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).
Using Agency Evaluation To Get 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!
Get Things More Easily Through Agency Evaluation
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 Using Incentive Compensation
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.