Creating an effective sales performance management system

Following on from last week’s article about managing and measuring the right things in sales, I thought it would be worth looking at some of the key principles for effective sales performance management systems.

The first place to start is to align your sales performance management system and subsequent key measures to your organisation’s strategy and goals. It’s then the job of the CEO and the Sales Leader to ensure the organisation (that means everyone else who supports the sales effort) is aligned to the sales performance management system. When this dimension is in place the organisation is best placed to sustain high sales performance.

Issues arise when the non sales teams impose their ‘numbers’ or ‘tasks’ on sales teams which are unrelated to the effective sales performance. i.e.

• The CFO being critical of missed forecasts and not looking into or understanding the underlying reasons why
• The Executive team demanding more activity (i.e. make more sales calls) and not understanding the potential negative impact on effectiveness
• Marketing engaging in lead generation activities that either generate the wrong leads or leads that require out of scope qualification meaning they’re in the forecast prematurely.

This leads to competing motivation, confusion and reduced sales performance across the board.

Another key area worth noting is the importance of addressing and working with values and explicit behaviours. This is now much higher on the agenda of many businesses now, not just the outputs of performance as we discussed last week.

While the focus of this article is directed towards sales, this principles presented here can be applied to any role in your organisation. As you read through the items below, bear in mind that this is not prescriptive in nature and you should use only what works for you.

Principles of an Effective Performance Management System:

• Reflect an organisation’s values and strategy.
• Commitment to the system should be obtained from top management and communicated to all employees. Ideally input should be sought from all levels to gain their engagement.
• Business objectives need to be linked to team and individual accountabilities.
• Performance measures are developed for each function and individual to ensure that their performance is aligned with the needs of the organisation.
• Feedback is provided on an ongoing basis, not just during the annual performance review. For instance, this would include coaching conversations.
• Expectations and communication should be transparent and consistent at all times.
• Employee development and future behaviour are the focus of attention, not just past performance.
• A partnership between the employee and manager is developed based upon open dialogue, two-way feedback, and shared responsibility.
• Employees are encouraged to take accountability for their own performance and success.

Benefits of an Effective Performance Management System:

• Encourages open, constructive communication between managers and employees.
• Provides feedback on how people are doing on the job.
• Allows for mutual understanding (between manager and employee) of each employee’s job responsibilities and performance expectations.
• Facilitates identification of individual capabilities, strengths and areas for development.
• Identifies factors negatively affecting employee performance (e.g. work environment, job design, organisational policies and practices, personal issues, external factors, etc) so that action can be taken to alleviate them.
• A structured and documented process encourages objective evaluation and fair treatment.
• Assists in the achievement of strategic goals.
• A consistent way of setting goals, monitoring performance and formally reviewing performance.
• Self-managing for proactive individuals.

Remember everybody lives by selling something.

Sue Barrett is Managing Director of BARRETT