Turning appraisals 360 degrees

Nathalie Towner looks at how an online 360-degree feedback system helped transform the appraisal process at AAH Pharmaceuticals

The business

AAH Pharmaceuticals is one of the UK’s biggest pharmaceutical wholesalers, providing medical products and services to pharmacies and hospitals across the UK.

At the end of 2002, the company had a turnover of £2.2bn.

AAH employs 3,800 people, with 18 working in the HR department, and its parent company is German healthcare group, Celesio.

The challenge

AAH Pharmaceuticals wanted to replace its standard performance appraisals with a360-degree feedback system, which allows staff to be rated by peers, line managers and direct reports.

“I felt it would provide more rounded feedback than the conventional top-down approach,” says management development manager David Thompson.

When HR director John Richards joined the business, Thompson was given the go-ahead to properly investigate the system. While Richards approached the board members to convince them of the business benefits, Thompson recruited consultancy, ‘the360.co.uk’ for assistance with the project.

“Crucially, they had the experience to measure the impact the system had on the business, so that John would have measurable results to feed back to the business,” says Thompson.

The system allows up to 12 participants to go online and work through a series of capability questions. Completed questionnaires are summarised into a report, which gives average ratings for each question, averages for each competency, and the written answers to comment questions. A pilot was successfully carried out on the board members and the system was then rolled out to the next level down.

Presentations were given to staff who expressed concerns over confidentiality, and what the information was going to be used for. So, HR chose to keep the results completely confidential for the first year. Richards felt this was the best way for people to feel in control of the process.

“Our primary aim was to identify a development plan they agreed with, and we didn’t want people thinking that we were using these reports for anything other than that,” he explains.

The outcome

Twelve months into the project, 800 staff have been involved in the process – although for the majority, their contribution has been to simply provide feedback on other people. Thompson says there are plans to roll out the system more widely.

For the 93 managers who had 360-degree appraisals, a full evaluation process was carried out. They had to attend a development day run by the consultancy, and go through their reports in a one-on-one meeting. “We asked them what their motivation was and how their plan would benefit themselves and the business so we could put together a development plan,” says Thompson.

Six months later, he went back to the managers to check their progress. Nearly 85 per cent of them were actively working on their plans. He was also pleased to learn that more than half the staff had chosen to share the results with their line manager.

Thompson has calculated the initial cost of the system as £90 per employee, although this figure includes one-off fees for consultancy and training days.

The line manager perspective

“I started off with a healthy degree of scepticism, but by the time I got to the feedback stage, I was a convert,” says Mel Redfern, director of financial control.

As a manager, he has seen his staff show different degrees of comfort with the system. “Although the vast majority were happy to show their reports to me, a handful felt exposed and chose not to,” he says.

He feels the reports give him insight as a manager as to how his staff are viewed across the organisation, and finds that people are more accepting of the results. “In a one-to-one appraisal, there is a much higher chance of conflict and the message won’t always be accepted. But it is more likely to be taken on board if it comes from several different avenues.”

The employee perspective

Martin Ledger works as branch manager for AAH in Southampton and had never gone through a 360-feedback process before. “I thought it would be a good opportunity for me, as it’s always useful to see how other people view you,” he says.

Before starting the process, he attended a presentation, received e-mails with more detailed information, and his line manager took him through the process.

“I had eight people in all providing feedback and, at first, I was a bit daunted by having to organise the process, but it was fine,” he says.

The final report did not contain any surprises. “Although I already knew where I was less strong, this process helped confirm it,” he says.

Ledger found the system was very much structured around the business capabilities, so he didn’t have any difficulties tying up his personal goals with those of the business.

“The 360-system is definitely more beneficial than the normal one-to-one appraisal, but for the whole process to have meaning you need to go through it with your line manager afterwards,” says Ledger.

Learning points for HR

  1. The ease and speed of the automated system was critical to the scheme’s success
  2. Board-level backing and leadership from the top enabled the system to gain high visibility within the organisation
  3. A full evaluation process ensured contact with all the managers and provided the board with data on how the system was benefiting the business

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