One of the ways we’ve seen firms avoid this situation is an explicit process through which they and their customers agree on performance scorecards, defining the metrics that matter and the achievement levels that are considered to be appropriate targets. While some exceptions exist, we’ve found over and over that reasonable agreement can be reached on both the metrics and the targets.
There are two major advantages of doing this. First is avoiding after-the-fact charges of unacceptable performance. When the targets are clear and known, that type of finger pointing is eliminated. Second and more important, well-understood targets allow the supplier’s management team to take the actions needed to meet the targets, including corrective actions if their firm isn’t hitting targets that they had previously agreed to as reasonable.
No firm should ever be surprised to hear it was the subject of a horror story told by a customer.
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