Chapter 16

Copyright © 2001 by Harcourt, Inc. All rights reserved.


CHAPTER 16

EVALUATION OF

SALESPEOPLE’S PERFORMANCE


LEARNING OBJECTIVESPerformance 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.


PERFORMANCE APPRAISALS –

WHAT ARE THEY?

THE PURPOSE AND IMPORTANCE OF

PERFORMANCE APPRAISALS


Numerous specific reasons for performance appraisals exist:

• Compensation

• Development

• Feedback

• Goals

• Legal compliance

• Motivation

• Penalties

• Personnel

• Planning

• Promotion

• Training


TABLE 16.1 COMPARISON OF EVALUATIVE AND DEVELOPMENTAL ASPECTS OF PERFORMANCE APPRAISAL

COMPARISON FACTORS EVALUATIVE ROLE DEVELOPMENTAL ROLE

Time Past sales performance Future performance

Objective Improve performance by rewarding based on performance

Improve performance through self-learning, e.g., taking selling courses

Method Use of evaluation forms Management by objective (MBO) approach to goal setting, career planning

Manager’s role Evaluate performance Encourage and help salesperson

Salesperson’s role Explain past perfor-mance; react to evaluation

Active involvement in developing future career and performance plans


FIGURE 16.1 THE PERFORMANCE APPRAISAL’S INFLUENCE ON SALES PERSONNEL MOTIVATION, BEHAVIOR, AND PERFORMANCE

M otiva tion to W ork

E ff or t P erfor m a n ce L evel

P erfor m a n ce A p p ra i sa l

R ew a rds E q u ity D eterm in a tion

S a tisfa ction


The performance level a salesperson attains results from a combination of the individual’s effort and ability. Ability, in turn, reflects the individual’s skills, training, information, and talents.


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?


FIGURE 16.2 THE SALESPERSON PERFORMANCE APPRAISAL SYSTEM WITH ITS NUMEROUS PARTS, PROCESSES, AND PROCEDURES

Jo b A naly sis D im ensio ns

Jo b D escrip tio n

Jo b Sp ecifi catio ns

Jo b R eq uirem en ts

P erfo rm ance C riteria

Im p lem en tin g

P lannin g

E valuating

Purpose of Performance Evaluation

Evaluative • Compensation • Legal

• Penalties • Personnel • Promotion

Developmental • Development • Feedback • Goals

• Motivation • Planning • Training


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 appraisal’s accuracy?

6. How should the appraisal be conducted?

7. How can the appraisal process be evaluated?


WHO SHOULD EVALUATE SALESPEOPLE?

The primary evaluator should be the salesperson’s immediate supervisor because this person has direct knowledge, having actually worked with the salesperson.


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.


FIGURE 16.3 POSSIBLE MANAGEMENT INPUT INTO THE SALESPERSON’S PERFORMANCE EVALUATION

Regional Manager

D istrict M anag er

D istrict M anag er

H om e O ff ice P erso nnel Sp ec ialist

D istrict M anag er

D istrict M anag er

Salesp erso n

Salesp erson ’s I m m ed iate D istric t M anager

D irect inp ut p erfo rm ance evaluation I nd irect inp ut p erfo rm ance evalu ation


ARE THE PERFORMANCE CRITERIA

APPROPRIATE?

A criterion is a standard on which a judgment or decision may be based.


Guidelines for Performance Criteria

• Measurable

• Practical

• Relevant

• Discriminating

• Stable


Quantitative Performance Criteria

1. Sales volumea. Percentage of increaseb. Market sharec. Quotas obtained

2. Average sales calls per day3. New customers obtained4. Gross profit by product, customer, and order size5. Ratio of selling costs to sales6. Sales orders

a. Daily number of orders1) Total2) By size, customer classification, and

productb. Order to sales-call ratioc. Goods returned


Qualitative Performance Criteria1. Sales Skills

a. Finding selling pointsb. Product knowledgec. Listening skillsd. Obtaining participatione. Overcoming objectionsf. Closing the sale

2. Territorial managementa. Planningb. Utilizationc. Recordsd. Customer servicee. Collectionsf. Follow-up

3. Personal traitsa. Attitudeb. Empathyc. Human relationsd. Team spirite. Appearancef. Motivationg. Care of carh. Self-improvement


• Graphic appraisal scales

• Descriptive statements

• Management by objectives

• Behaviorally anchored rating scales

• 360 degree feedback

PERFORMANCE EVALUATION FORMS

FOR GATHERING INFORMATION


• New Sales Managers

• False Performance Results

• Personalities Enter In

• Central Tendency ErrorsManagers may tend to rate all salespeople average on all performance criteria.

• Different Evaluation Standards

• The Halo EffectA positive or negative “aura” may be associated with an individual.

INFLUENCES ON A PERFORMANCE

APPRAISAL’S ACCURACY


•The Manager’s Attitudes

• Salespeople’s Expectations

INFLUENCES ON A PERFORMANCE

APPRAISAL’S ACCURACY continued


RULES FOR PERFOMANCE

APPRAISALS

• Be Objective

• Set Goals and Standards

• Be Honest

• Be Consistent

• Use Proper Documentation

• Follow Company Policy


CONDUCTING THE APPRAISAL

SESSION

Possibly the most challenging part of a manager’s 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.


Possibly the most challenging part of a manager’s 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.


The following are important when reviewing performance:

• An open discussion of each performance criterion.• The salesperson’s discussion of performance.• The salesperson’s evaluation of his or her own performance.• The manager’s view of performance.• Mutual agreement on the performance level

that must be established.• If disagreement occurs, the manager’s

careful explanation of why a low evaluation was given.


TABLE 16.5 DO’S AND DON’TS ON TERMINATION

DO’S DON’TS

• Put everything in writing. Leave a paper trail. Use a witness to the discussions on unacceptable performance.

• Sit down one-on-one with the indi-vidual 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 man-ager, not a colleague.

• Express appreciation for what the employee has contributed, if appropriate.

• Don’t leave room for confusion about the firing. Tell the individual in the first sentence that he or she is terminated.

• Don’t allow time for debate during the termination session.

• Don’t make personal comments when firing someone; keep the conversation professional.

• Don’t rush a fired employee offsite unless security is an issue.

• Don’t fire people on significant dates, like the 25th anniversary of their employment or the day their mother died.

• Don’t fire employees when they are on vacation or have just returned.


The specific evaluation of a sales force’s appraisal system requires the examination of several aspects of the entire system.

EVALUATE THE EVALUATION SYSTEM


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?


M arketin g M an agem en tC

usto

mer

s

E n v iro n m en tal A n alysis

C o rp o rate M issio n an d O b jective

M arketin g O b jectives

D efi n e M arket Segm en ts an d T arget M arkets

E stim ate M arket P o ten tial an d Fo recast Sales

Dev

elop

Mar

ketin

g-M

ix S

trat

egie

s

P ro d uct M arket E n try

P rice

P lace an d D istrib u tio n

P ro m o tio n

FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE MANAGEMENT


F eed b ack

F eed b ack

P lan Sales F o rce O b jec tiv es, Strategies, T ac tic s

D efi n e R o les an d M arkets o f Sales F o rce

E stab lish O rgan iz atio n al D esign an d Stru c tu re

Staff in g

T rain in g

D irectin g

Sales F o rce P erfo rm an ce A n alysis an d E v alu atio n

M arketin g- M ix E v alu atio n • P ro d u ct • P ro m o tio n • P rice • C h an n els

C o rp o rate P erfo rm an ce • R O A • Sales • M arket • Sh are

Cus

tom

ers

F eed b ack

F eed b ack

Sales F o rce M an agem en t

FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE MANAGEMENT continued


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.

Chapter 16

Business

performance cycle

performance level

performance appraisal

uses of performance

sales personnel motivation

appraisal process

appraisals accuracy

average sales calls