Performance management is the design, development, implementation, management and monitoring of systems and processes that are aimed at maximising human contribution and impact in the workplace. There are related issues here: (i) Ensuring that expectations and outcomes from the sales force are met; and (ii) assessing and communicating the levels of performance in a transparent manner and on a regular basis for various purposes.
The performance appraisal process should answer the two questions that every member of an organisation has: What do you expect of me?
How am I doing at meeting your expectations?
Reasons for performance management
Overall, regular assessments and appraisals are essential, if individuals are to continually expand their “skills set” and to deliver four key benefits for an organisation (and to some extent the staff):
A clear benchmark for salespeople and sales managers, so that they know what is expected of them.
A clear career path for progression (which typically seems to motivate salespeople)
Evidence of the return on investment made in developing people so organisations are encouraged to sustain ongoing development
Continuous and continual improvement in corporate results, effectiveness and efficiency.
Determinants of field force performance
Changing dynamics of the market have increased the pressure on sales force. Many studies were conducted to know the factors that influence sales force performance. They are found to be both internal and external factors.
Internal factors include motivation (the drive within an individual, propelling them to excel and do well); skill level (consisting of knowledge, capacity and cognate experience); job satisfaction (how much joy and happiness cones from performance of sales and demand-generation); role perception (personal paradigm of what is expected of them); ego drive (personal concern for success, being ahead, and fear of failure); and empathy (concern for pains of others – team members/team leader).
External factors (outside the control of the salesperson) include but not limited to those from the environment (general economic situation, industrial practices – including compensation, level of industrialisation, technology, etc.) and those traceable to the organisation they work for (communication, work flow, management style and attitude, corporate culture, size/age of the firm, level of professionalisation of management, reports/reporting and compensation system – perks, tools, expense system and available discretion), etc. For instance, capped running expenses, also known as “float” differ from company to company and is an important metric for reps in choosing where to work.
Another set of factors affecting sales performance level arise from sales management functions which can be considered as external. These include sales force planning process, forecasting (and acceptable variance), workload, territory size and expected results, field force performance metrics and control system. I have seen a rep who couldn’t work in a company deploying GPS-based reporting and movement tracking system!
As earlier noted, performance management is generally an integrated set of techniques designed to improve employees’ performance through
Setting clear objectives for individual employees that link to strategic goals.
Formal monitoring and review of progress toward these objectives.
Reinforcing desired behaviour through rewards
Identifying training & development needs.
Performance evaluation is the second plank above. Remember that whatever you want done well must be measurable and trackable. It is important that the major objective of regular evaluation is to assure success for each and every member of the field force by communicating status of performance and agreeing on remedial action(s) before it is too late; as well as preventing unnecessary waste of time, energy and resources. It is not meant to be a post mortem that never brings anyone back to life! Reasons for evaluation include:
Providing feedback of individual performance and motivate salespeople.
To clarify work expectations, assure acceptable level of productivity and opportunity for remedial actions.
Planning for future promotions, successions and separations.
Assessing counselling, training and development needs.
Providing basis and information for salary planning and other rewards.
To contribute to corporate career planning.
To link compensation and rewards to performance.
To help salespeople set career goals.
Key elements of performance management
These include: Measurement – assessing performance against agreed targets and objectives.
Feedback – providing information to the individual on their performance and progress.
Positive reinforcement – emphasising what has been done well and making only constructive criticism about what might be improved.
Exchange of views – a frank exchange of views about what has happened, how appraisees can improve their performance, the support they need from their managers to achieve this and their aspirations for their future career.
Agreement – jointly coming to an understanding by all parties about what needs to be done to improve performance generally and overcome any issues raised in the course of the discussion.
Performance evaluation systems
The following is a list out what practising sales managers can measure and track for the purpose of performance management and performance evaluation. Of course, this is not exhaustive, as specific needs differ from firm to firm and from time to time. The evaluation systems are grouped into two thus: Activities/inputs (efforts and actions needed to get the desired results) Daily call rates: Minimum number of sales/customer call per day, better specified in average quantities per customer type (doctors, pharmacists, nurses, specialists, wholesalers, distributors, institutions, retailers, etc).
Group meetings: Also called CMEs, RTDs, clinical meetings, presentations, etc. Minimum (and maximum) target per month/quarter per territory, Rep should be specified.
Retail presence: This is expressed as the percentage of surveyed retailers that has a given number of company products/SKUs. It is an important metric to drive access for patients and healthcare professionals.
Coverage: Acceptable number and level of presence/activities per geographic or customer or product territory. It can be stated by towns/cities, districts, economic units, states, professional group, set of institutions, or trade/channel members.
New Businesses. Required as the number of new customers/business on board per period per territory versus current numbers. This is important to drive growth, coverage and access
Sales Volume: Sales, in naira terms, for all products, specific products/SKUs with a territory in a given period. It is often compared with the standards, i.e. set target.
Market Share: How much of the company’s sale for a product, brand or SKU versus total industry within a territory.
Gross Profit: Sales less COGS within a territory in a given period. Often compared with company/industry standard
Batting Average: Number of total effort/trials versus number of positive outputs. Say, total number of distributors seeing/pushed for sales versus number that gave effective order, or number of doctors detailed versus the number that actually wrote scripts.
product range / mix (sales concentration)
new business (product and customer)
redistribution to sales ratio customer) customer range / mix (sales concentration) average order value credit to cash sales ratio debtor days outstanding.
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