Evaluating Salesperson Performance 13 Evaluating Salesperson Performance

Performance versus Effectiveness Behavior – what people do; tasks on which they expend effort Performance – behavior evaluated in terms of contribution to organizational goals Effectiveness –summary index of organizational outcomes for which individual is at least partly responsible

Performance Evaluation Measures Objective measures – reflect statistics sales manager can gather from the firm’s internal data Output Input Ratios of output or input Subjective measures – rely on personal evaluations by sales manager and others

13.1 Attributions and Salesperson Performance Evaluation Ability = Task difficulty/Effort Performance = (Ability X Effort ± Task difficulty) Source: Thomas E. DeCarlo, Sanjeev Agarwal, and Shyman B. Vyas. “Performance Expectations of Salespeople: The Role of Past Performance and Casual Attributions in Independent and Interdependent Cultures.” Journal of Personal Selling & Sales Management 27 (Spring 2007) pp. 133–47l; Andrea L. Dixon, Lukas P. Forbes, and Susan M. B. Schertzer. “Early Success: How Attributions for Sales Success Shape Inexperienced Salesperson’s Behavioral Intentions.” Journal of Personal Selling & Sales Management 25 (Winter 2005) pp. 67–77; Andrea L. Dixon, and Susan M. B. Schertzer. “Bouncing Back: How Salesperson Optimism and Self-Efficacy Influence Attributions and Behaviors Following Failure.” Journal of Personal Selling & Sales Management 25 (Fall 2005) pp. 361–69.

13.1 Common output and input measures used to evaluate salespeople 13-5

Ratio Measures Expense ratios Account development and servicing ratios Call activity and productivity ratios

Common ratios used to evaluate salespeople 13-7

Common ratios used to evaluate salespeople 13.2b 13-8

Common ratios used to evaluate salespeople 13-9

Summary Equations Sales = Days worked X Calls Orders or Call rate Batting avg. Avg. order size 13-10

Typical Attributes on Appraisal Forms Sales results Job knowledge Management of territory Customer and company relations Personal characteristics

Problems with Subjective Performance Measurement Lack of an outcome focus Ill-defined personality traits Halo effect Leniency or harshness Central tendency Interpersonal bias Organizational uses influence

13.4 Sample of a poorly constructed subjective performance evaluation form 13-13

Avoiding Errors in Performance Evaluation Read definition of each attribute thoroughly before rating Guard against tendency to overrate Be as objective as possible Do not permit your evaluation of one factor to influence your evaluation of another Base your rating on observed performance, not potential abilities Rate an employee on general success or failure over the whole period Have sound reasons for your ratings

13.2 Outcome Bias in Evaluations Sometimes outcomes and processes leading to outcomes match, sometimes they do not Evaluators tend to overlook process and rate performers based on outcomes Relationship selling requires attention to behaviors that may or may not influence the bottom line for some time Source: For recent treatments on the outcome bias see: Nidhi Agrawal and Durairaj Maheswaran, “Motivated Reasoning Outcome Bias Effects,” Journal of Consumer Research 31(4), pp. 798–805; Philip J. Mazzocco, Mark D. Alicke, and Teresa L. Davis, “On the Robustness of Outcome Bias: No Constraint by Prior Culpability,” Basic and Applied Social Psychology 26(2/3), p. 131.

BARS Systems Behaviorally anchored rating scale (BARS) system concentrates on criteria the individual can control Requires sales managers to consider in detail a wide range of components of job performance Requires clearly defined anchors for each performance criteria

A BARS scale with behavioral anchors for the attribute “promptness in meeting deadlines” 13.5 13-17

360-Degree Performance Feedback Integrates feedback from external customers, internal customers, other members of the selling team, the sales manager, and the salesperson Provides the impetus for a more productive dialogue between the sales manager and salesperson at performance review time

Performance Management System Requires a commitment to integrating all the elements of feedback on the process of serving customers Results in performance information that is timely, accurate, and relevant to the firm’s customer management initiative Salespeople take the lead in goal setting, performance measurement, and adjustment of their own performance

13.3 Effective Appraisals Preparation Appraisal interview Reps rate themselves Focus on their impact, needs, and goals Appraisal interview Discuss salary separately Focus on own and rep’s preparation answers Post-appraisal Share formal review documents Connect salary to appraisal issues Sources: "Three Steps to Great Performance Appraisals," Sellingpower Sales Management Newsletter, June 2007 "Are you missing an opportunity to motivate performance?" Sellingpower Sales Management Newsletter, 2008