CHAPTER 16

EVALUATION OF
SALESPEOPLES PERFORMANCE

Copyright 2001 by Harcourt, Inc. All rights reserved.

LEARNING OBJECTIVES
Performance appraisals are excellent methods for
building a strong and effective sales program. This
chapter should help you understand:
What a performance appraisal involves.
The uses of performance appraisals.
Who does the evaluation and how often salespeople
should be evaluated.
How performance criteria are developed.
The accuracy of performance appraisals and what
can influence that accuracy.
The importance of evaluating the evaluation system.
Copyright 2001 by Harcourt, Inc. All rights reserved.

PERFORMANCE APPRAISALS
WHAT ARE THEY?
THE PURPOSE AND IMPORTANCE OF
PERFORMANCE APPRAISALS

Copyright 2001 by Harcourt, Inc. All rights reserved.

Numerous specific reasons for

performance appraisals exist:
Compensation

Penalties

Development

Personnel

Feedback

Planning

Goals

Promotion

Legal compliance

Training

Motivation

Copyright 2001 by Harcourt, Inc. All rights reserved.

TABLE 16.1 COMPARISON OF EVALUATIVE AND DEVELOPMENTAL

ASPECTS OF PERFORMANCE APPRAISAL

COMPARISON FACTORS

EVALUATIVE ROLE

DEVELOPMENTAL ROLE

Time

Past sales performance

Future performance

Objective

Improve performance
by rewarding based
on performance

Improve performance through

self-learning, e.g., taking selling
courses

Method

Use of evaluation forms

Management by objective (MBO)

approach to goal setting, career
planning

Managers role

Evaluate performance

Encourage and help salesperson

Salespersons role

Explain past performance; react to

evaluation

Active involvement in
developing future career and
performance plans

Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 16.1 THE PERFORMANCE APPRAISALS INFLUENCE ON SALES

PERSONNEL MOTIVATION, BEHAVIOR, AND PERFORMANCE

P er fo r m a n ce
A p p ra isa l
M o tiv a tio n
to W ork

E ff o r t

P er fo r m a n c e
L ev el

R ew a r d s

Copyright 2001 by Harcourt, Inc. All rights reserved.

E q u ity
D e t er m i n a t i o n

S a t i s fa ct i o n

The performance level a salesperson attains

results from a combination of the
individuals effort and ability. Ability, in
turn, reflects the individuals skills,
training, information, and talents.

Copyright 2001 by Harcourt, Inc. All rights reserved.

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?

Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 16.2 THE SALESPERSON PERFORMANCE APPRAISAL SYSTEM

WITH ITS NUMEROUS PARTS, PROCESSES, AND PROCEDURES
Purpose of
Performance
Evaluation
Jo b
D e s c rip tio n
Jo b A n a ly s is
D im e n s io n s

Jo b
R e q u ire m e n ts

P la n n i n g

P e rfo r m a n c e
C rite ria

Jo b
S p e c i fi c a t i o n s

Copyright 2001 by Harcourt, Inc. All rights reserved.

I m p le m e n tin g
E v a lu a tin g

Evaluative
Compensation
Legal
Penalties
Personnel
Promotion
Developmental
Development
Feedback
Goals
Motivation
Planning
Training

Planning, implementing, and evaluating

the performance appraisal system
involves:
1. Who should evaluate salespeople?

2. When should salespeople be evaluated?

3. Are the criteria appropriate?
4. What forms should be used for gathering
information?
5. What may influence the appraisals
accuracy?
6. How should the appraisal be conducted?
7. How can the appraisal process be evaluated?
Copyright 2001 by Harcourt, Inc. All rights reserved.

WHO SHOULD EVALUATE SALESPEOPLE?

The primary evaluator should be the salespersons
immediate supervisor because this person has
direct knowledge, having actually worked with the
salesperson.

Copyright 2001 by Harcourt, Inc. All rights reserved.

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.

Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 16.3 POSSIBLE MANAGEMENT INPUT INTO THE

SALESPERSONS PERFORMANCE EVALUATION

Regional Manager

D is tri c t
M anag er

D is tric t
M anag er

H o m e O ff i c e
P e rs o n n e l S p e c ia lis t

S a le s p e r s o n s I m m e d i a t e
D is tric t M a n a g e r

S a le s p e r s o n

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

I n d i r e c t i n p u t p e r f o r m a n c e e v a lu a t i o n

Copyright 2001 by Harcourt, Inc. All rights reserved.

D is tri c t
M anag er

D is tric t
M anag er

ARE THE PERFORMANCE CRITERIA

APPROPRIATE?
A criterion is a standard on which a judgment or
decision may be based.

Copyright 2001 by Harcourt, Inc. All rights reserved.

Guidelines for Performance Criteria

Measurable
Practical
Relevant
Discriminating
Stable

Copyright 2001 by Harcourt, Inc. All rights reserved.

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
Copyright 2001 by Harcourt, Inc. All rights reserved.

Qualitative Performance Criteria

1. Sales Skills
a. Finding selling points
b. Product knowledge
c. Listening skills
d. Obtaining participation
e. Overcoming objections
f. Closing the sale
2. Territorial management
a. Planning
b. Utilization
c. Records
d. Customer service
e. Collections
f. Follow-up

3. Personal traits
a. Attitude
b. Empathy
c. Human relations
d. Team spirit
e. Appearance
f. Motivation
g. Care of car
h. Self-improvement

Copyright 2001 by Harcourt, Inc. All rights reserved.

PERFORMANCE EVALUATION FORMS

FOR GATHERING INFORMATION
Graphic appraisal scales

Descriptive statements
Management by objectives
Behaviorally anchored rating scales
360 degree feedback

Copyright 2001 by Harcourt, Inc. All rights reserved.

INFLUENCES ON A PERFORMANCE
APPRAISALS ACCURACY
New Sales Managers
False Performance Results
Personalities Enter In
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.
Copyright 2001 by Harcourt, Inc. All rights reserved.

INFLUENCES ON A PERFORMANCE
APPRAISALS ACCURACY
The Managers Attitudes
Salespeoples Expectations

Copyright 2001 by Harcourt, Inc. All rights reserved.

continued

RULES FOR PERFOMANCE

APPRAISALS
Be Objective
Set Goals and Standards
Be Honest
Be Consistent
Use Proper Documentation
Follow Company Policy
Copyright 2001 by Harcourt, Inc. All rights reserved.

CONDUCTING THE APPRAISAL

SESSION
Possibly the most challenging part of a
managers 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.
Copyright 2001 by Harcourt, Inc. All rights reserved.

Possibly the most challenging part of a

managers 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.

Copyright 2001 by Harcourt, Inc. All rights reserved.

The following are important when

reviewing performance:
An open discussion of each performance
criterion.
The salespersons discussion of performance.
The salespersons evaluation of his or her
own performance.
The managers view of performance.
Mutual agreement on the performance level
that must be established.
If disagreement occurs, the managers
careful explanation of why a low evaluation
was given.
Copyright 2001 by Harcourt, Inc. All rights reserved.

TABLE 16.5 DOS AND DONTS ON TERMINATION

DOS
Put everything in writing. Leave a
paper trail. Use a witness to the
discussions on unacceptable
performance.
Sit down one-on-one with the individual in a private office.
Complete a termination session
within 15 minutes.
Provide a written explanation of
severance benefits.
Provide outplacement services
away from company headquarters.
Be sure the employee hears about
his or her termination from a manager, not a colleague.
Express appreciation for what the
employee has contributed, if
appropriate.

DONTS
Dont leave room for confusion
about the firing. Tell the individual in
the first sentence that he or she is
terminated.
Dont allow time for debate during
the termination session.
Dont make personal comments
when firing someone; keep the
conversation professional.
Dont rush a fired employee offsite
unless security is an issue.
Dont fire people on significant
dates, like the 25th anniversary of
their employment or the day their
mother died.
Dont fire employees when they
are on vacation or have just
returned.

Copyright 2001 by Harcourt, Inc. All rights reserved.

EVALUATE THE EVALUATION SYSTEM

The specific evaluation of a sales forces appraisal
system requires the examination of several aspects
of the entire system.

Copyright 2001 by Harcourt, Inc. All rights reserved.

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?
Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE

MANAGEMENT

C u s to m e r s

D e fi n e M a r k e t
S eg m en ts an d
T arg e t M a rk e ts
E n v iro n m e n ta l
A n a ly s is

C o rp o ra te
M i s s io n
an d
O b j e c t iv e

M a r k e t in g
O b j e c t iv e s
E s tim a te M a r k e t
P o t e n t ia l a n d
F o r e c a s t S a le s

Copyright 2001 by Harcourt, Inc. All rights reserved.

D e v e lo p M a r k e t i n g - M i x S t r a t e g i e s

M a r k e tin g M a n a g e m e n t
P ro d u c t
M a rk et E n tr y

P ric e

P la c e a n d
D is t r ib u t io n

P ro m o tio 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 eed b ack

P la n S a le s
F o rc e
O b j e c t iv e s ,
S tra te g ie s,
T a c tic s

S t a ff i n g

T ra in in g

E s t a b li s h
O rg a n iz a tio n a l
D e s ig n
an d S tr u c tu re

S a le s F o r c e
P e rfo rm an c e
A n a ly s is
a n d E v a lu a t io n

M a r k e tin g M ix
E v a lu a t i o n
P ro d u ct
P r o m o tio n
P r ic e
C h a n n e ls

D ir e c t i n g

F eed b ack

F eed b ack
F eed b ack

Copyright 2001 by Harcourt, Inc. All rights reserved.

C o rp o ra te
P e rfo rm an c e
ROA
S a le s
M ark e t
S h are

C u sto m e rs

D e fi n e
R o le s a n d
M a rk e ts
o f S a le s F o r c e

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.
Copyright 2001 by Harcourt, Inc. All rights reserved.