The problem with 360-degree performance reviews

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As year-end approaches, investment banks embark on one of their most hallowed (and often groaned-about) traditions: the 360-degree performance review. The process gathers feedback from all levels — managers, peers, and juniors — to gain a comprehensive view.

In theory, it promises a fair and holistic evaluation. In practice, however, this ritual tends to elicit more scepticism than support.

The concept sounds great on paper. Anonymous reviews from a cross-section of colleagues should offer a balanced, crowdsourced assessment of performance. But for all the talk of objectivity, the 360-degree review is often less about constructive feedback and more about office politics. Without careful design and oversight, it risks morphing into a platform for hijinks where gaming the system can overshadow assessment. 

Here’s how 360-degree reviews work: Employees receive numerical scores based on answers by their colleagues to an online survey of typically 50 questions. The subject is then force-ranked against their peers. The long questionnaire aims to capture a wide range of metrics, from dealmaking mojo to teamwork and sense of urgency. 

However, the system is vulnerable to manipulation. Some bankers, far from viewing the 360 system as an opportunity for personal growth, see it as a platform for self-promotion. The strategies used to game the system are as varied as they are clever, with institutions constantly trying to stay a step ahead. It’s the performance review version of Whac-A-Mole: close one loophole and another pops up. The result is a never-ending cat-and-mouse game between employees trying to boost their scores, and banks trying to keep the process credible.

One of the oldest tricks in the book involves reviewer selection. At some firms, employees can handpick their reviewers, which opens the door to mutually beneficial quid pro quo arrangements. You lavish hyperbolic praise on your office buddy who duly returns the favour. To counteract this, some banks have turned to manager-selected reviewers, hoping for more objective feedback. Whether it works is another story.

Another contentious feature involves unsolicited reviews. Some institutions allow employees to submit feedback even if they weren’t selected as reviewers, theoretically to include a broader spectrum of input beyond just a curated group of allies. In practice, though, this can become a way to quietly torpedo a rival. Some firms have done away with unsolicited reviews altogether, figuring that fewer opportunities to sabotage a colleague can only be a good thing. 

The challenges go beyond gamesmanship. The criteria used in 360-degree reviews are often a hodgepodge of metrics, combining quantifiable measurements like revenue generation with squishier concepts like teamwork and acting as “culture-carrier.” These are valid points to measure, but the mix can lead to a confusing mishmash of results that are difficult to interpret consistently.

Banks aren’t blind to the shortcomings and shenanigans. Many have tinkered with various modifications, such as filtering out extreme ratings (both overly generous and overly harsh) to reduce data distortion. In fact, most leaders treat the scores as a gut check more than gospel, a way to confirm what they already suspect. When it comes to decisions on promotions and bonuses, managers still lean heavily on their own observations and trusted lieutenants.

For many managers, the most eye-opening part of the 360-degree review is often the free-text comment section, where anonymous feedback can offer genuinely helpful — and brutally honest — criticism. But much like the review scores, these comments can be weaponised, with anonymity giving cover for settling old scores or undermining office rivals.

And sometimes the remarks are trollishly unserious: several years ago, one colleague used the 360 form to criticise me for “consistently skipping leg day at the gym.” I had no problem figuring out who the (libellous) joker was!

The question is whether the industry should rethink its approach to performance reviews. The current system consumes a lot of time and resources and arguably obscures more than it illuminates.

One idea is to ditch the annual ritual altogether in favour of continuous feedback throughout the year, even if this piles on more of a burden on management. Another solution would be to explore team-based evaluations to encourage collaboration. And could AI-driven analysis be used to sift through feedback patterns and flag flagrant examples of back-scratching and back-stabbing? 

For now, the 360-degree review remains a curious mix of feedback, mischief, and gamesmanship. Success in this system often reflects a banker’s political acumen as much as their professional competence. Maybe that’s the appeal after all.