In the fast-paced, ever-evolving world of startups, there’s a constant push to build strong teams, nurture leadership potential, and align culture with action. Against that backdrop, 360-degree feedback can sound like a perfect fit: a structured way to collect input from multiple perspectives;  managers, peers, direct reports, even customers. It promises to help individuals grow and teams communicate more honestly.

But from what I’ve seen in the field as a manager and advisor to early-stage companies, 360 feedback isn’t always the game-changer it’s made out to be. It’s time-intensive, sometimes biased, and often layered on top of already packed performance cycles. Done right, it can be powerful. Done poorly, it becomes just another ritual that drains time without delivering real value.

What’s the Big Idea Behind 360 Feedback?

At its best, 360-degree feedback helps people see their blind spots. Instead of only hearing from their boss, individuals get a more rounded view of how they show up at work; how they lead, collaborate, communicate, and support others. For startups, where everyone’s wearing multiple hats and moving fast, this kind of insight can help people level up quickly.

And I found research that backs up the benefits. A well-known meta-analysis (cf. Smither, London & Reilly, 2005) showed that people who receive regular multi-source feedback can improve over time; especially when coaching or development plans follow. It’s not magic, but it does help.

Why It Often Fails in Startups

Let’s be honest: the theory is nice, but the reality is messy; especially in early-stage startups.

It Eats Time You Don’t Have

From personal experience, rolling out 360 feedback on top of half-year and annual reviews quickly becomes a logistical and mental overload. Each cycle takes hours per person; not just filling it out, but reviewing, discussing, and making sense of the results. When you multiply that across a startup team, the hours add up fast. That’s time most startups don’t have.

And you have to ask: Do we really need that many feedback cycles a year? In my view, no. Especially not if the feedback isn’t leading to clear action or behavior change. More feedback isn’t always better. At some point, it’s just noise.

Bias Creeps In Quickly

Another issue I’ve seen repeatedly: peer feedback isn’t always objective. People naturally support the teammates they like and go soft on critique. Or they seize the chance to call out someone they don’t get along with - often without much reflection or fairness.

This makes 360s feel political rather than developmental. The feedback ends up being more about relationships than real performance or behavior. Academic research backs this up too. One study (cf. Atwater et al., 2013) showed that peer reviews are often influenced by social closeness. That’s a problem if you’re trying to build a high-performance culture based on honest, useful feedback.

Feedback Without Context Can Mislead

Especially in small teams where roles are fluid, people often give feedback without knowing the full picture. They might not see the trade-offs someone had to make, or the constraints they were working under. That can lead to shallow or misdirected feedback.

Leaders, in particular, are vulnerable to this. One Harvard Business Review article pointed out that 360s often undervalue leaders who make tough decisions; simply because their choices aren’t popular (cf. Zenger, J., & Folkman, J., 2012) or as they need to manage a huge workload which results in delegating many tasks to the team which seem impossible to prioritize in a structured manner and complete on time. That usually creates performance pressure that people dislike and that they see as the leader's inability to manage effectively. 

Making It Work Without Burning Out the Team

So how do you get the benefits of 360 feedback without overloading your team or triggering social games?

Here’s what I’ve found helpful:

• Limit full 360s to once a year: That’s usually enough. Use lighter touch feedback or check-ins the rest of the year to stay in sync.
• Be clear about the goal: Are you developing leaders? Reinforcing culture? Preparing someone for a new role? Tailor the feedback to the purpose.
• Use external facilitators: especially in small teams where anonymity is tricky. It keeps things clean and helps focus on the signal, not the noise.
• Train your people: on how to give and receive feedback. Sounds basic, but it’s crucial. Most teams don’t have shared norms or tools for doing this well.
• Keep measuring impact: Don’t just roll it out and hope. Look for signs that people are acting on the feedback and that it’s actually improving team dynamics or performance.

Final Thoughts

360-degree feedback isn’t a bad tool. It can unlock meaningful growth and improve team awareness when used with care. But it’s not a silver bullet. And in a startup, where every hour and decision counts, you’ve got to be smart about when and how you use it.

If your team’s already juggling regular reviews, retrospectives, and OKR check-ins, adding another feedback loop might do more harm than good. Less, done well, is often more powerful.

Reference(s)

Smither, J. W., London, M., & Reilly, R. R. (2005): Does performance improve following multisource feedback? A theoretical model, meta-analysis, and review of empirical findings. Personnel Psychology, 58(1), 33–66.

Atwater, L. E., Wang, M., Smither, J. W., & Fleenor, J. W. (2013): Are cultural characteristics associated with the relationship between self and others’ ratings of leadership? Journal of Organizational Behavior, 34(5), 709–732.

Zenger, J., & Folkman, J. (2012): Why 360-Degree Feedback Doesn’t Work. Harvard Business Review.

Google People Operations (2015): Project Aristotle: Understanding Team Effectiveness.