"My supervisor is an idiot, anyway. . . . What does he know?" After traditional performance reviews, employees can too easily dismiss criticism or praise as one person's opinion. Feedback matters more when it comes from the coworkers they deal with every day. So Reed Phillips, CEO of Knowledge Systems, in Cary, N.C., instituted a program of peer reviews for the 50 employees at his software and training company.

A peer review, he claims, keeps managers from focusing on their pet concerns and ignoring others. And it takes some of the pressure off management when it's time to talk about "room for improvement."

Every 12 months, when an employee is due for a review, surveys are given to about 10 to 12 people who work directly with that employee on a regular basis. The survey lists about 45 positive statements, such as "I like the way Mike handles himself in meetings." (The computer merges the subject's name and the appropriate pronouns.) Each coworker indicates whether he or she agrees, agrees strongly, disagrees, disagrees strongly, or cannot judge.

Work teams, together with their managers, decide which statements will best measure performance. About half of the statements deal mostly with interpersonal skills and are common to all the surveys. The rest concern job-specific skills. Too many weak responses to a statement indicate that it is either unclear or not observable, and needs to be rewritten.

The manager receives printouts of individual responses and past survey scores, but the reviewee sees only aggregate scores -- an approach that erases extreme judgments. In any review group, Phillips says, "there'll be one person who thinks the subject is a jerk and another who thinks he's God."

Everyone in the company undergoes the peer review, including Phillips. For his evaluation, everyone in the organization fills out a survey. Partly as a result of the feedback, Phillips plans to soon hire a boss who will handle operations, so Phillips can focus on marketing and strategy.

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