What’s the ROI of 360 Feedback?
A 360 Feedback Review is a highly reliable process to gain the perspective of key stakeholders on a leaders performance and effectiveness by identifying their key strengths and development areas, through the anonymous and confidential assessment of competencies and behaviours. When administered professionally, the resultant improvement in leadership and team effectiveness, as well as overall business performance, can create significant ROI. Those companies who don’t invest in 360 Feedback Reviews, often have concerns about budget.
At Natural Talent we are privileged to provide regular 360 Feedback to leaders in global corporates, large SMEs and public sector organizations. We are able to demonstrate that the process normally pays for itself, frequently many times over, especially when areas of improvement are addressed in a follow up Executive Coaching Programme. In particular, a robust Face to Face 360 Feedback Programme can provide the most useful data a company will need in order to design and target its Executive Coaching and Leadership Development Programmes, as well as identifying areas of ineffectiveness, inefficiency, and sometimes overall areas of particular concern within the business and culture of the organization.
Key Benefits of a 360 Feedback Review
Here are some of the benefits of a 360 Feedback Review, in particular when combined with a follow up Executive Coaching Programme, resulting in a positive financial return:
If a leader is regarded by the raters as overly assertive, for example, and is demonstrating an outdated, controlling and authoritative style, it is highly likely that a few members of his/her team will have left the company, with others actively looking for a new role. Once the leader is given the challenging feedback by a qualified Assessor and Executive Coach, he/she can begin to address these perceptions and start to modify behaviours in order to further develop skills such as self-awareness, assertiveness and managing conflict, which will very likely lead to more engaged and valued team members and increased retention levels. The resultant saving to the organization is estimated at between 200% – 400% of the annual salary of each executive. Multiply this by a few members of the SLT and ROI of the 360 Process becomes apparent. Replacing leaders is extremely expensive when you factor in the executive recruitment and assessment process, the time and resource involved, and the usual 6 or so months for the leader to get up to speed in a new role.
If a leader is reluctant to delegate interesting and challenging work, for example, and constructive feedback highlights this, it can become clear that team members are feeling unempowered and demotivated. Despite their best intentions to remain professional and effective, as emotions are infectious, in turn their own direct reports may become disengaged; this can lead to a loss of productivity and increase in presenteeism, which can have a negative impact on revenue growth and overall business results. Once the leader starts to further improve his/her skills, for example, in planning and organizing, and to develop a more effective approach to delegation and empowerment, engaged team members are reportedly 87% more likely to stay with the organization and productivity improves.
Developing All-round Leadership Competencies:
Often a leader has been promoted due to their technical skills and longevity within an organization, such as a company accountant becoming Finance Director, and ultimately CEO. Once they receive constructive feedback, followed by Executive Coaching to work on any improvement areas, they can start to broaden their skills, become more inspirational and effective, as well as having the ability to firefight less in order to implement the strategy. Additionally, a more rounded leader is likely to have a highly engaged and motivated team, as well as in turn being able to spot, recruit, train and retain diverse and top talent themselves.
Replacing or Shortening Annual Performance Appraisals:
Annual appraisals are becoming less popular as a one-off assessment of performance and are often not robust or honest enough to identify specific areas for a leader to develop. Holding annual appraisals is time-consuming and frequently not cost-effective, whereas the results from a 360 Feedback Review are more detailed, robust and reliable.
Creating SMART Action Plans:
The outputs from a 360 Feedback Review need to be collated and transferred in to specific action plans and targeted PDPs; relevant competencies and behaviours can then be worked on in order to improve the performance of the individual, the team and business. This should involve signposting to a range of development initiatives, which may involve an internal/external Mentor, spending time working in other countries/functions to improve knowledge and organizational awareness, or attending a leadership programme.
Creating Measurable and Sustainable Changes in Behaviour, Competence and Performance:
Leaders are aware of the time and commitment required for a 360 Feedback Process in order for it to lead to maximizing efficiency and improving performance. As a result, they feel they need to be committed and responsible for making any necessary changes following the feedback and to become role models in the business. Often the 360 Feedback Report becomes their ‘aide memoire’ for checking in on their behaviours, actions and self-development. Working with an external provider also increases the level of accountability that they have to succeed. Knowing that the 360 feedback process is ongoing and may be repeated within 12 – 24 months adds to their commitment levels, with regular assessments reportedly resulting in an average 20% improvement in performance, aside from any additional development initiatives, such as Executive Coaching and Mentoring or Leadership Development.
Following a robust 360 feedback review, senior executives will commit to making long-term improvements to their behaviours and competencies, often working with an Executive Coach/Mentor; some, who may have been looking to move on, will decide not to leave their leader or the organization, and it’s then that ROI can be seen to be as high as 7,000%.
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