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Most managers in Strategic Relationship Management (e.g. Marketing Agencies or Strategic Suppliers) can list a fair number of reasons why relationship evaluations should be conducted on a regular basis.   A typical list is shown below.   The problem with these sorts of lists is that the benefits are all a little theoretical and lack direct practical relevance.   Forget the theory, how do relationship evaluations really help?   What practical help can I get from them?

In responding to these questions managers need to re-frame the objectives they seek to achieve from relationship evaluation programs.   There should be 3 basic expectations:-

a) Help the organization get what it wants from the agency / supplier relationship (outputs);

b) Help the organization get these more easily (process);

c) Help with delivery of results (outcomes).

Getting What You Want From The Relationship

The key to getting what you want from the relationship is to make it clear from the outset what it is that you want, and then to measure it.   As we often note: “People do not do what’s expected – they do what’s inspected”.   So it is important that the evaluation criteria in an evaluation program are carefully chosen and carefully prioritized for importance.

This is probably best accomplished by having all top managers involved in the relationship take part in the identification and prioritization process.   This has the added benefit of ensuring buy-in and cohesion i.e. everyone on the client side will be singing the same song.  

From the Agency / Supplier’s perspective, clear identification and prioritization of evaluation criteria helps them see exactly what you want and gives them the assurance that it is what you all want.   Armed with this information the agency can allocate resources and time appropriately.

If the Agency / Supplier knows what you want they have a better chance of providing it smoothly.

Getting what you want from the agency / supplier is sometimes referred to as Expectation Management.   If you can’t measure it then you can’t manage it.   Make it clear in the evaluation criteria what you want and then measure it!

Getting Things More Easily

Most large advertisers or strategic supplier managers today have multi-agency/supplier line-ups.   Whatever benefits this affords, an offsetting common problem is getting the various organizations to work together smoothly and cooperatively.   How can Client organizations more efficiently manage multi-organization line-ups?

One answer is better use of the relationship evaluation program.   If clients make it clear that cooperation between agencies is a priority – and that agencies will be evaluated and rewarded accordingly – then this is sure to lead to easier management and coordination.   Reiterating, people and orginazation do not do what’s expected, they do what’s inspected.   So if you want your agencies to cooperate with each other tell them, and tell them they will be assessed for their performance on this measure, and compensated accordingly.

Use the relationship evaluation program to help get what you want more easily.

Delivery Of Results

Most organizations these days have in place some kind of incentive compensation program.   The whole point about these programs is to further encourage focus and performance.   The Agency is set objectives and rewarded accordingly for achievement.

It is important that the incentive compensation program ties in with the evaluation program.   The two should complement and reinforce each other.

Summary & Conclusions

Relationship evaluation programs can deliver real value and practical help if they are set up and implemented correctly.   The keys to success are:-

Be sure that the program is measuring the right things.   Be sure that the evaluation criteria set out what’s expected of the Agency / Supplier in the relationship.  

If you have a multi-agency line-up, use the relationship evaluation program to encourage cooperative working.   And tie this to the incentive compensation program.   Your life will be easier!  

Ensure that the incentive compensation program complements and reinforces the evaluation program.   Once you have made it clear what you want from the Agency, encourage them to focus on this by rewards from the incentive compensation program.  

Benefits Of Performance Management Programs

1. Establishment of goals and priorities in the relationship, and the benchmarking of performance against these.

2. Identification of strengths and weaknesses in the relationship (particularly so that weaknesses can be addressed early before they become real problems).

3. Facilitation of good communication and understanding between the advertiser and the agency/supplier, particularly at the senior level.

4. The tracking of performance over time.

5. Formalization of various ongoing informal comments that occur during the everyday life of the relationship.

6. Cross-comparison of performance across agencies/suppliers (where clients have multi-agency/supplier arrangements).

7. Help with the assessment and calculation of incentive compensation payments. 
 

Author: Derek groom (Decideware)

Adweek not long ago highlighted the 50 year relationship between Publicis Groupe’s Leo Burnett and insurance giant, Allstate.

At a time when so much is written about the decline of long term client - agency relationships, this one receives plenty of interest.

The article reveals the five things Lisa Cochrane, Allstate EVP of integrated marketing and Nina Abnee, Burnett EVP of account management learnt from having survived and subsequently prospered from a difficult period in 2003.

They identify 5 important learnings to building a successful long term client – agency relationship:

1. Be Honest and Commit

Allstate's Cochrane was honest in naming problems with the relationship.

However, she also gave her commitment to work with the agency to solve those problems and to build a better relationship.

That gave the agency an environment where they could confidently air their views and make changes to the way they did business with their client.

2. Accept Responsibility and Rebuild Trust

Both sides accepted responsibility for previous weaknesses in the relationship.

For example, Allstate recognised they were responsible for the briefs and had, at times approved lackluster work. Burnet accepted they let staff become complacent on the brand and had lost sight of its essence.

Cochrane recognised Allstate was not the account Burnett people wanted to work on and set a personal goal correct the problem.

Significantly, there was agreement to change; in the way Burnett worked to Allstate, in staffing, and with new compensation arrangements that recognised business growth, as examples.

3. Listen … and Make Your Needs Known

Both parties invested in listening to the needs and expectations of the other, and to communicating their own needs.

Better communication brought out that Cochrane wanted more staff on the account, and for Burnett to liaise more closely with the media agency, Starcom. Abnee wanted better direction, strategy and approval processes.

With these needs clarified, both parties committed to make change. Said Cochrane "My team had to match the Burnett team in commitment and talent and experience."

4. Set Aside Time for Each Other

Aside from adopting more face-to-face meeting time and more opportunities to review work-in-progress, Cochrane and Abnee committed to monthly dinners (where Allstate and Burnet each took it in turn to pay) with the core team on each side of the business attending.

The shift to add informal meetings to the schedule of formal presentations provided another means to develop a deeper level of understanding.

5. Have Fun

Both sides admit the relationship still requires a significant amount of work and along with that goes some tension. So they’ve agreed to inject some fun wherever they can to help ease some of those tensions and facilitate a better working environment.

Conclusion 

Abnee makes an interesting concluding comment that perhaps summaries what’s most important to all of this when she says: “There were a lot of good people before us, and there are going to be a lot of people after us. At some point there has to be a commitment to the brand.”

Source: Adweek, Lessons from Allstate, Burnett, 23 Jul 2007

Author: Viji Ratnam (Decideware)

I am currently reading a terrific book by Harvard Business School Press called "Managing Performance to Maximize Results". It is a compilation of articles, all based around Human Resources Performance Management.

What drew me to read it was to investigate parallels between HR Performance Management and Strategic Supplier Relationship Management.

A great deal of theoretical research and practical study has gone into the manager/employee performance management process and I believe we can leverage this body of work to apply to the domain of supplier relationship management.

Fundamental Drivers

The first page of the book reveals the fundamentals of how performance management can generate better business results. (I have taken the liberty to insert the appropriate 'supplier relationship' text)

• Determine how well the team (client and supplier/agency) is meeting organizational goals
• Identify important strengths on which your suppliers / agencies can build
• Discover opportunities for improvement in individual supplier / agency skills and processes
• Craft development action plans for each of your suppliers / agencies
• Make key decisions about compensation and rewards
• Document patterns of poor performance that protect your company from legal liability if suppliers / agencies must be let go

Best-practice

Further, their research identifies the characteristics of 'best practice' performance management systems (and again, I hope the parallels with supplier management systems are clear):

• ongoing, two-way exchanges of feedback between manager & employee 
• regular "coaching" sessions between manager & employee
  
• separation of conversations devoted to development and compensation
  
• an explicit link between performance goals and high-level company objectives

What's in a name?

The authors raise a point about how performance management systems are viewed - and named accordingly.

For example, does the term "Performance Evaluation" lead to the perception that the process is complete once a final score or rating has been determined? Or should we communicate via "Performance Management" that data will be used to build development plans for the upcoming year?

Should we follow the lead of the Human Resources sector and  move on from the term"Performance Appraisal" to adopt more contemporary descriptors like "Performance Management" or "Professional Development"?

Where we want to go!

The fact is, the evaluation data is historical and viewing it as the goal could lead to a 'rear view mirror' approach to relationship management. Surely we want to shift our focus to the present and then to the future, leveraging off the information that the evaluation scorecard has provided us - guiding us to where we need to go - rather than where we have been!

Author: Richard Benyon (Decideware)