360 degree feedback is used by the companies generally in two ways. One is for development and other is for appraisal. When used for the purpose of development, this type of feedback can prove very effective. It helps an employee to recognize his weak points and gives him a chance to improve his performance. Feedback is given in anonymity thus everybody can share their opinions honestly. Another way of utilizing this feedback is for appraisals. However this feedback alone should not be the only criteria of performance appraisal. It can become hard to determine if the opinions expressed by others are true and sincere. There is a fair chance that their opinions might be based on personal perceptions rather than the work performance of an employee. Subordinates and peers can give their opinion about behavior and competency but it is not possible for them to evaluate the actual skills and capabilities of an employee.

Collecting honest and reliable feedback can help the employees to understand the areas where they can improve their performance. This type of feedback can also be useful for the organizations in differentiating star performers from average employees or the ones which need training. If used effectively and appropriately 360 degree feedback can be a very useful tool for performance evaluation and appraisals.