Evaluating the Performance of Salespeople

Transcription

1 Evaluating the Performance of Salespeople Purposes of Salesperson Performance Evaluations 1. To ensure that compensation and other reward disbursements are consistent with actual salesperson performance 2. To identify salespeople that might be promoted 3. To identify salespeople whose employment should be terminated and to supply evidence to support the need for termination 1

2 Purposes of Salesperson Performance Evaluations 4. To determine the specific training and counseling needs of individual salespeople and the overall sales force 5. To provide information for effective human resource planning 6. To identify criteria that can be used to recruit and select salespeople in the future 7. To advise salespeople of work expectations Purposes of Salesperson Performance Evaluations 8. To motivate salespeople 9. To help salespeople set career goals 10. To relate salesperson performance to sales organization goals. 11. To enhance communications between salesperson and sales manager. 12. To improve salesperson performance 2

3 Salesperson Performance Evaluation Approaches 1. Most evaluate on an annual basis 2. Most combine input and output criteria which are evaluated using quantitative and qualitative measures 3. When used, performance standards or quotas are set in collaboration with salespeople 4. Many assign weights to different objectives and incorporate territory data. Salesperson Performance Evaluation Approaches 5. Most use multiple sources of information 6. Most are conducted by the field sales manager who supervises the salesperson 7. Most provide a written copy of the review and personal discussion 3

4 360-Degree Feedback System Salesperson is evaluated by multiple raters Helps salespeople better understand their ability to add value to their organization and their customers Evaluation Oneself External Customers Salesperson Evaluation Evaluation Sales Manager Evaluation Evaluation Evaluation Team Members Evaluation Evaluation Internal Customers Key Issues in Evaluating and Controlling Salesperson Performance Outcome-Based Perspective Focuses on objective measures of results with little monitoring or directing of salesperson behavior by sales managers Behavior-Based Based Perspective Incorporates complex and often subjective assessments of salesperson characteristics and behaviors with considerable monitoring and directing of salesperson behavior by sales managers 4

5 Perspectives on Salesperson Performance Evaluation Outcome-Based Little monitoring of people Little managerial direction of salespeople Straightforward objectives measures of results Behavior-Based Based Considerable monitoring of salespeople High levels of managerial direction of salespeople Subjective measures of salesperson characteristics, activities, and strategies Dimensions of Salesperson Performance Evaluation Behavioral Results Salesperson Performance Professional Development Profitability 5

6 Criteria for Performance Evaluation Behavior: Consists of criteria related to activities performed by individual salespeople Sales calls, customer complaints, required reports submitted, training meetings, letters and calls Should not only address activities related to shortterm sales generation but should also include nonselling activities needed to ensure long-term customer satisfaction. Criteria for Performance Evaluation Professional Development: Assess improvements in certain characteristics of salespeople that are related to successful performance in the sales job Characteristics include - Attitude, product knowledge, initiative and aggressiveness, communication skills, ethical behavior 6

7 Criteria for Performance Evaluation Results: Salespeople measured objectively based on results such as sales, market share, and accounts A sales quota represents a reasonable sales objective for a territory, district, region, or zone Some research shows that rewards for achieving results have a negative effect on performance and satisfaction Market Response Framework Environmental Factors Control Unit Attractiveness Business Position Salesperson Factors Characteristics Role Perceptions Aptitude Skill Level Motivation Behavior Effort Quality Planning and Control Unit Behavior Effort Quality Organizational Factors Marketing Effort Sales Management Effort 7

8 Elements Important in Assigning Sales Quotas Concentration of businesses within the territory Geographic size of the territory Growth of businesses within the territory Commitment by the sales manager to assist the sales representative Complexity of products sold Elements Important in Assigning Sales Quotas Sales representative s s past sales performance Extent of product line Financial support (e.g., compensation) a firm provides Relationship of product line Amount of clerical support 8

9 Criteria for Performance Evaluation Profitability: Salespeople have an impact on gross profits through the specific products they sell and/or through the prices they negotiate for final sale. Salespeople affect net profits by the expenses they incur in generating sales. Criteria Examples Net profit dollars Gross margin per sale Return on investment Number of orders secured Selling expenses versus budget Performance Evaluation Methods: Characteristics any method should include Job Relatedness Reliability Validity Standardization Practicality Comparability Discriminability Usefulness 9

10 Performance Evaluation Methods Graphic Rating/Checklist Methods Salespeople are evaluated using some type of performance evaluation form Especially useful in evaluating behavioral and professional development criteria May be filled out by customers Disadvantage is providing evaluations that discriminate sufficiently Performance Evaluation Methods: Ranking Methods Rank all salespeople according to relative performance on each performance criterion These methods force discrimination as to the performance of individual salespeople May be complex Rankings only reveal relative performance evaluation 10

11 Performance Evaluation Methods: Objective- Setting Methods Management By Objectives (MBO) 1. Mutual setting of well-defined and measurable goals within a specified time period. 2. Managing activities within the specified time period toward the accomplishment of the stated objectives. 3. Appraisal of performance against objectives. Performance Evaluation Methods Behaviorally Anchored Rating Scales (BARS) Links behaviors to specific results Salespeople are used to develop performance results and critical behaviors Positive feedback about behaviors may be more affective than positive output feedback 11

12 Performance Evaluation Bias Occurs when a manager s evaluation of a salesperson is affected by considerations other than the specified criteria Common sources of bias: Personal relationships Perceived difficulty of territory Outcomes (i.e., ends justifies the means) Evaluating Team Performance Consider the criteria on which members will be evaluated and the methods used to evaluate performance Establish a link between team performance and positive outcomes to promote individual and team effort May be beneficial to allow team to help develop goals and evaluation criteria 12

13 Framework for Using Performance Information Evaluate Salespeople against Relevant Performance Criteria Compare Salesperson Evaluations to Identify Problem Area Investigate Problem Areas to Identify Causes of Performance Problems Determine Sales Management Actions to Eliminate Causes of Future Problems and to Solve Existing Problems Salesperson Job Satisfaction Job satisfaction related to turnover, absenteeism, motivation, and organizational commitment Job satisfaction may be related to performance (direction of relationship is unknown) Results may identify areas where manager may intervene to improve job satisfaction 13