Protecting Integrity in Governance with 360-Degree Feedback

In the wake of recent corporate scandals, 360-degree feedback has emerged as a tool that may help prevent future disasters.

The tool is already recognized for promoting the growth of managers. It enables people in the know to provide their leaders with an honest assessment of their skills and integrity, based on a secure, confidential questionnaire.

But its success on the individual level can blind us to its capacity to scan for danger in the organization as a whole.

In every organization that hit the headlines because of governance issues, there were people who recognized the problems but had no secure way to voice concerns. By default, their silence supported the pretense of the official corporate numbers.

But had their organizations aggregated and studied the results of 360-degree feedback, corporate health could have been charted earlier and more accurately, boards of directors alerted, and remedial measures put in place.

In recent years, there have been growing demands from customers of the 360 provider Panoramic Feedback, for automated aggregate reports that would help them measure their human assets and understand the culture of their organizations.

“They asked for a tool that would provide useful data by combining the results of their 360s,” said CEO Esther Kohn-Bentley. “They wanted to sort them effortlessly by department or division, by individuals, by highest and lowest ratings, even by the extent to which those being assessed differed from or were similar to each other.”

These requirements led to the development of a 360 aggregate report by which organizations can measure:

• The integrity of their leaders
• Their level of competency
• Whether they adhere to codes of ethics
• Whether the organization is out of control

To put in place such a remarkable instrument requires foresight but surprisingly little additional effort. Here’s a 3-step plan to scan for danger in your organization’s governance.

1. Assess the right people

It is essential to make sure your 360 project covers all the senior management of the organization, including the CEO and CFO.

That’s not as difficult as it might seem. Leaders generally understand that 360 has the most positive impact on staff when its use is modeled by the leadership.

2. Ask the right questions

The confidential nature of the 360-degree feedback questionnaire makes it safe for responders to provide valuable intelligence.

In addition to focusing on traditional business skills, your 360 can ask questions like this: “Does the person being assessed carry out accounting and audit measures rigorously and transparently?”

As well, you can ask pointed questions about the culture of the leadership group. For instance: “Would you trust this person to manage your own personal finances?”

Finally, you can ask responders for unstructured comments that elicit their valuable personal perspective: “Please comment on this person’s adherence to the highest standards of governance.”

The most effective questionnaires include competencies and skills that will be needed in and beyond the foreseeable future.

Questions like these have a strong positive side effect. They convey an unmistakable message that the organization is committed to integrity in governance.

3. Aggregate the results

An aggregate report provides the view from 10,000 feet, contributing to an overall picture of corporate skills and culture. It can reveal specific corners of the organization where integrity is strongly or weakly practiced.

As well, aggregate reports can be filtered to show the results for specific leaders. Their Individual results can alert you, for instance, to persons who were rated high on business acuity but received lower scores on ethical or financial issues.

(Be careful to generate this kind of data only if the people being assessed understand that their individual results may be seen by others.)

Use aggregate results to understand the organization 360 aggregates have benefits beyond governance issues. Organizations are hungry for quantified, usable data. An oft-quoted study by Lingle and Schiemann in Management Review, March 1996, showed that “measurement-managed” companies consistently out-performed the rest.

360-degree feedback can provide crucial numerical information about the skill levels in individual departments or divisions. It can suggest cost-effective training initiatives, help keep your best performers fully engaged, point to winning strategies, and warn the organization away from plans for which it may lack the bench strength.

But for many organizations, the most urgent concern is to assess the integrity of governance. 360-degree feedback can predict whether they risk becoming the next victim of critical headlines.

Sidebar: 
360-Degree Feedback Questions for Corporate Governance

Explicit Questions

• Do the persons being assessed walk their talk when it comes to the organization’s standards of integrity?
• Do they carry out accounting and audit measures rigorously and transparently?
• Do they demonstrate the core values established for the organization?
• Do they fully understand the financial management of the organization?
• Are they capable of overseeing the financial management of the organization?
• Are they careful to balance the organization’s need to present a strong public face with its responsibility to be frank and fair?
• Are they prepared to put their own desires aside for the sake of their responsibility to shareholders, employees, customers, and the general public?
• Do their decisions reflect their social responsibility, to the people of the country and to the environment?

Culture Questions

• Do you feel great confidence that the person you are assessing is leading the organization in the most effective way?
• Would you trust this person to manage your own personal finances?
• Is this person contributing actively to make the organization strong on capability and integrity?

Requests for Comments

• In your own words, please comment on this person’s capability as a leader responsible for financial reporting.
• Comment on this person’s adherence to the highest standards of governance.
• Is there any risk that this person is building an organization which may be successful in the short term, but might attract negative attention in the longer term?