Nowadays almost all companies do performance evaluations (or something else of the same function that is called by another name) at least 1 time per year for their employees. These evaluations have become an integral part of other discussions related to the employee-employer relationship and without them there would be no data to point(s) to related to things such as compensation, hiring/firing, and promotions. Performance evaluations are typically carried out by the HR department, which either chooses outright or has a big voice in choosing the specific type of performance evaluation process. Some HR departments have adopted 360-degree performance evaluations, which include input not only from an employee and their supervisor, but others such as coworkers, direct reports, or customers. Because there are pros and cons of using this type of performance evaluation process, companies should weigh them carefully before making the choice.
The biggest pro of 360-degree performance evaluations is to free employees from being improperly categorized as “lower” on the scale because of a non-performance issue between them and their boss. Almost everyone has either been through this scenario or knows someone else who has: the employee does a good job and their boss either gets jealous, or gets anxious because they are underperforming themselves, or worried another manager will steal their employee, etc. There are many reasons why that employee will not get the credit they should via a typical performance evaluation and many such employees, even if they like the position they are in or the company they work for, are forced to move elsewhere to get away from that boss. The 360-degree performance evaluation process doesn’t completely prevent such employees from getting submarined, but statistics show it does reduce the chances.
The biggest con of the 360-degree performance evaluation process is the possibility of employees collaborating to produce results that don’t match up with someone’s true performance. This can be employees who know they are all performing below-par rating each other higher than they should, or that same group of employees all rating 1 employee lower than they should because that employee is actually doing a good job. Either way the goal of that group of employees is just to “keep each other safe” and not anything related to actual performance evaluation or the potential damage it would do to a company if all the highest performing employees choose to perform below where they could perform to avoid being singled out and potentially fired.

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