Sales and Distribution Management

Evaluating Sales Force Performance : Overview

A proper evaluation process ensures that the organization is well managed. It also provides the sales personnel with information on their performance and gives recommendations for further improvement.

Performance evaluation can also help in improving the relationships between the sales force and superiors by minimizing suspicion and improving interaction. The performance evaluation process generally involves five steps. The first step is to determine the factors that affect the performance of the sales force. The next step involves the selection of criteria that will be used to evaluate the performance. Step three involves establishing performance standards that can be used as a basis to compare the performance of the sales force. Step four involves monitoring actual performance. The last step is to review and provide feedback to the sales personnel.

The purpose of conducting performance evaluation is to crosscheck whether the sales force activities are in alignment with organizational objectives. It also helps monitor the sales force activities and provide remedial action, if required. Performance evaluation also helps to prepare a future action plan for the sales personnel and fulfill the organizational objectives. It exerts an influence on the mode of compensation, fixing of sales quotas, and decisions on the transfer or removal of the salesperson from the organization. In most organizations, it is the immediate superior or the sales manager who conducts the performance appraisal. Sometimes a team of people including the personnel manager and the department head, along with the sales manager, appraise the sales personnel. The timing of appraisal also varies for different organizations. It depends on the complexity of the sales plan, the costs involved, and the current objectives of the organization. Periodic performance appraisal is necessary to identify any discrepancies in the overall sales plan and correct them.

The sales manager or the concerned person involved in appraising the sales force can take the help of quantitative or qualitative criteria. These are also termed the behavior and outcome components. Qualitative criteria include sales skills, territory management skills, personality traits, etc. The quantitative factors include the sales volume, average calls per day, sales orders, etc. Quantitative criteria are those aspects that measure the sales performance in terms of the end results whereas qualitative criteria involve all those activities that the sale person does to achieve the end results.

The sales manager must ensure that the performance standards are set to compare and evaluate the actual performance of the sales force. The standards vary from industry to industry and are different for different job profiles. Performance standards come under quantitative standards, qualitative standards, time-based standards, or cost-based standards. All the sales force activities can be segregated into one of these four categories and compared with the base standard.

Many methods of performance evaluation have been developed over the years. Yet, there is no single method that can be considered ideal for all organizations. Some of the commonly used methods are essays, rating scales, rankings, management by objectives and behaviorally-anchored rating scales. Several modern methods like critical incident appraisal, work-standards method, family of measures, etc., have been developed to suit variations and other requirements. Finally, regular monitoring and review of the sales force activities is also necessary to ensure that the organizational activities are aligned to the sales plan.

Chapter 16 : Overview