The transportation manager you hired last year — in large part because of his success at reducing transportation costs at previous employers — was able to reduce your transportation spend by 17 percent this year, way above the 10 percent target you had set. You highlight this accomplishment in his performance review, and you further recognize his success by giving him an end-of-year bonus.
But does he deserve it?
If you go strictly by WHAT he accomplished, then the answer is probably yes. But if you also take into consideration HOW he realized those cost savings, then the answer might be different, especially if this transportation manager is actually despised by the carriers and 3PLs your company works with because of his “I win, you lose” approach to business relationships.
“Measurements are incomplete [at companies today]. They generally focus on operational metrics, operational necessities, but they miss a lot of pieces that are important. First of all, they fail to measure all the operational pieces that are important, and second of all, the vast majority of metrics today — and I can say this will full confidence because I see a lot of companies — miss the interpersonal piece…[Companies] are measuring what gets done versus how things get done. The ‘what gets done’ is did we hit the metrics, did we hit this particular percentage or this number that we needed to, but ‘how things get done’ is a different component that [most organizations aren’t measuring well today].”
So, this raises an important question: Is the traditional performance review outdated, especially for evaluating supply chain talent? Watch this short video clip for Tracy’s response.
In a nutshell, Tracy says that traditional performance reviews are ineffective for a variety of reasons, and he advocates (among other things) incorporating 360 degree feedback into the evaluation process, including input from customers and suppliers. “The whole idea here is let’s add more than KPIs in the performance review,” says Tracy. “The second piece is let’s get more than one person’s point of view and input because my performance isn’t just related to how I work with you as my supervisor, it’s related to how I deal with my entire network, those who I work with in general.”
Back in April, I argued that the ability to develop, manage, and grow positive and productive relationships with peers, customers, suppliers, and partners is the most important attribute of a supply chain leader. Chances are, however, that the way you currently evaluate your supply chain talent fails to adequately measure interpersonal performance. You probably rely too much on the what, and not enough (if anything at all) on the how.
Something to think about and start taking corrective action on as Q4 approaches and the dreaded performance review season begins.