The 360-degree feedback tool was originally used to determine professional development needs, but quickly gained popularity as a performance appraisal tool. The 360-degree review aims to provide employees with feedback on their performance from those above, below, and at the same level in the company. With managerial support, employees are expected to analyze the feedback to identify their strengths and weaknesses and then develop a plan to improve their productivity and effectiveness. This form of colleague-based feedback has proved useful for determining professional development needs, but many companies have reported difficulties and problems when using the tool for appraisals.

Debates have sprung up over issues including how to: select the feedback tool and process, determine the competencies, select the raters, use the feedback, review and interpret the feedback, use the results to create development plans, and to integrate the process into a larger performance management system. Numerous commentators have identified difficulties in using 360-degree reviews effectively. Maury Peiperl explained four paradoxes of peer appraisal (in his January 2001 issue of Harvard Business Review) but, along with some of the other critics, provides suggestions for alleviating the problems rather than giving up on the tool. Other critics find 360-degree assessments too problematic and recommend alternatives.

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