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CHAPTER 16
EVALUATION OF SALESPEOPLES PERFORMANCE
Copyright 2001 by Harcourt, Inc. All rights reserved.
LEARNING OBJECTIVES
Performance appraisals are excellent methods for building a strong and effective sales program. This chapter should help you understand: What a performance appraisal involves. The uses of performance appraisals. Who does the evaluation and how often salespeople should be evaluated. How performance criteria are developed. The accuracy of performance appraisals and what can influence that accuracy. The importance of evaluating the evaluation system.
Copyright 2001 by Harcourt, Inc. All rights reserved.
PERFORMANCE APPRAISALS WHAT ARE THEY?
THE PURPOSE AND IMPORTANCE OF PERFORMANCE APPRAISALS
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Numerous specific reasons for performance appraisals exist:
Compensation Development Feedback Goals Legal compliance Penalties Personnel Planning Promotion Training
Motivation
Copyright 2001 by Harcourt, Inc. All rights reserved.
TABLE 16.1 COMPARISON OF EVALUATIVE AND DEVELOPMENTAL ASPECTS OF PERFORMANCE APPRAISAL
COMPARISON FACTORS
Time
EVALUATIVE ROLE
Past sales performance
DEVELOPMENTAL ROLE
Future performance
Objective
Improve performance by rewarding based on performance
Use of evaluation forms
Improve performance through self-learning, e.g., taking selling courses
Management by objective (MBO) approach to goal setting, career planning Encourage and help salesperson Active involvement in developing future career and performance plans
Method
Managers role Salespersons role
Evaluate performance Explain past performance; react to evaluation
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FIGURE 16.1 THE PERFORMANCE APPRAISALS INFLUENCE ON SALES PERSONNEL MOTIVATION, BEHAVIOR, AND PERFORMANCE
P e r f o r m a n c e A p p r a i s a l
M o t i v a t i o n t oW o r k
E f f o r t
P e r f o r m a n c e L e v e l
R e w a r d s
E q u i t y D e t e r m i n a t i o n
S a t i s f a c t i o n
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The performance level a salesperson attains results from a combination of the individuals effort and ability. Ability, in turn, reflects the individuals skills, training, information, and talents.
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After determining the equity of and satisfaction from the rewards resulting from the appraisal, the individual again asks these four questions:
1. What is the probability of success? 2. Will I be rewarded for success? 3. Are the rewards worth it?
4. Are the rewards fair?
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FIGURE 16.2 THE SALESPERSON PERFORMANCE APPRAISAL SYSTEM WITH ITS NUMEROUS PARTS, PROCESSES, AND PROCEDURES
Purpose of Performance Evaluation
J o b D e s c r i p t i o n J o b R e q u i r e m e n t s J o b S p e c i f i c a t i o n s
Planning
J o b A n a l y s i s D i m e n s i o n s
P e r f o r m a n c e C r i t e r i a
Implementing Evaluating
Evaluative Compensation Legal Penalties Personnel Promotion Developmental Development Feedback Goals Motivation Planning Training
Copyright 2001 by Harcourt, Inc. All rights reserved.
Planning, implementing, and evaluating the performance appraisal system involves:
1. Who should evaluate salespeople?
2. When should salespeople be evaluated?
3. Are the criteria appropriate? 4. What forms should be used for gathering information? 5. What may influence the appraisals accuracy? 6. How should the appraisal be conducted? 7. How can the appraisal process be evaluated?
Copyright 2001 by Harcourt, Inc. All rights reserved.
WHO SHOULD EVALUATE SALESPEOPLE?
The primary evaluator should be the salespersons immediate supervisor because this person has direct knowledge, having actually worked with the salesperson.
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WHEN SHOULD SALESPEOPLE BE EVALUATED?
Salespeople should be evaluated at the end of each performance cycle. A performance cycle is a period related to specific product goals or job activities.
Copyright 2001 by Harcourt, Inc. All rights reserved.
FIGURE 16.3 POSSIBLE MANAGEMENT INPUT INTO THE SALESPERSONS PERFORMANCE EVALUATION
Regional Manager
District Manager
District Manager
Home Office Personnel Specialist
S a l e s p e r s o n s I m m e d i a t e D i s t r i c t M a n a g e r
D i s t r i c t M a n a g e r
D i s t r i c t M a n a g e r
Salesperson
D i r e c t i n p u t p e r f o r m a n c e e v a l u a t i o n I n d i r e c t i n p u t p e r f o r m a n c e e v a l u a t i o n
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ARE THE PERFORMANCE CRITERIA APPROPRIATE?
A criterion is a standard on which a judgment or decision may be based.
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Guidelines for Performance Criteria
Measurable Practical
Relevant
Discriminating Stable
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Quantitative Performance Criteria
1. Sales volume a. Percentage of increase b. Market share c. Quotas obtained 2. Average sales calls per day 3. New customers obtained 4. Gross profit by product, customer, and order size 5. Ratio of selling costs to sales 6. Sales orders a. Daily number of orders 1) Total 2) By size, customer classification, and product b. Order to sales-call ratio c. Goods returned
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Qualitative Performance Criteria
1. Sales Skills a. Finding selling points b. Product knowledge c. Listening skills d. Obtaining participation e. Overcoming objections f. Closing the sale 2. Territorial management a. Planning b. Utilization c. Records d. Customer service e. Collections f. Follow-up 3. Personal traits a. Attitude b. Empathy c. Human relations d. Team spirit e. Appearance f. Motivation g. Care of car h. Self-improvement
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PERFORMANCE EVALUATION FORMS FOR GATHERING INFORMATION
Graphic appraisal scales
Descriptive statements Management by objectives Behaviorally anchored rating scales 360 degree feedback
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INFLUENCES ON A PERFORMANCE APPRAISALS ACCURACY
New Sales Managers
False Performance Results
Personalities Enter In Central Tendency Errors
Managers may tend to rate all salespeople average on all performance criteria.
Different Evaluation Standards
The Halo Effect
A positive or negative aura may be associated with an individual.
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INFLUENCES ON A PERFORMANCE APPRAISALS ACCURACY continued
The Managers Attitudes Salespeoples Expectations
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RULES FOR PERFOMANCE APPRAISALS
Be Objective Set Goals and Standards Be Honest Be Consistent Use Proper Documentation Follow Company Policy
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CONDUCTING THE APPRAISAL SESSION
Possibly the most challenging part of a managers job is effectively conducting the performance appraisal session. 1. Both manager and salesperson should be prepared for the interview.
2. Be positive.
3. Actually review performance.
Copyright 2001 by Harcourt, Inc. All rights reserved.
Possibly the most challenging part of a managers job is effectively conducting the performance appraisal session. continued 4. Finalize the performance evaluation.
5. Summarize the total performance evaluation.
6. Develop mutually agreed upon objectives. 7. Formalize the evaluation and objectives.
Copyright 2001 by Harcourt, Inc. All rights reserved.
The following are important when reviewing performance:
An open discussion of each performance criterion. The salespersons discussion of performance. The salespersons evaluation of his or her own performance. The managers view of performance. Mutual agreement on the performance level that must be established. If disagreement occurs, the managers careful explanation of why a low evaluation was given.
Copyright 2001 by Harcourt, Inc. All rights reserved.
TABLE 16.5 DOS AND DONTS ON TERMINATION
DOS
Put everything in writing. Leave a paper trail. Use a witness to the discussions on unacceptable performance. Sit down one-on-one with the individual in a private office. Complete a termination session within 15 minutes. Provide a written explanation of severance benefits. Provide outplacement services away from company headquarters. Be sure the employee hears about his or her termination from a manager, not a colleague. Express appreciation for what the employee has contributed, if appropriate.
DONTS
Dont leave room for confusion about the firing. Tell the individual in the first sentence that he or she is terminated. Dont allow time for debate during the termination session. Dont make personal comments when firing someone; keep the conversation professional. Dont rush a fired employee offsite unless security is an issue. Dont fire people on significant dates, like the 25th anniversary of their employment or the day their mother died. Dont fire employees when they are on vacation or have just returned.
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EVALUATE THE EVALUATION SYSTEM
The specific evaluation of a sales forces appraisal system requires the examination of several aspects of the entire system.
Copyright 2001 by Harcourt, Inc. All rights reserved.
The following questions can provide an assessment of the specific components:
1. What does the sales force want its performance appraisal system to do? Does the firm have goals and objectives for the system? 2. Do procedures exist for gathering data to measure how well the goals and objectives are being met? 3. Do the appraisal forms really elicit the information to serve these goals and objectives? 4. Are the appraisal interviews done effectively?
Copyright 2001 by Harcourt, Inc. All rights reserved.
FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE MANAGEMENT
M a r k e t i n g M a n a g e m e n t
Strategies
D e f in eM a r k e t S e g m e n t sa n d T a r g e tM a r k e t s
Customers
P r o d u c t M a r k e tE n t r y
E n v i r o n m e n t a l A n a l y s i s
M a r k e t i n g O b j e c t i v e s
Marketing-Mix
Corporate Mission and Objective
P r i c e
Dev elop
E s t i m a t eM a r k e t P o t e n t i a la n d F o r e c a s tS a l e s
P l a c e a n d D i s t r i b u t i o n
P r o m o t i o n
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FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE MANAGEMENT continued
S a l e s F o r c e M a n a g e m e n t
Feedback
D efin e R o les an d M ark ets o f Sales F orce
Plan Sales Force Objectives, Strategies, Tactics
Staffing
M arke tin g M ix E valu atio n P ro d u ct P ro m o tio n P rice C h an n els
Training
S a les F o rce P erfo rm an ce A n alysis an dE v alu atio n
Corporate Performance ROA Sales Market Share
E stab lish O rgan izatio n al D esign an dS tru ctu re
Directing
Feedback
F e e d b a c k F e e d b a c k
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Customers
THE BOTTOM LINE
Effective job performance is essential for organizations to stay in business and for salespeople to keep their jobs. Managers must be aware of the legal repercussions of performance appraisals. Companies must develop, relevant, discriminating, and stable criteria. Performance evaluations serve to reward effective performers and penalize ineffective salespeople. Many difficulties can be corrected if performance evaluations are effectively conducted.
Copyright 2001 by Harcourt, Inc. All rights reserved.