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Why Startups Need 360-Degree Feedback

A healthy foundation paves the way for long-term success. A successful startup must begin with a clear vision.

360-degree feedback is generally assumed to take place in large, global corporations with inefficient hierarchy and burned-out employees. According to the Corporate Leadership Council (2002), multisource feedback increases individual performance by 8.1% as it keeps everyone accountable for their daily behavior, not just when their supervisors are around.

However, it is not just the large corporations that can benefit. In fact, some of the best 360-degree feedback can be performed in smaller companies because feedback can bring even more substantial results.

Though a startup has driven employees, limited hierarchy, and a collective passion to thrive, not all voices are always challenged or heard equally. Multisource feedback provides an opportunity for employees to improve their individual competencies to better strive towards a collective company vision.

Why 360-degree feedback is especially important in small ventures:

  • A passionate culture: Intrinsic motivation already exists because employees are generally passionate about what they are doing and want the company to succeed. In this case, employees are also excited to continuously improve as they are looking to enhance their individual skills. A 360-degree feedback system is generally welcomed, not feared.
  • Fear of providing negative feedback with few employees: With few employees, it takes more audacity to offer a personal critique or recommendation in person because it could also cause tension. Offering anonymous multisource feedback allows for voices to be heard, but also encourages honest and straightforward feedback.
  • Working towards a collective mission: It is easier to establish a collective goal in a small setting where employees are also the primary stakeholders. If all members agree on a strategy or ideal company vision, it is more likely that each individual will take the extra step to make it happen.
  • Keeping goals aligned: Maintaining common goals is increasingly complicated, especially as the number of stakeholders in a small organization grow. In a startup environment, it is essential to keep revisiting these goals; a 360-degree feedback system provides the means for benchmarking these goals and redefining them as the organization evolves.
  • A positive alternative: Increased compensation for spectacular performance actually decreases motivation, but motivation increases in an environment where verbal reinforcement and positive feedback are used. Without monetary incentives, employees are encouraged by the optimism and feedback of their peers. Startups are notorious for celebrating at every measure of success.
  • A team environment: This team-oriented mentality fuels a startup and therefore, issues such as appreciation, trust, and specific role assignments are crucial to success. Making sure that everyone is on the same page can help to mitigate tension and lead tasks to be more efficient.

To summarize, communication lies at the heart of any successful organization. Working with employees who want to better themselves and work towards a collective vision offers the perfect environment to implement a multi-source feedback system. 360-degree feedback helps startups establish healthy roots, essential for developing long-term success.


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