Technology has made it easier to gather feedback and assess performance in a variety of areas, from student learning to employee performance. This has impacted procurement teams as well, giving them more options than ever to collect feedback and manage their vendor relationships.
In a previous post, we made the case for gathering feedback more frequently to give you better visibility into your vendors’ performance throughout the contract lifecycle.
However, it’s what you do with that visibility that counts. The key benefit of frequent feedback is that it empowers a proactive approach to supplier management and ultimately strengthens your relationships with vendors.
So, how do you go from survey to satisfied stakeholders? To answer this, we dove into the research from a related field which has clear parallels to vendor relationship management: employee performance management.
Like vendors, employees are engaged in a long-term business relationship with an organization and are accountable to certain deliverables. Employee performance management - like vendor performance - is undergoing transformation, as more managers realize the benefits of informal, ongoing feedback as opposed to the formal, infrequent methods of the past (i.e. the dreaded annual performance review).
These insights from employee performance will help you leverage more frequent feedback for better vendor relationships:
1. Clarify expectations.
Research on employee performance conducted by Jean Martin and Brian Kropp of corporate research firm CEB found that more frequent feedback can improve employee performance by up to 12% (Washington Post). The reason? They cited managers’ ability to clarify expectations as a key benefit.
In the relationship between a vendor and an organization, the contract establishes the terms of the relationship and specifies a standard of service — nevertheless, opportunities remain for miscommunication, especially given the pace of change in some industries.
Using frequent vendor performance surveys, procurement teams can catch these issues early and intervene to correct the mismatch in expectations and ultimately avert bigger performance issues before they arise.
2. Offer proactive rather than punitive performance management.
Nobody likes giving bad feedback. However, there’s good news! Research from leadership development experts Zenger and Folkman suggests that people are more receptive to negative feedback than you might think.
Their research on employee performance concluded that employees actually want to receive negative feedback and believe it is effective in improving their performance. Ninety-two percent of respondents agreed with the assertion: “Negative (redirecting) feedback, if delivered appropriately, is effective at improving performance” (Harvard Business Review).
When it comes to procurement, vendor performance surveys are historically issued at the conclusion of a contract, at which point it’s too late for vendors to make improvements or repair the relationship.
This is a missed opportunity for everyone involved. More frequent feedback allows procurement teams to identify vendor performance issues, notify vendors, and proactively work towards improvements. Negative feedback can be the jumping-off point for conversations that ameliorate vendor performance issues, resulting in happier stakeholders and reduced risk for your organization.
3. Recognize and enhance good performance.
Recognition for good work is a powerful force in building trust and improving performance. This has been shown time and again in employee performance. Studies show that 69% of employees would work harder if they felt their efforts were being better recognized, and 78% of employees said being recognized actively motivates them in their job (LinkedIn Talent Blog).
Thus, even if all your surveys come back with rave reviews, frequent feedback still has the potential to improve your vendor performance.
In addition to ensuring continued strong performance, recognition can be the first step in moving from transactional vendor relationships towards partnerships — with attendant benefits in risk mitigation, coordination, and ultimately your bottom line.
Check out this video to see how Bonfire streamlines vendor performance management, so you can get to the important insights faster.