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

CHAPTER 16

EVALUATION OF
SALESPEOPLE’S 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

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Numerous specific reasons for
performance appraisals exist:

• Compensation • Penalties
• Development • Personnel
• Feedback • Planning
• Goals • Promotion
• Legal compliance • Training
• Motivation

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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 Improve performance through

by rewarding based on
performance
Method Use of evaluation forms
Manager’s role Evaluate performance
self-learning, e.g., taking selling
courses
Management by objective (MBO)
approach to goal setting, career
planning
Encourage and help salesperson

Salesperson’s role Explain past perfor- Active involvement in developing

mance; react to evaluation future career and performance plans

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 FIGURE 16.1 THE PERFORMANCE APPRAISAL’S INFLUENCE ON
SALES PERSONNEL MOTIVATION, BEHAVIOR, AND PERFORMANCE

P e r f o r m a n c e
A p p r a i s a l

M o t i v a t i o n P e r f o r m a n c e E q u i t y
E f f o r t R e w a r d s S a t i s f a c
t o W o r k L e v e l D e t e r m i n a t i o n

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

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.

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
J o b Evaluative
D e s c r i p t i o n • Compensation
P l a n n i n •g Legal
• Penalties
J o b A n a l y s i s J o b P e r f o r m a n c e
I m p l e m e• n Personnel
t i n g
D i m e n s i o n s R e q u i r e m C e r ni t te s r i a • Promotion
Developmental
E v a l u a t•i n Development
g
J o b
S p e c i f i c a t i o n s • Feedback
• Goals
• Motivation
• Planning
• Training

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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 appraisal’s
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 salesperson’s

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
SALESPERSON’S PERFORMANCE EVALUATION

Regional Manager

D i s t r i c Dt i s t r i c Ht o m e O f f i cS e a l e s p e r s o n ’ s D I i ms t mr i c eD t d i i s a t t r ei c t
M a n a g M e r a n a g P e e r r s o n n e l S D p ei s c t i r a i cl i ts tM a n Ma g ae nr a g M e r a n a g e

S a l e s p e r s o 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 l u a t i o
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 l u a t

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

ARE THE PERFORMANCE CRITERIA
APPROPRIATE?

A criterion is a standard on which a judgment or

decision may be based.

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Guidelines for Performance Criteria
• Measurable
• Practical
• Relevant
• Discriminating
• Stable

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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
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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
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PERFORMANCE EVALUATION FORMS
FOR GATHERING INFORMATION

• Graphic appraisal scales

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

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INFLUENCES ON A PERFORMANCE
APPRAISAL’S 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.
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INFLUENCES ON A PERFORMANCE
APPRAISAL’S ACCURACY continued

•The Manager’s Attitudes

• Salespeople’s Expectations

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

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

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.
Copyright © 2001 by Harcourt, Inc. All rights reserved.
TABLE 16.5 DO’S AND DON’TS ON TERMINATION

DO’S DON’TS
• Put everything in writing. Leave a • Don’t leave room for confusion
paper trail. Use a witness to the about the firing. Tell the individual in
discussions on unacceptable the first sentence that he or she is
performance. terminated.
• Sit down one-on-one with the indi- • Don’t allow time for debate during
vidual in a private office. the termination session.
• Complete a termination session • Don’t make personal comments
within 15 minutes. when firing someone; keep the
• Provide a written explanation of conversation professional.
severance benefits. • Don’t rush a fired employee offsite
• Provide outplacement services away unless security is an issue.
from company headquarters. • Don’t fire people on significant
• Be sure the employee hears about his dates, like the 25 anniversary of
th

or her termination from a man- ager, not their employment or the day their
a colleague. mother died.
• Express appreciation for what the • Don’t fire employees when they are
employee has contributed, if on vacation or have just returned.
appropriate.

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

EVALUATE THE EVALUATION SYSTEM

The specific evaluation of a sales force’s appraisal

system requires the examination of several aspects
of the entire system.

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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.Copyright
Are© the appraisal interviews
2001 by Harcourt, Inc. All rights reserved.
done effectively?
FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE
MANAGEMENT

M a r k e t i n g M a n a
P r o d u c t
M a r k e t E n t r
D e f i n 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
S e g m e n t s a n d
T a r g e t M a r k e t s
C o r p o r a t e P r i c e
C u sto m er s

E n v i r o n m M e n i s t sa i l o n M a r k e t i n g
A n a l y s i s a n d O b j e c t i v e s
O b j e c t i v e P l a c e a n d
E s t i m a t e M a r Dk e i ts t r i b u t i o n
P o t e n t i a l a n d
F o r e c a s t S a l e s
P r o m o t i o n

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FIGURE 16.6 THE RELATIONSHIP OF MARKETING TO SALES FORCE
MANAGEMENT continued

S a l e s F o r c e M a n a g e m
F e e d b a c k
D e f i n e
R o l e s a n d S t a f f i n g
M a r k e t s
o f S a l e s F o r c e
M a r k e t i n g -
C o r p o r a t e
P l a n S a l e s M i x
S a l e s F o r c e P e r f o r m a n c e
F o r c e

C u sto m e r s
E v a l u a t i o n
T r a i n i n gP e r f o r m a n c e R• O A
O b j e c t i v e s , P• r o d u c t
A n a l y s i s S• a l e s
S t r a t e g i e s , P• r o m o t i o n
a n d E v a l u a t i o n M• a r k e t
T a c t i c s P• r i c e
S• h a r e
C• h a n n e l s
E s t a b l i s h
O r g a n i z a t Di o ni r ae l c t i n g
D e s i g n
a n d S t r u c t u r e
F e e d b a c k
F e e d b a c k

F e e d b a c k

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 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.