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Purpose Of Appraisal And Factors Affects Employees Performance Management Essay

INTRODUCTION

This chapter intends to provide background information on the nature of the present study, its purpose and significance. It is divided into four seven sections. The first section presents the overview of the study. The second part presents the problem statement of the study. The third part presents the setting of the study. The purpose of the study and its significance are revealed in sections four and five respectively. The sixth part presents the limitation of the study. The final section presents how this study is organized.

1.1 OVERVIEW

In our contemporary life, Establishments have seen some remarkable changes in the way they are organized and conducting their business. Traditional management techniques are no more effective in the competitive era, and companies are looking for new methods to manage effectively their employees. To stay in a competitive position, companies need to attain the highest productivity ratings possible. This requires higher performance from their employees, and for an increasing number of companies, the best way to achieve this is by assembling them into work teams, evaluate their performance, and enhance it by providing appropriate training course. Companies are aware that their employees require specific support structures, leadership, and performance management to function at their highest level and ensure both employee and their satisfaction.

In the same base, companies are realizing that performance appraisal is an important part of their organizational success. Organization top management typically assumes that providing employees with feedback about their performance makes it more likely that performance on the job will be improved. DeNisi and Kluger (2000), who has many contributions in the field of Human Resource Management, suggested that it is widely accepted that feedback is an essential component of an effective performance improvement strategy.

Furthermore, the Literatures of Human Resources management reveals that performance feedback increases job satisfaction and motivation (Hackman and Oldham, 1980). Organization top management that adapted a appraisal feedback approach should emphasizing that individuals learn on the basis of receiving feedback on their performance (DeNisi and Kluger, 2000). Thus, performance feedback plays paramount important role in numerous institutional activities such as career development, job satisfaction, motivation, and performance management.

Recently, and because of the great stress from external customers and stakeholders, organizations top managements all over the world seek vividly to reveals how well their employees perform on their jobs and tasks. Yet it has probably caused more controversy, applied research and practical advice than any other assertion in the history of management writing and thinking. The challenge is that both applied scientists and managers have simply been unable to provide complete feedback about job performance that satisfies an employee’s need to know how well he/she has done and where to improve (Kavanagh, 1997).

The traditional appraisal system works basically on top-to-down evaluation, employer always evaluate their subordinates. As it is single source feedback, employee performance evaluated from just one point of view and the information received one limited. Despite the predominance of feedback mechanisms in management interventions, however, single approach-feedback is not always as effective as is typically assumed.

Organizations become more aware of the limitation of single source feedback that hampers the evaluation process. The current efforts of organization management has shifted it concern from single feedback to evaluating their employees by receiving feedback from different sources in the organization as they seeking to collect the largest amount of data from all levels unlike the traditional approaches.

A relatively recent development in this context is a concept that has been termed “360 feedback” or “multi-rater performance appraisal”. The 360 feedbacks or multi-rater is one of the vehicles that is used to facilitate performance feedback and therefore deserves attention at an academic and practitioner level. The 360 feedback refer to the circular that feedback coming from different direction peers, subordinates, supervision, manager person him/her self and others for two purposes development and assessment tools. Coates (2008) uttered that multi-source appraisal became popular on the corporate since 1980s and at this time was mostly used it as an executive development tool.

The 360 appraisal system add one new criteria that was not included in the traditional appraisal system that is to focus on human behavior including employees competency and skills and thus emphasizing that it should be evaluated (Chawdron, 1990). The 360 feedbacks is consist several steps to implement in right way and to ensure success for this process. This approach should be start with set some issues to follow then to involve in this process (Chappelow, 1990).

The basic idea of 360 feedback is relaying upon two main theoretical principles. The first is that utilizing multiple sources yields higher quality, more valid, more reliable information than single source appraisal (Church and Bracken, 1997). The information collected is usually more reliable, as three or more different raters there is less chance of positive or negative bias. The information is usually more detailed, because when several different sets of feedback are combined they provide more information than just one. It is also more extensive, since there are several different people contributing their perspectives and each interacts with the rater in a different manner or capacity.

The using of 360 feedbacks as performance measurement approach provides more comprehensive information than most traditional methods (Waldman, 1997). In most cases the ratings are multi-directional - they can come from the employees co-workers, internal and external customers, and his/her subordinates (Waldman, 1997). When used effectively, 360 feedback can improve leadership and management abilities, increase communication and learning, assist employee and organizational development, improve customer service, promote teamwork and organizational change, and increase productivity and efficiency (Edwards and Ewen, 1996; Yukl and Lepsinger, 1995).

As the current study attempts to examine 360 feedbacks in the oil sector in the state of Kuwait, thus it’s important first to explain the current status of this sector. Next, the researcher presents brief introduction about Kuwait and the oil sector companies.

1.2 THE SITTING OF THE STUDY

Kuwait’s trade surplus continued to grow upwards since 2003. The Kuwaiti economy continues to rely on oil sector as its major driving force since that time. Oil represents more than 90 percent of Kuwait export earnings and 80 percent of budget revenue. In addition, oil industry is a public sector that dominates the economic sphere in terms of ownership and management of most activities.

On annual basis, both years 2007 and 2008 persist to witness ongoing growth in trade figures to support the prevailing economic growth and development projects in Kuwait. This was coupled as well with ongoing increased production levels of oil and upward prices at end of 2008. According to the latest figures from CBK, Kuwait witnessed trade surplus reaching a new high of KD15.1bn over last year’s surplus of KD11.7bn. As for the whole year, despite such decline, trade balance is estimated to report a surplus of KD2.1bn. Looking forward, Global research has expected the financial turmoil and declining oil prices to have much more impact on trade surplus to decline by more than 20% for 2009 (www.globalinv.net).

However, the recent reports and researches indicate that Kuwait economy has significantly affected by economic crisis in 2009 and may post much lower growth for the year. For the year 2009, the expected the real GDP growth for Kuwait could be marginal. The oil prices, which are the significant drivers of Kuwait economy, are expected to remain in the range of US$40 to US$50 per barrel for the year 2009. The projected oil prices for 2009 are much lower than their average levels for 2008. However there are chances of higher oil prices in the second half of the current year if the global economic condition stabilizes. This will be helpful for Kuwait’s economy. Looking further forward to 2010, research expected that economic growth will be higher than 2009 as expect to see stabilization in the world economic order by then (Global Investment House report, 2009).

The public sector in the state of Kuwait and institutions are using the traditional top-to-down evaluation systems since institutions have ever emerged, moreover, the private sector also using the same approach to evaluate employee's performance. Recently, few banking retails have applied the KPI’s (Kaplan approach). Coming to the oil sector establishment, the oil sector in the only public sector in the state of Kuwait that adopted 360 feedback approach since 2006. Development purpose is the main reasons why this approach implemented. Recently, oil companies have taken an action to collecting historical data to implement it as an appraisal system, however only one company has implemented 360 for both development and assessment objectives.

The current study attempts to investigate Kuwait Oil sector companies by exploring employee's perspectives toward 360 feedback as instrument for development assessment and employees career plan. Next the researcher presents problem statement of the study.

1.3 PROBLEM DEFINITION

To manage the employees performance, appraisal system should been implemented in all organizations. (London and Smither, 1995; Walker and Smither, 1999, Church and Bracken, 1997; Yammarino and Atwater, 1997) There is relationship between organization mission and appraisal system, it means that through evaluating employees' performance organization can guarantee achieving their objectives, by assess the actual performance of their employees.

Several studies indicate that the use of 360-degree feedback helps people improve performance (Hazucha et al., 1993; Walker & Smither, 1999). Multi-rater feedback use steadily increased in popularity, due largely to the use of the internet in conducting web-based surveys (Atkins & Wood, 2002). Today, studies suggest that over one-third of U.S. companies use some type of multisource feedback (Bracken, Timmereck, & Church, 2001a). Others claim that this estimate is closer to 90% of all Fortune 500 firms (Edwards & Ewen, 1996). In recent years, internet-based services have become the norm, with a growing menu of useful features (e.g., multi languages, comparative reporting, and aggregate reporting) (Bracken, Summers, & Fleenor, 1998).

In contrast, many authors indicated that the 360 processes are much too complex to make blanket generalizations about their effectiveness (Bracken, Timmreck, Fleenor, & Summers, 2001b; Smither, London, & Reilly, 2005). The fact that feedback relied on multi level and source of feedback bring another draw back from middle-manager of how they evaluated by the lower-level management. In other hard subordinate refuse to feedback their managers because of fear of put in danger their relationship with top level probability and affect their evaluation score as consequence. Smither et al. (2005) suggest, "We therefore think that it is time for researchers and practitioners to ask, "Under what conditions and for who is multi-source feedback likely to be beneficial?" rather than asking "Does multi-source feedback work?'"

Previous studies conducted on the topic of employee's performance assessment and training development has extensively studies the implementation of 360 feedback approach and its advantageous over the traditional single-approaches. However, few studies have studied employee's perspectives toward the implementation of this method. Quantitative studies are rarely done in organizations to ensure that training is effective (Carnevale and Schultz, 1990; Stephen et al., 1988). The similar is true also of management training based on 360 feedback approach (Church, 1997). Most of the previous studies have been conducted in the United States and in Europe context. Since there is a scarcity of works on the topic in East Asia, especially in the Middle East countries, this study attempts to partially fill this need through an empirical investigation of the effectiveness of using 360 feedbacks in the oil sector and from the employee's perspectives.

In the state of Kuwait, companies in the oil sector are concern to accomplish its objective and its purpose. The only path to ensure that these establishments goals are satisfied is to improve employee's performance by obtain better evaluation methods and approaches. Organizations in the oil sector are implementing 360 feedbacks since 2006 for development purpose as an alternative to traditional single-approach methods (e.g. up-warding methods). However no study has indicated that reveals employees perspectives and attitude toward this approach.

Thus the current efforts attempts to examines critically the introduction of 360 feedback in the oil sector in the state of Kuwait, which has recently moved to make 360 feedback available to all of its managers and employees. The paper explores three specific issues. First, it examines the organization's rationale for the introduction of 360 feedback. Second, the effectiveness of this approach and, third, it evaluates employees perceptions of the value of the 360 feedback scheme used in the oil sector companies.

1.4 RESEARCH OBJECTIVES AND QUESTIONS

The objective of this study to provide empirical-based evidence on the usefulness of 360 feedback and explore employee's perspectives toward this approach as development instrument for employees training and career devilment. In state of Kuwait, the 360 feedbacks as development approach are rarely implemented. The researcher argues that oil sector only has fully adapted this approach. The current study attempts to examine the oil sector setting in the sate of Kuwait. Thus to examine employees perspective toward this approach is necessary and justifiable.

The researcher examines this approach in two large establishments in the oil sectors. The study seeks to measure the 360 feedbacks from several issues; acceptability, level of involvement, and more that will be mentioned in chapter two. Hence, the study will investigate the 360 feedbacks system before apply it as an appraisal system. They main focus of the current study is to explore the effectiveness of the 360 feedbacks as appraisal system from employee's perspectives.

The current study attempts to provide empirical-based evidence for the following questions:

What are the general perspectives of the oil sector employees toward 360 feedback?

From employee’s perspectives, what is the degree of acceptability of this approach from employee’s perspectives?

How employees agree/disagree with the Benefits of the 360 feedbacks system?

How employees agree/disagree with Effectiveness of this approach?

1.5 SIGNIFICANCE OF THE STUDY

The significance of this study is the potential contribution at two primary levels: theoretical and practical. At the theoretical level, the present study is expected to bridge a gap in the literature for empirical research focusing on the effectiveness of the 360 feedbacks as appraisal system from employee's perspectives. For the practical contributions, this study is expected to make a contribution by providing additional evidence that top management may considered when implementing this approach and to avoided any problems that may arise. Exploring employees perspectives toward this approach is very important to the top management in order to understand how to better implement and conduct this approach.

1.6 LIMITATION OF THE STUDY

The limitation of this study lies in the differences of demographic and personal factors. The current study has selected only two establishments in the oil sector to investigate employees perspectives toward 360 feedback approach. The limited response rate also considered one of the study limitations. Finally, other studies are required for the purpose of generalization. Finally, the result of the current study may not be appropriate to generalized to other sector or GCC countries related to differences in demographic factors.

1.7 THESIS STRUCTURE

This study expected to comprise six major chapters. Chapter 1 provides a discussion of nature, purpose and significance of the study. Chapter 2 presents an extensive review of the literature on bank selection criteria for the purpose of laying out the theoretical foundation of the study. Chapter 3 presents research methodology, it discuses the population and sampling, data collection procedures, questions of the research and instrumentation. Chapter 4 presents the result of data analysis. Chapter 5 reveals the discussion of the study. Finally, chapter 6 presents Summary, conclusion and other implications of the study.

CHAPTER TWO

LITERATURE REVIEW

In this chapter, the researcher presents previous studies for performance appraisal and specifically the 360 feedback approach that could be the framework to understand and systematically analyze the effectiveness of this approach. The current chapter begins with explanation of the purpose of appraisal and reasons behind the need to measure employee's performance. The researcher develops the literature with more intention given to the 360 feedback as an appraisal approach. At the end of this chapter, literature reviews are summarized.

2.1 PURPOSE OF APPRAISAL AND FACTORS AFFECTS EMPLOYEES PERFORMANCE

Literatures reveal that the appraisal is inspirable management tools to improve organization performance. Organizations use these appraisals systems in order to satisfy many objectives and purposes. However, these purposes vary from one company to another but rarely. "The main purpose of the performance appraisal is to further the organization’s purpose by strengthening the performance of every member of the organization” (Grote, 1996). Furthermore, Grote (1998) has suggested that the most common objectives purpose of the appraisal system could be summaries as follows:

To identify training and developing need to start with.

To assess employee actual performance and compare it with the desired performance during specific period of time. To support the strength and reduce the weakness.

To determine the job need and do recruitment modification for the future.

To develop the relationship between manager and subordinates avoiding jeopardize relations.

To do change if needed for the payroll and round system.

To receive feedback that could take part in manager’s decisions.

Setting and measuring goals.

Confirm the good decisions.

Previous studies reveals that those organizations concern of cost and profit as major objectives in their mission may review financial data related to cost and gained profit in specific period then to based on it they take an action toward it (Niculite, 2007) Many studies emphasize that there are factors affects organizations growth and employees performance. But it is different from one organization to another depending on the company’s industry wither it is technological, investment, electronic, service provider and etc. (Industry system research, 2002). Even individual differences effect their reactions toward these factors. Hence, employee's performance varies from one organization to another for many reasons:

Environment: in this factor it is required to provide all needed issues to start job with comfortable atmosphere, people like to work in place let them to feel comfortable not stressed from their managers. Because it is hard to involve in any assigned task in such environment (Bruce, 2003). Managers encourage people to motivate themselves to work as desired. This occurs by appear managers concern of people to stratify both parties organization and employee to highly productivity and best outcome and others factors related are to share feeling and positive experience, this could happened once a week. Furthermore, to ensure sufficient training to do work as planned.

Experience: Human with long experience in this field will lead to high productivity unlike new person who just start his job in the same filed, but it is not rule. It illustrate that employee with previous experience have a background of how to involve job better than whose first time participant. It will affect his productivity (Heska, 2009).

Personal problems: getting your own problems to workplace affect your behaviour in workplace. It could lead to task mistakes and lower level of productivity as consequence your colleagues will be bothered from repeating complaining from you and could affect their mood on doing work (Guerin, 2007). In similar cases manager should take an actions to solve these types of problems.

Rewarding system as motivation: Organization must pay attention to those high qualified employees with skills and talent in managing their job (Lawler, 2000). Through this rewarding system you support this group of employees and emphasize their motivation.

Lower level involvement in set company’s mission: the lower levels employees involvement in set organization objectives facilitate achievement the desired goals. It will affect in better performance because they understand what they should do (Worley and Cummings 2008).

wages and salaries: there is link between job satisfaction and salary, any employee build his decision to accept his new job on how much they will pay, they need to be satisfied to accept this job or they will not accept. The concern seeking higher salary with less responsibilities or it affect their performance in negative way (Streingold, 2007).

The majority of organizations considered performance evaluation measurement as one of the top priority of the top management. However, the importance of this approach varies depending on the nature and objective, Job tasks, and the organization process. Studying human resource management reveals that person behaviour is significant aspect to be evaluated although it is difficult to be measured. In addition, the productivity level outcome from each person should be measured regardless the activity of the organization. Service or product it will be assessed depending on desired goal of productivity

2.2 THE 360 FEEDBACK: DEFINITION AND PURPOSE

Feedback in general describes the situation when output from an event or phenomenon in the past will influence the same event in the present or future. Multi-rater feedback, 360 feedback; co-worker feedback; multi-perspective ratings; and full-circle feedback are just a few of the names used to describe this type of feedback. The literatures reveal that there are numerous contribution that propose definitions of the 360 feedback approach. “Feedback from multiple sources or ‘360 feedback’ is a performance appraisal approach that relies on the input of an employee’s superiors, colleagues, subordinates, sometimes customers, suppliers and/or spouses” (Yukl and Lepsinger, 1995). In the same base, Tornow (1993) observes that in 360 feedback approach, feedback about a target individual is solicited from significant others using a standardized instrument.

Yukl and Lepsinger (1995) explained that 360 feedback approach is a performance appraisal method, while Jones and Bearley (1996) has defined 360 feedback as "the practice of gathering and processing multi-rater assessments on individuals and feeding back the results to the recipients". Hoffman (1995) uttered that 360 feedback is: "an approach that gathers behavioral observations from many layers within the organization and includes self-assessment". Clevland (1995) has defined this approach, he said that “its one to provides accurate, complete, and fair evaluation for each person’s performance and that provides information useful to both organization and individual”

In explaining this approach, Hoffman (1995) has suggested that the feedback receiver completes the same structured evaluation process that managers, direct reports, team members and sometimes external clients use to evaluate an employee performance. Lepsinger and Lucia (1997) point out that the 360 feedback process involves collecting perceptions about a person’s behavior and the impact of that behavior from a number of rating sources. Therefore, a 360 feedback approach seeks to relay feedback to the receiver regarding an employee behavior in the workplace and how it affects other organizational members that work with that employee.

In an era where the boundary less organization is gaining increasing currency, the concept of 360 feedback seems to fit very well with the tenets of this approach to organizational theory (Ashkenas et al., 1995). Walton (2003) has elaborate the concept of 360 feedback and uttered that "360 feedback is the process of formally judging the value or quality of person or thing for managers, as employee evaluation is core mean for ensuring effective employee performance"

More recently, Steven (2007) has confirmed the similarity of these definitions. He uttered that "the analysis in term of initial objectives, and estimate usually made of accomplishment using an automatic data processing to provide information on operating and identifying action require if any”. Erasmus (2009) suggested the concept of 360 feedback is a formal and systematic process by means of which the job-relevant strength and weaknesses of employees are identified, observed, measured, record and developed”.

For the purposes of this study, the term 360 feedback is employed. Figure 1 presents a graphical representation of potential evaluator in a multi-source appraisal system.

Supervisor

Subordinators/

Direct reports

Suppliers

External Customers

Internal

Customers

Other Boss

Cp-workers

An employee to be

evaluated

Figure 1: potation evaluator in multi-source appraisal approach

Source: Lepsinger and Lucia (1997)

The figure reveals that the most commonly employed rating sources are the boss, subordinates, self and peers. In some organisations there is a more limited use of feedback which does not include all the evaluator and these types of feedback systems can be termed: upward appraisal; subordinate appraisal; reverse appraisal; co-worker feedback or colleague assessment.

Literatures explain that there are varying forms of the 360 feedback process, for example 270 feedback that considered one source of feedback is omitted such as customer ratings. Another form is 180 feedback where it is only peers that provide feedback (Peters, 1996). The study of Handy et al. (1996) suggested that some organizations use an extended version of the 360 feedback process which is termed “540 feedback”, because suppliers and external customers are included with the other evaluator. However, it is acceptable to use the term 360 feedback or multi-source feedback, even if the process does include suppliers and customers as evaluator.

The use of 360 feedback presents accepted method for both enhancing the learning of the participants and improving the evaluation process. Feedback is seen as a essential element in affecting change in an organization (Bennis et al., 1969). According to Zemke (1995) employees undertake learning experiences if they see necessitate for a new or different skill or knowledge. Studies explain that when 360 feedback is presented in an organization, top-management can see clearly the skills they need to improve their employees (Shipper et al., 1991).

The implementation of 360 feedback is the first step in Lewin’s (1948) model that suggest this approach is necessary to enhance the learning process. In addition, adapting 360 feedback approach before and after the training, the first step in evaluating the effectiveness of the training can occur. In addition, the second round of feedback can be used both as review of past learning and also an enhancement for future learning.

In his study, Kirkpatrick (1976) suggested that the data from the second round of 360 allows one to examine for positive changes in the subjects’ managerial skills and for the collection to come from a source other than the manager. By definition, as explained above, 360 feedback observations are collected from the employees as well as from the manager, the superior to that manager, and the peers. Qualities of studies have reveals that the employees’ observations of the managers’ behaviours have the highest correspondence of all four with performance (Schriesheim and Kerr, 1974; Bass, 1990; Clark et al., 1992; Shore et al., 1992). Thus, collecting 360 feedback forms both before and after the training may both improve the learning and provide the required data to evaluate the training.

2.3 THE 360 FEEDBACKS AND TRADITIONAL APPRAISAL SYSTEM

After explaining the importance of performance appraisal and defining the 360 feedback system, its very important here to clarify the differences between this appraisal and the traditional Top-Down appraisal. Review the literatures, many academics and practitioners argue that the performance appraisal process has traditionally been viewed in a negative light in many organisations, even though it is a very important element of the overall performance process. In his study, Meyer (1999) argues that most managers see performance appraisal as an “onerous and distasteful” chore that has to be carried out.

Old literatures reveals explain that the performance appraisal considered as an unpleasant activity for both top-management and managers that is either avoided or carried out in a hurried or automatic manner (Lawler et al., 1984). Furthermore, in their study, they explain that managers dislike the performance appraisal process so much that, without administrative pressure to perform it, they will not carry out appraisals with subordinates at all. Later, Taylor (1995) assist Lawler by suggesting that performance appraisal system is a practical challenge to all involved in the process.

The prior study Napier and Latham (1986) uttered that an organization employees often see no value in the performance appraisal interview and view it as another organisational intervention which does not, in reality, have a significant influence on their performance or development. They explain that managers performance evaluation may depend more on unit performance than on observations of the individual employee’s actual behaviour.

Folger (1998) give details explanation for the complications associated with negative feedback in the context of the performance appraisal interview. They explain that most managers dislike giving negative feedback and they are as well not skilled in providing it. As a result, evaluations are often positively inflated. If this is the manner in which the interview is conducted, the effectiveness of the performance management process is significantly undermined. Meyer (1999) finding assess Folger (1998) explanation, he explain that because of inaccurate performance feedback, an organization employees may have a distorted view of their actual performance which will then be inconsistent with administrative decisions on issues such as salaries and promotions.

In his study, Longenecker (1997) has collected a sample of 120 managers from top five US companies to investigate the factors that lead managerial performance appraisals to be ineffective. Longenecker study reveals that fail to focus on the issue of management development and performance improvement is the main cause of ineffective appraisals. Table 1 presents the causes of ineffective managerial appraisals.

Table 1: top reasons for ineffective managerial appraisals

- Poor working relationship with the manager.

- Lack information on actual performance.

- Lack of ongoing performance feedback.

- Unclear performance criteria/ ineffective rating instruments.

- Overly negative/ second guessing review.

- Perceived political reviews.

- Lack of focus on management development/ improvement.

- An ineffective link to reward systems.

- Superior lacks rating skills/ motivation.

- Review process lacks structure/ consistency.

Source: Longenecker, 1997

From the table, it is obviously that 360 feedbacks appraisal system has the potential to address most of the weaknesses inborn with the traditional approach.

As we explained the problems and complication that inherited in the traditional interview-based performance appraisal and the negative perceptions that have been carried out long-time ago, it seems appropriate to investigate another approach to performance appraisal than has heretofore been used. The 360 feedback system offer a potential solution to most of the complications outlined by Longenecker (Wexley and Klimoski, 1984). For instance, ratings need not be inflated because managers when evaluate their employees are providing information anonymously and the aggressive aspect of the review is narrowed because the manager does not have to carry out the review in an interview setting.

According by Longenecker’s (1997), one of the frequently cause of ineffective appraisals to work is poor working relationships with the boss. 360 feedbacks appraisal offer solution for this problem by having a number of other sources rate performance, such as peers and subordinates, should help alleviate to some degree the problem with a single source rating of performance if that source is not perceived in a positive light.

Furthermore, Longenecker (1997) highlighted that the lack of information on actual performance is another problem for effective managerial appraisals. It is argued that managers typically do not have the opportunity to observe some behaviours in the workplace, such as leadership, for example, and thus they are not in a position accurately to rate such behaviour.

The 360 feedbacks appraisal and the traditional top-down supervisory appraisal are similar in that both can be used to evaluated employees performance to provide training and development required. While the manager was the only rating source in traditional top-down appraisals, thus he is still a significant evaluator in the 360 feedbacks system representing (he has a “90” view of the individual’s performance). Furthermore, both performance appraisal strategies involve reports of behaviour as well as judgements of performance based on work unit results. Both contain the potential to use rating scales and therefore are subject to traditional problems of data validity and bias, such as leniency, halo and stereotyping (London and Beatty, 1993).

Literatures reveals that there are a number of important differences between 360 feedback and the traditional appraisal process. For example, London and Beatty (1993) uttered that performance appraisal is carried out primarily to measure performance and has implication such as pay and job assignments, transfer and promotion decisions and that it is not always easy to be implemented in most of organization.

Furthermore, studies suggested that training and development decisions may not considered the outcome of traditional performance appraisal because the focus of the performance appraisal itself is to evaluate the past performance of the individual concerned. On the other hand, 360 degree feedback primarily use in companies as a development instruments for the learner process. Finally, the most relevant difference between these two processes is that there is only one rating source in the traditional approach and the 360 feedback approach utilises a number of ratings sources. In their study, Becker and Klimoski (1989) explained that 360 feedback recognizes the complexity of management and the value of input from these different sources, which is dissimilarly to the traditional supervisor appraisal.

2.4 THE DEVELOPMENT AND EVOLUTION OF 360 FEEDBACK

Since 1980, the 360 feedback system has become popular in organizations and at that time was mostly used as an administrative development tool (Coates, 1998). As explain in the previous section, the traditional upward appraisal did receive some attention in the 1970s and early 1980s but it was not until the 1990s that 360 feedback per se gained currency (Mount, 1984; Bracken et al., 2001).

Tornow and London (1998) explained that the need for managers to adjust with the chaining business environments is a primary reason why 360 feedback has become popular in the past decade. evaluation sources from both inside and outside the organisation can provide key information which enables the organisation to be adaptive. In their research, Edwards and Ewen (1996) uttered that management by objectives (MBO) became popular in the 1960s and 1970s. As part of the MBO approach, employees were encouraged to participate in developing work objectives and in evaluating their own performance against these objectives. Therefore, the self-assessment component of the 360 process is not a totally new concept but stemmed from the MBO culture of the 1960s and 1970s.

The 360 feedback system was first implemented in medicine organization, reviewers for physicians and residents generally include medical colleagues, co-workers, and/or patients (Ramsey et al., 1993; Lipner et al., 2002). Feedback is summarized in a confidential report providing individual and aggregate mean scores from each reviewer group, and personal self-assessment scores. The intent is that recipients learn from their report and use it for practice improvement through reflection upon their own and aggregate scores.

Lepsinger (1998) uttered that increasing competition and a renewed focus on the customer were trends associated with the 1990s and these trends acted as a catalyst for the adoption and popularity of multi-source appraisal. They indicate that the shift from the bureaucratic and hierarchical to flatter organisation structures similarly encouraged the growth of 360 feedback. Flatter organisation structures required more interdependence in the form of teamwork and communications. In his study, Lepsinger (1998) argue that one of the consequences of flatter organisational structures is that managers are increasingly required to work with people in other parts of the organisation and are expected to achieve results, even though they have no direct authority over them. With such work structures in place, the traditional approach to appraisal proves less useful as a source of information and demands a more comprehensive process whereby peers and customers and other stakeholders can provide feedback to the individual.

Waldman et al. (1998) provide other potential reasons for the increased adoption of 360 feedback processes. First, it is assumed that the provision of feedback to managers about how they are viewed by subordinates, peers, superiors and customers should prompt positive change in behaviour and performance. Second, it is assumed that the implementation of 360 feedback processes will lead to increasing levels of trust and communication throughout the organisation, fewer grievances and greater customer satisfaction.

In his study, Waldman et al. (1998) refer to organizational theory as playing an important role in the increasing use of 360 feedback. Organizational theory advocates that organizations make attempts to imitate their competitors. Waldman conducted his research in one of the organizations that implement a 360 feedback process and he found that the reason that was cited for deciding to use 360 feedback was that the competition were doing it and so this particular organisation should also utilise it. Waldman explained that “politics” is another factor that influences the adoption of 360 feedback. They state that a company may embrace 360 feedback in an attempt to give an impression of openness and participation in the organisation but the reality may be somewhat different.

While the purpose of 360 feedback system is performance improvement, recipients of performance feedback, especially negative feedback, do not always accept and use it. The previous studies reveals that receiving negative feedback may evoke strong emotional reactions such as anger, shame, or powerlessness which can negatively influence subsequent behaviour and be long-lasting (Atwater et al., 2002; Smither et al., 2005). As result, performance feedback is personal information about an employee, it is often more difficult to treat objectively, tends to be more emotionally charged and can hurt the recipient’s self-esteem and pride (Ashford et al., 2003; Boud, 2002).

Studies suggested that a useful model of performance feedback based upon the internal organization of individuals’ performance goals. In their Physiology study, DeNisi and Kluger (2000), reveals that performance goals are arranged hierarchically in three levels, the highest is a ‘‘self’’ where goals relate to self-concept, the second level is a ‘‘task’’ where goals relate to task performance, and the third level is a ‘‘task learning’’ where goals relate to task details and the specifics of performing it.

In their study, DeNisi and Kluger (2000) suggested that negative emotional responses most commonly occur when feedback intended for the ‘‘task’’ or middle level is interpreted at the ‘‘self’’ level. This diverts attention from the task and instead focuses it upon the ‘‘self’’ where it is perceived as a generalized criticism and leads to negative feelings like self-doubt, anger, or frustration. Finally, they suggest this has particular implications for 360 feedback system would encourages participants to compare their individual scores with aggregate scores may focus interpretation at the ‘‘self’’ level and away from the ‘‘task’’ level.

Finally, the recent development of 360 feedback system reveals that the total quality management (TQM) movement, with its emphasis on quality and customer satisfaction, acted as a driving force in the development of 360 feedback (Edwards and Ewen, 1996). As total quality management emphasis on quality service in striving for quality excellence, 360 feedback acts as a very useful and powerful source of information because, with this method, customers and suppliers can provide feedback on various quality dimensions within the organisation. In his study, Grote (1996) suggested that the TQM movement has served as a strong force in promoting the notion that those closest to the work are in the best position to evaluate performance. Similarly, those closest to the job are in the best position to suggest ways for improvement. TQM, therefore, was instrumental to the development of 360 feedback processes.

2.5 DIFFICULTIES ASSOCIATED WITH 360 FEEDBACK STSTEM

After all, it's important here to explain the difficulty and complication that associated with the adoption 360 feedback system. It has been suggested that 360 feedback system often generate conflicting opinions about the person to be evaluated, and that there may be no way to determine whose feedback is more accurate (Vinson, 1996). Studies have also indicated that self-ratings could be generally significantly higher importance than the ratings of others (Yammarino and Atwater, 1993).

Another major challenges facing the adoption of 360 feedback system is that employees may feel threatened by other assessments (London et al., 1990). This is especially true if the organisational culture has traditionally been bureaucratic and hierarchical. A move away from traditional methods and processes that employees are used to can lead to fear and rejection of the new initiative. Murphy and Cleveland (1991) claim that hierarchical organisations present difficult contexts for 360 feedback programmes and consequently subordinate and peer appraisals in these organisations are generally not well received.

A predictable issue with 360 feedback appraisal is that the feedback ratings may not always be positive and could even be relatively negative (London et al., 1990). Its obviously that most of managers when presented with negative rate about their performance become more aggressive and defensive, thus the feedback process may lead to frustration, which in turn has negative consequences for the organisation (Kaplan, 1993). London and Beatty (1993) highlight that 360 feedback raises the stakes for a manager and that the process places pressure on the employee’s self-concept.

Another complication that arises with the adoption of 360 feedback is the long process arise with the conducting survey (Bracken, 1996). This explains the fact that organisations employ numerous surveys forms and questionnaires to evaluate, for example, customer and/or employee satisfaction. The widespread adoption of 360 feedback assessment within an organisation may result in employees having to fill out numerous questionnaires for their managers, their co-workers and their subordinates. This survey exhaustion may de-motivated employees to provide accurate and valid ratings.

Furthermore, literatures reveals that 360 feedback may not change feedback recipients’ behaviour and performance at all. For instance, Bernardin et al. (1993) have explained that managers’ ratings from supervisors and customers did not change after the managers received feedback. In the same study, they also found that store sales volume was unaffected by the use of 360 feedback, which suggests that 360 feedback may have no significant effect on an organisation. The researcher believes that if these findings can be generalised, then it is questionable whether or not the adoption in 360 feedback is value to an organization.

The study Moses et al. (1993) reveals one of the prominent critiques of 360 feedback. In their study they argue that there are fundamental flaws in the design of many of the 360 feedback inventories that result in the feedback that the system produces being severely limited. A number of factors impact the effectiveness of the feedback process. An evaluator may rate the learner in relation to “generalised trait-based outcomes” rather than concrete situations (Moses et al., 1993). Second, a limited or non-existent frame of reference may exist for making evaluator judgements. Furthermore, they argue that an evaluator is making observations on past performance based on memory and he/she may not be sufficiently capable of interpret employee behaviour. After all, Moses et al., (1993) stress on the fact that there is too much reliance placed on the instrument designer’s scoring system, factor analysis and data collection to interpret the information for the participant.

Finally, studies reveals that many of the 360 feedback programmes are conceded out in the absence of a strategic context, which did not focused on enhancing the competitive advantage of an organization (Schneier et al., 1992). Kanouse (1998) uttered that the success of many 360 programmes is constrained in that evaluaters are often inadequately instructed in the task of providing feedback. Hautaluoma et al. (1992) suggested that the potential risks to the evaluator may existed (e.g. manager to evaluate his superior) that may generate tension in an organization context.

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