PERFORMANCE MANAGEMENT

What is Performance
Management?
The process by which organisations ensure
that their people:
 Are aligned to achievement of the
organisation’s overall goals ; and
 Are meeting their performance goals
Performance Management

A method for improving employee

performance through goal setting,
feedback, encouragement and support,
and rewards for success
 Where do we Start?
 No matter how large the organisation, all
performance begins with the individual.
 Individual performance then flows onto

teams, divisions, business units and finally to

the whole organisation.
 Hence, each individual needs to be
Performance Managed.
 Undertaking Performance
Management
Successful PM requires:
 A desire to achieve success through people.
 This must come from the top of the
organisation.
 A Performance Management methodology.
 A Performance Management system.
 PM Methodology

What to assess:
 • Objectives
 • Behaviours / Values
 • Competencies
 PM Methodology: What to
Assess?
Objectives:

These are the “Hard Edged" components.

Examples:
 Sales of X within 6 months at a specified
average margin.
 Lost Time / Injury Rates of X or less.
 PM Methodology: What to
Assess?
 Behaviours / Values:
Basically “How we do business in our
organisation” components.
 Examples:

Importance of teamwork
Demand for integrity
The requirement to be innovative
 PM Methodology: What to
Assess?
 Competencies:
These are the “skills” components.
 Examples:

Can be technical competencies that are job

specific.
Managerial competencies such as leadership,
flexibility, achievement motivation and
communication skills.
 Practical Tips for a Performance
Management System
 Keep it simple and focussed:
 Resist the temptation to have too many
objectives or other criteria in the PM
process.
 Be very clear about the relative
importance of each performance
component being measured
 There is only a maximum of 100% of an
employees time/effort available.
 Ensure Objectives set at the beginning
of the review period:
 Objectives should be assessed more
than just once a year:
 What gets measured gets done!
 Performance Appraisal –
Key Components
 Colleague/Client Feedback
 Employee Accomplishments Summary
 Review of Goals and Accomplishments –
Performance Feedback and Appraisal Meeting
 Goal Setting for upcoming year
 Development and Learning Plan
 Overall Performance Summary
 Merit Recommendations
 Appraisal Documentation For An
Employee Must Be:

 Consistent: use same standards for people in the

same job

 Personalized: use each employee’s progress

toward individual goals

 Measurable: use numbers to document

accomplishments wherever possible
Appraisal Documentation Must Be:
Continued

 Results Track results, such as

oriented: number of jobs completed

 Effort Track dependability,

oriented: attendance, or ability to
follow instructions

 Accurate: Be specific & correct

about incidents, dates,
 Timely: Focus on events during
appraisal period
 Use The SMARRT Criteria For
Setting Goals:
Specific: so the employee knows
exactly what is expected
Measurable: so the employee knows
when the goal is achieved
Achievable: accomplished with effort
and/or skill
Realistic: doable within reason
Results oriented: focus on end-result
Time bound: identify deadlines
 Giving Feedback: The Basics

• Criticism is subjective and judgmental

• Feedback is objective and evaluative – the goal is to
help people learn and improve their performance
• Positive feedback is just as important for success as
developmental feedback
• Positive feedback should be given in the same manner
as developmental feedback:
• Frequently
• Specific
• Based on performance examples
 EPM Formula for Developmental Feedback

• Empathize – try to see the problem from the other

person’s perspective.
• Pinpoint Problems – give very specific examples of
what’s wrong and the specific behaviours you are
asking for.
• Move Forward to Solutions – open a discussion
about how to solve the problem.
 An example….
• E – Jane, I realize that the end of the month is a very
busy time.
• P – For the last two months, I haven’t received the
attendance reports until the tenth of the month.
• M – It’s essential that I receive the reports by the fifth
of the month. Is there a system we can develop for
ensuring that I get the reports on time?... OR Can you
suggest a system for ensuring that I get the reports on
time?
Giving Feedback in the Performance Appraisal

• Listen 60-70% of the time.

• Use feedback to inform, not to advise – let them
decide how to do it.
• Ask open-ended questions about how they would like
to improve over the next year.
• Agree on mutual goals.
• Keep the feedback process supportive, not
threatening.
• Be willing to accept feedback too – “How can I best
support you in these goals
 Receiving Feedback

4A Formula
 Anticipate a learning experience – what can I learn
from this?
 Ask questions – “How could I have done this better?”
Help your manager to be specific about what he/she
wants from you in the future.
 Agree with something – find something to agree with
to establish common ground.
 Analyze – consider the feedback and determine how
to move forward to a solution.
EVALUATION OF SALESPEOPLE’S PERFORMANCE
PERFORMANCE APPRAISALS –
WHAT ARE THEY?

THE PURPOSE AND IMPORTANCE OF

PERFORMANCE APPRAISALS
Numerous specific reasons for
performance appraisals exist:

• Compensation • Penalties
• Development • Personnel
• Feedback • Planning
• Goals • Promotion
• Legal compliance • Training
• Motivation
 FIGURE 1 THE PERFORMANCE APPRAISAL’S INFLUENCE ON SALES
PERSONNEL MOTIVATION, BEHAVIOR, AND PERFORMANCE

P er fo r m a n ce
A p p ra isa l

M o t iv a tio n P er fo r m a n ce E q u ity
E ffo r t R ew a rd s S a t is fa ct io n
to W ork L evel D eter m in a tio n
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

Purpose of
Performance
Evaluation
Jo b Evaluative
D e s c rip tio n • Compensation
P la n n i n g • Legal
• Penalties
Jo b A n a ly s i s Jo b P e rfo r m a n c e • Personnel
I m p le m e n tin g
D im e n s io n s R e q u ire m e n ts C rite ria • Promotion
Developmental
E v a lu a tin g • Development
Jo b
S p e c ific a tio n s • Feedback
• Goals
• Motivation
• Planning
• Training
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 3 POSSIBLE MANAGEMENT INPUT INTO THE
SALESPERSON’S PERFORMANCE EVALUATION

Regional Manager

D is tric t D is tric t H o m e O ffic e S a l e s p e r s o n ’s I m m e d i a t e D is tric t D is tric t

M anager M anager P e rs o n n e l S p e c ia lis t D is tric t M a n a g e r M anager M anager

S a le s p e r s o n

D ire c t in p u t p e rfo rm a n c e e v a lu a tio n

I n d ire c t in p u t p e rf o r m a n c e e v a lu a t io n
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 volume
a. Percentage of increase
b. Market share
c. Quotas obtained
2. Average sales calls per day
3. New customers obtained
4. Gross profit by product, customer, and order size
5. Ratio of selling costs to sales
6. Sales orders
a. Daily number of orders
1) Total
2) By size, customer classification, and
product
b. Order to sales-call ratio
Qualitative Performance Criteria
1. Sales Skills 3. Personal traits
a. Finding selling points a. Attitude
b. Product knowledge b. Empathy
c. Listening skills c. Human relations
d. Obtaining participation d. Team spirit
e. Overcoming objections e. Appearance
f. Closing the sale f. Motivation
2. Territorial management g. Care of car
a. Planning h. Self-improvement
b. Utilization
c. Records
d. Customer service
e. Collections
f. Follow-up
INFLUENCES ON A PERFORMANCE
APPRAISAL’S ACCURACY
• New Sales Managers
• False Performance Results
• Similarity Error : evaluator perceives himself
• Central Tendency Errors
Managers may tend to rate all salespeople
average on all performance criteria.
• Different Evaluation Standards
• The Halo Effect
A positive or negative “aura” may be associated
with an individual.
 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.
EVALUATE THE EVALUATION SYSTEM

The specific evaluation of a sales force’s appraisal

system requires the examination of several aspects
of the entire 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?
FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE
MANAGEMENT

M a r k e t in g M a n a g e m e n t
P ro d u ct
M a rk et E n try
D e f in e M a r k e t

D e v e lo p M a r k e t in g - M ix S t r a t e g ie s
Seg m en ts an d
T arg e t M a rk e ts
C o rp o rate P r ic e
C u sto m e r s

E n v ir o n m e n t a l M is s io n M a r k e t in g
A n a ly s is and O b je c t iv e s
O b je c t iv e P la c e a n d
E s t im a t e M a r k e t D is t r ib u t io n
P o t e n t ia l a n d
F o r e c a s t S a le s
P r o m o t io n
FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE
MANAGEMENT continued

S a le s F o r c e M a n a g e m e n t
F eedb ack
D e f in e
R o le s a n d S t a f f in g
M a rk e ts
o f S a le s F o r c e
M a r k e t in g -
C o rp o ra te
P la n S a le s M ix
S a le s F o r c e P e rfo r m an c e
F o rce E v a lu a t io n

C u sto m e rs
T r a in in g P e rfo rm a n c e • RO A
O b je c t iv e s , • P ro d u ct
A n a ly s is • S a le s
S t r a t e g ie s , • P r o m o t io n
a n d E v a lu a t io n • M arket
T a c tic s • P r ic e
• S h are
• C h a n n e ls
E s t a b lis h
O r g a n iz a t io n a l D ir e c t in g
D e s ig n
an d S tr u c tu re
F eedb ack
Feed b ack

Feed b ack
 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.
Q&
A
QUESTIONS
ANSWERS