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Sales Management 15

Sales Management 15. Performance Analysis. Purposes of Salesperson Performance Evaluations I. To ensure that compensation and other reward disbursements are consistent with actual salesperson performance To identify salespeople that might be promoted

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Sales Management 15

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  1. Sales Management 15 Performance Analysis

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

  3. "Do not think a man has done his full duty when he has performed the work assigned him. A man will never rise if he does only this. Promotion comes from exceptional work."Andrew Carnegie (1835-1919)Scottish industrialist & philanthropist founder, Carnegie Steel Company

  4. Purposes of Salesperson Performance Evaluations II • To determine the specific training and counseling needs of individual salespeople and the overall sales force • To provide information for effective human resource planning • To identify criteria that can be used to recruit and select salespeople in the future

  5. Purposes of Salesperson Performance Evaluations III • To advise salespeople of work expectations • To motivate salespeople • To help salespeople set career goals • To improve salesperson performance

  6. Salesperson PerformanceEvaluation Approaches I General conclusions: • Most evaluate on an annual basis • Most combine input and output criteria which are evaluated using quantitative and qualitative measures • When used, performance standards or quotas are set in collaboration with salespeople • Many assign weights to different objectives and incorporate territory data.

  7. Salesperson PerformanceEvaluation Approaches II General conclusions: • Most use multiple sources of information • Most are conducted by the field sales manager who supervises the salesperson • Most provide a written copy of the review and personal discussion

  8. Type of Measurement • Objective • Statistically-based • Use internal data • Subjective • Personal evaluations • Usually sales manager

  9. Objective Measures I • Common Output Factors • Orders • #, Avg. size, # cancelled • Accounts • # active, # new, # lost, # overdue, # prospective • This data is in computer records • Measures results

  10. Objective Measures II • Common Input Factors • Calls: # planned, made, unplanned • Time: Days worked, calls/day, % time selling • Expenses: Total, by type, % sales, % quota • Non-selling Activities: Letters/calls to prospects, # formal proposals, displays built, # meetings, # missionary calls, # service calls, overdue accts collected • This data is in salespeople’s records • Measures effort

  11. Objective Measures III • Ratios are a quick and dirty way to judge salespeople performance • Common Ratios • Expense • Account development/service • Call activity/productivity

  12. Subjective Measures I • Focus is on how well salespeople do their job vs. focus of objective measures, what they do. Qualitative vs. Quantitative. • More difficult to measure qualitative (how well) rather than quantitative (how much). • Qualitative measures tend to be inconsistent and plagued with biases because they rely on human judgment.

  13. Subjective Measures II • To force some consistency in judgment, and eliminate bias, salespeople are judged along multiple attributes using a rating scale. • Five attributes rated: • Sales results • Job knowledge • Territory management • Customer/Company relations • Personal characteristics

  14. Sales Results • Volume performance • Sales to new accounts • Selling the full product line

  15. Job Knowledge • Product knowledge • Pricing • Company policies • Competitors

  16. Territory Management • Planning activities and calls • Controlling expenses • Reports and records

  17. Customer/Company Relations • Solid, professional relationship with customers • Working well with colleagues • Good company citizen

  18. Personal Characteristics • Initiative (also drive and ambition) • Personal Appearance (yes, it’s important) • Personality • Resourcefulness (getting things done)

  19. So how do you subjectively evaluate your salespeople?

  20. Actually… • Use Merit Rating Forms • Helps guide subjective process • Forces more objectivity and consistency

  21. Merit Rating Forms: Common Problems • Lack of an outcome focus • Ill-defined personality traits • Halo effect • Leniency or harshness • Central tendency • Interpersonal bias • Organizational uses influence

  22. Lack of an Outcome Focus • Need goals, not just attribute ratings • Accomplishment • One type is BARS • (behavioral anchored rating scale) • Critical Success Factors • Focus on behaviors that are effective in achieving goals • Key attributes

  23. BARS NOT BARS

  24. Ill-defined Personality Traits • Are they related to performance? • E.g., initiative, aggressiveness, goal-oriented, resourcefulness • These are intuitively appealing, but do they lead to good performance? • Sometimes personality traits (e.g. aggressiveness) can be counter-productive.

  25. Halo Effect • Rating on one attribute tends to influence the rating on other attributes • Important characteristics influence others • Both positive and negative effects • Managers have different ideas of what is important • Even then, they will change over time

  26. Leniency or Harshness • Managers are not the same in their evaluations (same with professors) • Same performance will be judged differently by different managers • Need consistent expectations and evaluations of performance throughout the organization

  27. Central Tendency • Sometimes managers (like people) don’t like the extremes on scales • Given 1-4, most people pick 3 • Not very helpful scores • Can be a problem when used for raises, promotions, terminations, etc.

  28. Interpersonal Bias • Our perceptions of people and their behavior are influenced by whether we like the person or not • Salespeople can use their skills of personal influence to affect the scores • Impression Management • E.g., Eddie Haskell 

  29. Organizational Uses Influence • Managers may be more lenient (or not) if the evaluations are to be used for raises or promotions • If meant for employee development, then they focus on weaknesses in order to have salespeople improve

  30. Protections Against Biases • Instructions on forms • Descriptive categories not words • Request objectivity • Use Objective Measures

  31. …and they walked off into the sunset

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