McGraw-Hill/Irwin Copyright 2006 by The McGraw-Hill Companies, Inc.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 13 Evaluating Salesperson Performance

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Learning Objectives Explain the difference between performance and effectiveness. Identify objective measures of salesperson performance, both output and input. Utilize ratio analysis as an objective approach to salesperson performance measurement. Discuss key issues related to subjective measurement of salesperson performance and the forms that might be used to administer such an evaluation. Understand how a sales manager can make the performance review process more productive and valuable for the salesperson.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Performance versus Effectiveness Behavior – what people do; the tasks on which they expend effort Performance – behavior evaluated in terms of its contribution to the goals of the organization Effectiveness – some summary index of organizational outcomes for which the individual is at least partly responsible

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Performance Evaluation Measures Objective measures – reflect statistics the sales manager can gather from the firm’s internal data –Output –Input –Ratios of output or input Subjective measures – rely on personal evaluations by the sales manager and others

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 13-6

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Ratio Measures Expense ratios Account development and servicing ratios Call activity and productivity ratios

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Summary Equations Sales=Days workedXCallsXOrdersXSales Days workedCallsOrders or Sales=Days workedXCall rateXBatting avg. XAvg. order size

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Typical Attributes on Appraisal Forms Sales results Job knowledge Management of territory Customer and company relations Personal characteristics

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved 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

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Avoiding Errors in Performance Evaluation Read the 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

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved 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

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved 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

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved 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

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Key Terms behavior performance effectiveness attribution theory objective measures –output measures –input measures –ratio measures subjective measures bias outcome bias BARS (behaviorally anchored rating scale) 360-degree performance feedback internal customers self-evaluation performance management system

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Mark W. Johnston Rollins College Greg W. Marshall Rollins College