corner-left

5 Top Tips for Marketing Agency Appraisal Schemes for Incentive Compensation

corner-right
team member

Simon Francis

Marketing Agency Appraisals are often used to drive Agency Incentive Schemes and agency performance-related pay. Although this has been the preferred way of remuneration, many agencies and clients are using antiquated methods of agency appraisal which can present the risk of agencies being disproportionately compensated, either negatively or positively. With millions of dollars at risk on both sides, it is essential that any agency appraisal system used for agency incentive schemes, is very well constructed.

For agencies and clients choosing to adopt agency appraisals as an ingredient for incentive compensation, there are some essential aspects to consider:

1. Have the right number of stakeholders and decide whether they are equally important

Along with a robust sample that is fair to all parties, you may also need to weight the stakeholders either by importance, e.g. CMO versus marketing graduate, or by market e.g. large market versus small market, and agree this weighting with the agencies. Interestingly, senior managers score lower than middle and junior managers. The Flock Agency Appraisal Tool allows weighting by seniority, market, or discipline.

2. Ask the right questions

Many appraisal questionnaires are old-fashioned in nature and do not cover data-driven marketing topics such as ROI, Authentic Representation, and Sustainability enough. Moving beyond subjective scoring is required for bonus/malus scheme surveys, so the more specific the question, the better. The Flock Agency Appraisal Tool has over 400 questions to choose from, written by world expert agency and advertiser staff with questions that evolve with time to remain current and effective.

3. Use an adequate question scoring scale

Some agency appraisal questionnaires use a scale that does not link to contractual terms or does not show statistical differences enough to be of use for incentive schemes. For this sort of survey an academically recommended scoring scales is best suited. For instance, The Flock Agency Scoping Tool scoring system has been academically validated and links to major contractual terms.

4. Use reliable baselines/benchmarks

An incentive scheme needs a score or range to indicate when a bonus is payable, and beneath which a malus payment may be required. Naturally, it is best if this baseline is based on tangible evidence or a benchmark. The summary from The Flock Agency Appraisal Tool shows various regions with differing scoring averages using benchmarks built from thousands and thousands of recent respondents to hundreds of surveys. With averages coming from recent data across 50 global markets this makes it the perfect baseline depending on the markets, seniority, type of agency selected.

5. Use accurate and fair sliding scales

We see many incentive schemes that have sliding scales for bonus and malus payments that are either unfair or are not based on statistically robust benchmarks. A fair sliding scale “up” for a bonus, should be matched by a fair sliding scale “down” for malus, where malus schemes are employed. The amount of incentive will then link to well built scoring bands.

Want to know more?

If you would like to know more about using Marketing Agency Appraisals for Incentive Compensation, or more about the Flock Agency Appraisal Tool get in touch with us by completing the form.

Contact Form UK