources to help them understand and connect with the sales organization, as it may be the part of the company most foreign to their personal intuitions and business experience. Consequently, HR professionals have been inundated with buzzwords, technologies, and fads generated by management consultants to help bridge the HR-Sales gap.
Take for example the venerable 360-feedback tools used to build competency models for performance management. Mercer Consulting found that in 1995 40% of US companies used this approach; by 2000, this figure jumped to 65% (Quoted by Pfau & Kay, “Does 360-degree feedback negatively affect company performance?” HR Magazine, June 2002).
Performance management by competency (PMbC) has become an article of faith in HR circles. While it certainly sounds rational that HR professionals should seek input from peers, supervisors, subordinates, even customers about competencies, the objective data show the PMbC approach may be seriously flawed. In one study by Jai Ghorpade, a professor of management at San Diego State University, of 600 businesses that implemented these programs, 1/3 saw increases in performance, 1/3 saw a decrease in performance, and 1/3 saw no difference at all (Academy of Management Executive). According to a study by Watson Wyatt, companies that evaluated performance by competencies generated from 360 feedback models actually showed a 10.6% decline in shareholder value.
What’s going on here? The problem seems to be that competencies are frequently not directly related to the organization’s business objectives. A behavior becomes a “competency” if and only if it is proven to directly relate to somebody’s success metric. If your definition of success focuses on teamwork and compliance, you end up with a completely different set of competencies than those who define success by behaviors that generate dollars and cents profit.