From the December 1996 issue of Entrepreneur

A decade ago, "multirater" performance feedback for employees was a fad found in just a handful of businesses. Today, "it's used by over half the Fortune 500," says Susan Gebelein, a senior vice president at Minneapolis-based Personnel Decisions International, a creator of staff development tools. That makes multirater feedback--where employees get formal insights on their performance from multiple sources such as peers, their subordinates and their boss--the hottest human resources trend around. The question is, Why is it so rapidly replacing the traditional boss-to-subordinate, one-way performance feedback model that has prevailed for generations?

Simple, says Mick Mount, chairman of the Department of Management and Organization at the University of Iowa in Iowa City: "We have come to recognize the boss does not know all the answers. Certainly, the boss's perspective is valuable, but is it the only one? When we supplement it with the perspectives of others, we are much more likely to get a comprehensive picture of a person's performance."

In the smallest businesses, boss-to-subordinate performance feedback may be all that's needed to jump-start a worker's output. When there are only two to four employees, the boss may have ample insight into how an employee deals not only with him or her but also with co-workers.

But as a business grows, the boss can't see the whole picture. Some employees are skilled at giving the boss exactly what he or she wants but drop the ball when dealing with co-workers. Others are esteemed by co-workers but little noticed by the boss. Either way, boss-to-subordinate evaluations provide a very limited point of view--and that's where multirater feedback comes in.

In addition to the boss's perspective, ratings are given by a minimum of three co-workers, says Bruce Knudson, owner of Cape Coral, Florida-based Positive Directions Inc., a consulting firm specializing in customer and employee retention. If the rated employee has subordinates, at least three of them should be involved, too. Why use so many raters? A diversity of voices helps to preserve anonymity, meaning workers are more apt to be honest.

Another plus of instituting multirater feedback: Few bosses enjoy doing one-on-one evaluations, and, often, they simply neglect doing them. The multirater system means the burden is shared, making it much more likely to produce valid results that benefit the employee and the business.

Will workers welcome the new system? "They are very receptive--that's what we have found in most organizations," says Gebelein. "In businesses where there has been a history of mistrust and antagonism, we occasionally find workers who mistrust the process at first. Even there, though, confidence in multi-rater feedback grows over time."

Questions, Questions

Where to get started? The first step is to develop a questionnaire, but don't expect to do this over a cup of coffee. The better the survey, the better the results. "The key is to make the questionnaire strategically significant," says Richard Harris, a senior vice president with Boston-based The Forum Corp., a human resources consulting firm that has implemented multirater feedback systems in numerous companies. "You want it to serve the critical needs of the business."

This means thinking hard about what the individual worker needs to do to be effective, then writing survey questions that match these needs. "The key is to measure competencies the worker needs to benefit the company," stresses Gebelein. For instance: "On a scale of 1 to 5, 5 being highest, rate this worker on how well he or she meets deadlines."

Keep the survey not only focused but short. Busy employees don't have hours to fill out forms. At Personnel Decisions, the target time in surveys it provides its clients is completion within 10 to 25 minutes. (Tell employees how long the survey should take--"otherwise, some people agonize over this," says Gebelein.)

Once surveys are written, it's time to begin the process. Guess who gets rated first? You. "If commitment from the top isn't there, don't even start this process," says Bob Abramms, a senior consultant with ODT Inc., an Amherst, Massachusetts, human resources consulting and publishing firm.

But don't be surprised if the feedback does not fill you with cheer. "We know several facts about this process," says Mount. "People tend to rate themselves higher than others do. We also know that, in many instances, direct subordinates are tough raters of their bosses. Some bosses get hammered--and that hurts."

Knowing this in advance lessens the sting. Besides, what the workers will tell you may well heighten your effectiveness. Be a role model here, too. If you shrug off the feedback, workers will do the same.

What should you do about negative feedback? At Personnel Decisions, Gebelein says, "We tell the person to meet with the raters, thank them for their feedback, and tell them what they learned and what they plan to do differently."

What if some of the feedback isn't clear to you? Ask for elaboration--but do it gingerly. "It is difficult not to get defensive when asking to clarify feedback you've been given. We tell people instead to ask for advice about development, about the steps they should be taking to improve," says Gebelein.

Once you've been through the process, expand it to include your employees--and make sure rating sessions are followed by actions. "Multirater feedback can be like a commitment to exercise. How long does it take most people to slide back to not exercising?" asks Knudson. "The same thing happens with decisions to make behavioral changes."

The point is not simply to collect observations about yourself but to follow up with changes that improve personal effectiveness and benefit the business. Some businesses build follow-up meetings with raters into their process--at three-month intervals, the rated employee meets with the raters to review the changes implemented and what still needs work.

Share And Share Alike?

Should you be privy to the ratings workers get? In some companies, bosses automatically get copies. In others, it's the employee's choice to share the feedback with the boss. The experts' strong recommendation: "The report should go only to the employee. Let him choose how much to share," says Mount.

"Co-workers can be paranoid about giving feedback, and if they know it goes only to the employee, it increases their honesty," adds Knudson.

More expert advice: Don't link feedback to pay raises. Granted, it seems an easy way to handle compensation, but taking this route could land you in trouble. "Some corporate legal departments are skittish about even trying this. Multirater feedback provides perceptions, not facts. It's important not to forget that," says Gebelein.

There's a benefit, too, in separating multirater feedback from pay, says Gebelein. "When it is used for raises, people tend to become protective of each other," he says. "Ratings tend to be higher. When it is decoupled, the process [generally] produces honest feedback."

Not all the feedback will be accurate--and workers need to be told that before getting their results--but much of it will be on the mark. And, when multirater feedback is used as a tool to help employees develop, "it provides a valuable vehicle for communication. It helps people talk to one another in ways they otherwise never do and about issues they otherwise never discuss," says Gebelein. "It can become a life-changing experience."

Contact Sources

The Forum Corp., 1 Exchange Pl., Boston, MA 02109, (617) 371-3442;

ODT Inc., (800) 736-1293, fax: (413) 549-3503;

Personnel Decisions International, 2000 Plaza VII Tower, 45 S. Seventh St., Minneapolis, MN 55402, (800) 633-4410, (612) 339-0927;

Positive Directions Inc., (941) 945-4673, BKnud45002@aol.com.