Evaluating Salesperson Performance 14 Evaluating Salesperson Performance

4/20/2017 Learning Objectives Explain the difference between performance and effectiveness Identify objective measures of salesperson performance, both output and input Use ratio analysis as an objective approach to salesperson performance measurement

4/20/2017 Learning Objectives Discuss key issues related to subjective measurement of salesperson performance and the forms that might be used to administer such an evaluation Understand how a sales manager can make the performance review process more productive and valuable for the salesperson Explain the benefits of 360-degree feedback

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

Performance Evaluation Measures Objective measures – reflect statistics the sales manager can gather from the firm’s internal data Subjective measures – rely on personal evaluations by the sales manager and others

Common Output and Input Measures Used to Evaluate Salespeople 14.1 Common Output and Input Measures Used to Evaluate Salespeople Continued

Common Output and Input Measures Used to Evaluate Salespeople 14.1 Common Output and Input Measures Used to Evaluate Salespeople Continued

Common Output and Input Measures Used to Evaluate Salespeople 14.1 Common Output and Input Measures Used to Evaluate Salespeople

Ratio Measures Three key types: Expense ratios Account development and servicing ratios Call activity and productivity ratios

Summary Equations Sales = Days worked X Calls Orders or Call rate Batting avg. Avg. order size

Typical Attributes on Appraisal Forms Sales results Job knowledge Management of territory Customer and company relations Personal characteristics Note the mix of objective and subjective performance measures

Common 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

Advice for Avoiding Errors in Performance Evaluation Read the 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

Advice for Avoiding Errors in Performance Evaluation 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

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

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

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