Carrot vs. Stick Debate: Effective Agency Appraisals and Remuneration
When companies evaluate their agency partners, they often times use the scores from that evaluation to decide the remuneration of the respective agency and thus whether they should receive a bonus, or a malus, based on their performance. Though agency appraisals and evaluations are effective methods of giving the company an overview of agency performance, it sometimes ends up being a slightly one-sided endeavor that doesn’t examine the reason for the scores – be them high or low.
Flock’s Agency Appraisal Tool uses a 1 to 5 scale with 1 being unsatisfactory performance, and 5 being exceptional performance. Though clients usually give the agencies scores above 3 in Flock’s experience, scores under 3 are a strong signal of critical issues to be addressed by the agency and client. When an agency receives a low score from a client in an appraisal process this gives the agency a malus. The rational for this seems clear: if an agency is not performing well, they will be remunerated accordingly, saving the client money.
Nonetheless, a story typically has three perspectives – one from each party involved, and the objective truth lying somewhere in between. While the consequences of poor performance could initially reduce the client’s agency expenses, it may lead to enduring complexities in the future. Evaluating only the client’s perspective of an agency’s performance without considering the agency’s viewpoint severely limits the chances of identifying the root cause of poor performance. It is plausible that the agency’s inability to perform effectively is due to the client’s failure to provide timely briefs or meet mutually agreed-upon deadlines. Without uncovering these underlying issues, the client may unjustly penalize a well-performing agency, resulting in reduced resources and an unfavorable perception of the agency. Moreover, this approach may hinder the client’s ability to recognize areas of improvement in their agency collaborations, potentially damaging long-term partnerships.
To get closer to the truth-side of the story, which in this case would be the reason for the low-rated agency performance, it is necessary to measure how the client rates the agency’s performance as well as how the agency rates the client’s performance. This allows for an external party to examine the agency’s side and the client’s side to the performance evaluation which enables them to better uncover the root cause for the scores given from both sides.
Flock’s Agency Appraisal Tool is a solid tool to examine these issues. The tool offers a 360-view of the relationship as it includes reviews of Client on Agency, Agency on Client, Agency on Agency and Agency self-appraisal. Flock’s Agency Appraisal Tool is future-facing, leveraging the past learnings but also encouraging an actualisation of the ambitions, to make sure the client-agency relationship is future-proof.
This holistic approach will likely improve the partnership and relation between the client and agency as the transparency of a double-sided appraisal builds a foundation for improved ways of working together. By thinking long-term and making sure the agency is empowered and enabled to perform at their best, the clients will reap way more benefits than those reflected in a malus saving. Flock’s Agency Appraisal Tool’s insights offer a solid base to build effective action plans and make sure the challenges identified in the report highlifghts the source of the issue, even if that means addressing aspects that relate to the client’s organisation. Effective action planning has shown to lead to score increases of about 14% wave on wave.
Providing a balanced view of the relationship where the client and agency are evaluating each other is thereby far more likely to foster an effective climate for collaboration than when only one is evaluating the other.
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