Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Evaluating the Performance of Salespeople Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Learning Objectives 1. Discuss the different purposes of salesperson performance evaluations.
2. Differentiate between an outcome-based and a behavior-based perspective for evaluating and controlling salesperson performance.
3. Describe the different types of criteria necessary for comprehensive evaluations of salesperson performance. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Learning Objectives 4. Compare the advantages and disadvantages of different methods of salesperson performance evaluations. 5. Explain how salesperson performance information can be used to identify problems, determine their causes, and suggests sales management actions to solve them. 6. Discuss the measurement Importance of salesperson job satisfaction. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making 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. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Purposes of Salesperson Performance Evaluations 4. To determine the specific training and counseling needs of individual salespeople and the overall salesforce. 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. 7. To advise salespeople of work expectations. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Purposes of Salesperson Performance Evaluations 8. To motivate salespeople. 9. To help salespeople set career goals. 10. To relate salesperson performance to sales organization goals. 11. To enhance communications between salesperson and sales manager. 12. To improve salesperson performance. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Salesperson Performance Evaluation Approaches 1. Most evaluate on an annual basis.
2. Most combine input and output criteria which are evaluated using quantitative and qualitative measures.
3. When used, performance standards or quotas are set in collaboration with salespeople.
4. Many assign weights to different objectives and incorporate territory data. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Salesperson Performance Evaluation Approaches 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. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Salesperson 360-Degree Feedback System Salesperson is evaluated by multiple raters.
Helps salespeople better understand their ability to add value to their organization and their customers. Sales Manager E v a l u a t i o n
Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making 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. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Perspectives on Salesperson Performance Evaluation Little monitoring of people Little managerial direction of salespeople Straightforward objectives measures of results Outcome-Based Considerable monitoring of salespeople High levels of managerial direction of salespeople Subjective measures of salesperson characteristics, activities, and strategies Behavior-Based Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Dimensions of Salesperson Performance Evaluation Behavioral Professional Development Results Profitability Salesperson Performance Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Criteria for Performance Evaluation Consists of criteria related to activities performed by individual salespeople, including: Sales calls Customer Complaints Required Reports Submitted Training Meetings Letters and Calls Behavior 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. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Criteria for Performance Evaluation 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 Professional Development: Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Criteria for Performance Evaluation Salespeople measured objectively based on results such as sales, market share, and accounts 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 satisfaction Results Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Elements Important in Assigning Sales Quotas Concentration of businesses within the territory Commitment by the sales manager to assist the sales representative Growth of businesses within the territory Geographic size of the territory Complexity of products sold Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Elements Important in Assigning Sales Quotas Sales representatives past sales performance Extent of product line Financial support (e.g., compensation) a firm provides Relationship of product line Amount of clerical support Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making 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 Profitability: Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Performance Evaluation Methods Job Relatedness Reliability Validity Standardization Practicality Comparability Discriminability Usefulness Characteristics any method should include: Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Performance Evaluation 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 Graphic Rating/Checklist Methods Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Performance Evaluation 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 evaluation Ranking Methods Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Performance Evaluation Methods Management By Objectives (MBO) Mutual setting of well-defined and measurable goals within a specified time period. Managing activities within the specified time period toward the accomplishment of the stated objectives. Appraisal of performance against objectives. Objective-Setting Methods Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Performance Evaluation Methods Links behaviors to specific results Salespeople are used to develop performance results and critical behaviors Positive feedback about behaviors may be more affective than positive output feedback Behaviorally Anchored Rating Scales (BARS) Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making Performance Evaluation Bias Occurs when a managers 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)
Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making 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. Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making 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 Chapter 10: Evaluating the Performance of Salespeople Ingram LaForge Avila Schwepker Jr. Williams Sales Management: Analysis and Decision Making 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 satisfaction. Results may identify areas where manager may intervene to improve job satisfaction. 313