Once Bill Markt was working on the business and not in the business, he realized that he didn't have direct interaction with many of the employees of Markt and Company Construction, West Linn, Ore. “It became evident to me that I was doing the job of critiquing them, but I wasn't seeing them.” So Markt instituted what he calls a “360- degree peer review process” that he'd read about in a trade journal.

Instead of a supervisor doing an employee's review, it's done by “all the people in the organization who have a relationship with that person,” says Markt, who is not spared a review. On the plus side, he says, “you're getting feedback from people you work with and not somebody responsible for you. On the downside, if people don't take the procedure seriously, you might not get a critical and valid critique.”

With nine people in the company, Markt sends out review questions for two or three employees at a time. Colleagues respond with grades of 1 to 10, and the recipient is told his or her average score. The self-review score is kept separately.

Markt goes over the reviews with individual employees, and he stresses that raises are not tied to the evaluation, per se. “We hope that two or three actions are agreed to, and taken on, by the person being critiqued,” Markt says. “This influences raises or bonuses. If you make improvements, that deserves a response.”

In use biannually for the past two years, Markt reports that employees like the peer review process, and the more they do it, the more aware they are of benchmarks and standards. “Management isn't about managing people below you,” Markt says. “It's about creating an environment for people to be successful without someone telling them what to do.”