Salesperson Employment

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					        Module Ten

Evaluating the Performance
      of Salespeople
Evaluating Salespeople’s Performance
              An Expert’s Viewpoint:
At Synygy, Inc, each sales director is assigned
salespeople to mentor. Every Monday, the director meets
with each salesperson for a “bullet point” review. In
addition, each month and each quarter Synygy’s
salespeople meet with their managers to review progress
and reassess their goals for the year. These reviews are
critical since they play a larger role in determining each
salesperson’s quarterly bonus.

Evaluating Salespeople’s Performance
              An Expert’s Viewpoint:


Synygy’s salesperson performance evaluation system
allows the company to improve salespeople’s performance
and appropriately compensate salespeople for their
performance. As such, it serves two very useful functions
in effectively managing the sales force to help achieve the
company’s goals.
      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
      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
      Purposes of Salesperson
      Performance Evaluations

7.   To advise salespeople of work expectations

8.   To motivate salespeople

9.   To help salespeople set career goals

10. To improve salesperson performance
      Salesperson Performance
       Evaluation Approaches
General conclusions:
 1.   Most evaluate on an annual basis

 2.   Most combine input and output criteria which are
      evaluated using quantitative and qualitative

 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
General conclusions:
 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
      360-Degree Feedback System

• Salesperson is          Sales Manager
  evaluated by

  multiple raters
• Helps salespeople
  better understand      Salesperson
  their ability to add
  value to their
  organization and
  their 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 Perspective
  – Incorporates complex and often subjective
    assessments of salesperson characteristics and
    behaviors with considerable monitoring and directing
    of salesperson behavior by sales managers
      Perspectives on Salesperson
        Performance Evaluation
Outcome-Based                  Behavior-Based
• Little monitoring of       • Considerable monitoring
  people                       of salespeople
• Little managerial          • High levels of managerial
  direction of salespeople     direction of salespeople
• Straightforward            • Subjective measures of
  objectives measures of       salesperson
  results                      characteristics, activities,
                               and strategies
    Dimensions of Salesperson
     Performance Evaluation

 Behavioral                    Results


Criteria for Performance Evaluation

• 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 short-
  term sales generation but should also include non-
  selling 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
Criteria for Performance Evaluation

• Salespeople measured objectively based on
  results such as – sales, market share, and

• 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
          Market Response Framework
       • Control Unit
       • Business

                   • Role                         Planning     Behavior
Salesperson                          Behavior
                     Perceptions                               • Effort
  Factors                            • Effort    and Control
                   • Aptitude                                  • Quality
                                     • Quality      Unit
                   • Skill Level
                   • Motivation

     Organizational Factors
     • Marketing Effort
     • Sales Management Effort
       Elements Important in
      Assigning Sales Quotas

• Concentration of businesses within the
• 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 representatives past sales performance
• Extent of product line
• Financial support (e.g., compensation) a firm
• Relationship of product line
• Amount of clerical support
Criteria for Performance Evaluation
• 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
   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
     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
• Positive feedback about
  behaviors may be more
  affective than positive
  output feedback
  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
             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)
• INDSALES may be used to measure job
• Results may identify areas where manager may
  intervene to improve job satisfaction

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