Sales Force Management

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13

Evaluating Salesperson Performance

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Sales Force Performance Management Systems

• Performance Management Systems
• Inform sales force of how to sell
• Provide managers w/ management framework
• Enable measurement and continuous improvement of sales force performance
• BPR and TQM movements didn’t significantly impact the sales force
• CRM and SFA have sparked the current interest
• Key elements
• Proper milestones
• Workflow
• Business logic
• Controls

Source: HR Chally Group (2007), The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.

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• Explain difference between performance and effectiveness
• Identify objective measures of salesperson performance, output and input
• Utilize ratio analysis as an objective approach to salesperson performance measurement
• Discuss key issues related to subjective measurement of salesperson performance and forms used to administer such an evaluation
• Understand how a sales manager can make performance review process more productive and valuable for the salesperson

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Performance versus Effectiveness

• Behavior – what people do; tasks on which they expend effort
• Performance – behavior evaluated in terms of contribution to organizational goals
• Effectiveness –summary index of organizational outcomes for which individual is at least partly responsible

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Performance Evaluation Measures

• Objective measures – reflect statistics sales manager can gather from the firm’s internal data
• Output
• Input
• Ratios of output or input
• Subjective measures – rely on personal evaluations by sales manager and others

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13.1 Attributions and Salesperson Performance Evaluation

• Ability = Task difficulty/Effort
• Performance = (Ability X Effort ± Task difficulty)

Source: Thomas E. DeCarlo, Sanjeev Agarwal, and Shyman B. Vyas. “Performance Expectations of Salespeople: The Role of Past Performance and Casual Attributions in Independent and Interdependent Cultures.” Journal of Personal Selling & Sales Management 27 (Spring 2007) pp. 133–47l; Andrea L. Dixon, Lukas P. Forbes, and Susan M. B. Schertzer. “Early Success: How Attributions for Sales Success Shape Inexperienced Salesperson’s Behavioral Intentions.” Journal of Personal Selling & Sales Management 25 (Winter 2005) pp. 67–77; Andrea L. Dixon, and Susan M. B. Schertzer. “Bouncing Back: How Salesperson Optimism and Self-Efficacy Influence Attributions and Behaviors Following Failure.” Journal of Personal Selling & Sales Management 25 (Fall 2005) pp. 361–69.

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13.1

Common output and input measures used to evaluate salespeople

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Ratio Measures

• Expense ratios
• Account development and servicing ratios
• Call activity and productivity ratios

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Common ratios used to evaluate salespeople

13.2a

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Common ratios used to evaluate salespeople

13.2b

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Common ratios used to evaluate salespeople

13.2c

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Summary Equations

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Typical Attributes on Appraisal Forms

• Sales results
• Job knowledge
• Management of territory
• Customer and company relations
• Personal characteristics

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Problems with Subjective Performance Measurement

• Lack of an outcome focus
• Ill-defined personality traits
• Halo effect
• Leniency or harshness
• Central tendency
• Interpersonal bias
• Organizational uses influence

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13.4

Sample of a poorly constructed subjective performance evaluation form

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Avoiding Errors in Performance Evaluation

• Read definition of each attribute thoroughly before rating
• Guard against tendency to overrate
• Be as objective as possible
• Do not permit your evaluation of one factor to influence your evaluation of another
• Base your rating on observed performance, not potential abilities
• Rate an employee on general success or failure over the whole period
• Have sound reasons for your ratings

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13.2 Outcome Bias in Evaluations

• Sometimes outcomes and processes leading to outcomes match, sometimes they do not
• Evaluators tend to overlook process and rate performers based on outcomes
• Relationship selling requires attention to behaviors that may or may not influence the bottom line for some time

Source: For recent treatments on the outcome bias see: Nidhi Agrawal and Durairaj Maheswaran, “Motivated Reasoning Outcome Bias Effects,” Journal of Consumer Research 31(4), pp. 798–805; Philip J. Mazzocco, Mark D. Alicke, and Teresa L. Davis, “On the Robustness of Outcome Bias: No Constraint by Prior Culpability,” Basic and Applied Social Psychology 26(2/3), p. 131.

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BARS Systems

• Behaviorally anchored rating scale (BARS) system concentrates on criteria the individual can control
• Requires sales managers to consider in detail a wide range of components of job performance
• Requires clearly defined anchors for each performance criteria

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13.5

A BARS scale with behavioral anchors for the attribute “promptness in meeting deadlines”

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360-Degree
Performance Feedback

• Integrates feedback from external customers, internal customers, other members of the selling team, the sales manager, and the salesperson
• Provides the impetus for a more productive dialogue between the sales manager and salesperson at performance review time

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Performance Management System

• Requires a commitment to integrating all the elements of feedback on the process of serving customers
• Results in performance information that is timely, accurate, and relevant to the firm’s customer management initiative
• Salespeople take the lead in goal setting, performance measurement, and adjustment of their own performance

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13.3 Effective Appraisals

• Preparation
• Reps rate themselves
• Focus on their impact, needs, and goals
• Appraisal interview
• Discuss salary separately
• Focus on own and rep’s preparation answers
• Post-appraisal
• Share formal review documents
• Connect salary to appraisal issues

Sources: "Three Steps to Great Performance Appraisals," Sellingpower Sales Management Newsletter, June 2007 "Are you missing an opportunity to motivate performance?" Sellingpower Sales Management Newsletter, 2008

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Mark W. Johnston | Greg W. Marshall