PEER appraisal in the form of 360-degree feedback can be a disaster if applied wrongly. Knowing how to get it right, however, improves employee performance and can add value to your business.

So how can you fashion peer appraisal so that it is more productive for your organisation?

Getting peer appraisal right involves understanding the common problems businesses face when they implement such a system:

1. Can colleagues be both peer and judge?

The premise of peer appraisal is that the best people to comment on someone's performance are those he works with, rather than a distant manager who may not have the full picture.

However, more often than not, results are inaccurate because peers tend to be too generous with their praise as they want to maintain good working relationships with their colleagues.

It is important, therefore, to get everyone used to receiving feedback and knowing how to take it positively.

2. What is the value of peer appraisal to an individual when people work in teams?

In most work environments today, teamwork plays an important part in getting things done. In this case, peer appraisal may not appear to serve a purpose as it focuses on individual performance.

It is important, therefore, to include group dynamics and work realities into the appraisal system, and again, communicate to everyone the objectives of the exercise so that you can avoid negative reactions that are ultimately counterproductive to the end goal.

3. Is easy feedback as easy to apply?

Simple rating systems appear at first glance to be the easiest to apply. But in reality, they don't yield sufficient feedback.

If a candidate receives a good rating, this may bolster his confidence in the short term, but he has no conclusive feedback as to why he got that result or what he can do now to move forward.

Conversely, qualitative feedback can lead to misunderstandings if comments made are open to interpretation.

4. Should you take rewards out of the equation?

Most employees tend to step up their performance in the short term when peer appraisals are linked to salary reviews.

They will tend to focus on feedback linked to rewards rather than on those that would improve their performance.

Linked to rewards, the appraisal system seems to have only short-term effects and the objective gets missed. Take rewards out of the mix and the feedback tends to be more constructive and therefore more useful to the organisation.

However, if the system is not set up right, the recipient may view feedback as unimportant if he does not benefit from rewards.

How to manage it

As a manager, you are the key ingredient in the peer appraisal process and you have to ensure that your employees take the system on board and use it constructively.

So if you are seen to give feedback constructively, specifically and in a timely manner, it is more likely that your subordinates will follow suit. Here are some tips to improving the process by getting your team on board:

* Show you care

Let everyone know how much you value peer appraisals and how you have benefited from them in the past.

* Be an active listener

Take the time to sit down with each subordinate and carefully go through the appraisal system, listening for objections and dealing with them sympathetically.

Engage each subordinate in discussion, ask for and be open to feedback, and implement changes based on that feedback, if required.

* Organise regular training sessions

These sessions, held in small groups in an informal setting, should help subordinates practise giving and receiving feedback.

* Publicise successes

Focus not on individual successes but the important benefits to the company that have come out of 360-degree feedback, such as cost-saving initiatives. By announcing these successes, everyone will feel they have made a valuable contribution.

* Step in early with positive criticism

Don't be afraid to let someone know he or she is not doing well at 360-degree feedback. The earlier you nip the problem in the bud, the more successful your peer appraisal system will be.