managing sales team growth
- 1. 2 | P a g e Contents 1.0 Introduction ................................................................................................................................ 3 2.0 What is Performance Management?............................................................................................ 5 3.0 Why is Performance Management Important? ............................................................................ 6 4.0 Building Success Profiles.............................................................................................................. 7 5.0 Assessing your Current Sales Team............................................................................................ 11 6.0 The Framework.......................................................................................................................... 12 6.1 Agreeing Goals................................................................................................................... 13 6.2 Reviews and Appraisals...................................................................................................... 13 6.3 Reward and Development.................................................................................................. 14 7.0 Rolling Out The Process ............................................................................................................. 14 7.1 Setting individual goals ...................................................................................................... 14 7.2 Monitoring, Reviewing, Coaching and Appraising............................................................... 16 8.0 Conclusion................................................................................................................................. 17
- 2. 3 | P a g e 1.0 Introduction This latest in our series of white papers looks at the fourth component of a successful sales function, performance management. In previous white papers we have covered the other three critical success factors:- • Recruiting top performing sales professionals • Implementing an appropriate sales process • Implementing well thought out commission plans. Whilst I will go on to explain the importance of performance management, it is worth noting that all four components need to be in place to ensure you are maximising your sales potential and getting the best return on the investment in your sales team. Firstly, it is worth considering that the role of your sales people is very different in today’s technology savvy environment. The sales person is no longer a single source of information for your
- 3. 4 | P a g e prospects. Gone are the days when your customer relied solely on their sales or account manager. Their approach to purchasing software, hardware or services has changed as have the skills required by your salesforce to be successful. Performance Management will help you to ensure you have the right skills within your sales team to achieve the targets you have set out for your business. Secondly, in my role as a Search Consultant, I find it incredibly easy to engage your sales people in conversations about moving to work for my clients. Even your real “stars” who are earning reasonable commissions are normally keen to talk. The only time I experience difficulty is when a well implemented sales process exists and an appropriate performance management process is linked to a well thought out compensation plan. Then it becomes almost impossible to entice them away. Good sales people thrive in a structured environment, no matter what size your organisation. My point is a simple one, performance management helps you:- - keep the people you want - manage out those that you don’t - improve the performance of the average people - ensure your team have the right knowledge and skills to do the job you want them to do - increase revenues and maximise the investment you have made in your sales team This white paper will help you implement your performance management process and by reading this guide you will get:- • Tips on how to build a “success profile” against which to evaluate your current sales team • Tools to enable you to rank your team against your success profile by going through a “willing and able” assessment. This will allow you to identify the strengths and weaknesses within your sales team and focus on the areas for development • A performance management framework and a roll out plan If you are still wondering whether you should continue to read on, try this self assessment:- • Are all of your sales team achieving greater than 90% against their target? • Do you have a plan to deal with the members of your sales team who aren’t achieving target? • Are you confident that your top performers can’t be enticed away from you? • Does everyone in your sales team understand their contribution to the organisational goals and how those goals affect the sales strategy? • Does everyone in your sales team understand what is expected of them and do they have the skills to support and achieve the goals you have set them?
- 4. 5 | P a g e • Do you have effective communication throughout your organisation and linking of objectives to your sales and corporate goals? • Do you or your managers have positive relationships with your sales people based on trust, respect and empowerment? • And finally, and for me by far the most important, do your sales people know your product or solution inside out in order to mitigate any uncertainties and risks raised by your potential clients? If you can’t answer yes to all those questions you should read on. 2.0 What is Performance Management? Performance management includes all activities required to ensure that goals are consistently being met in an efficient and effective manner. It applies to the performance of the organisation, a department, the process required to build a product or service or simply individuals. For the purposes of this white paper we will concentrate on performance management within a department, your sales department. Within the sales function, performance management consists of six key areas:- • Measuring performance • Leading people to achieve higher levels of performance • Providing helpful feedback • Addressing performance issues • Coaching for continued success • Maximising business results Effective performance management teaches, guides, measures and reinforces appropriate sales behaviours at all levels. When the team strives to improve performance, then the people will be asked to change their behaviours. Managing Directors and their Sales Directors must become knowledgeable about human behaviour and understand the conditions where their people do their best individually. If not, the organisation only survives through sheer luck. The definition of performance management I find useful is from a factsheet written by Armstrong and Baron. They define performance management as “a process which contributes to the effective management of individuals and teams in order to achieve high levels of performance”. As such it establishes a shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved. Armstrong and Baron stress that at its best, Performance Management is a tool to ensure that managers manage effectively and that the people and teams they manage:-
- 5. 6 | P a g e • Know and understand what’s expected of them • Have the skills and ability to deliver on these expectations • Are supported by the organisation to develop the capacity to meet these expectations and are given helpful feedback on their performance • Have the opportunity to discuss and contribute to individual and team aims and objectives It is also about ensuring that managers themselves are aware of the impact of their own behaviour on the people they manage, and about encouraging them to identify and exhibit positive behaviours. Performance Management is not about punishment. It is not about implementing a performance improvement plan because a sales manager waited too long to address performance issues. 3.0 Why is Performance Management Important? The benefits of implementing performance management within your organisation are significant and it is an area that has become a top priority for sales organisations that are looking to reduce the risk and uncertainty around meeting their sales and financial performance targets. Managing your sales organisation’s performance will facilitate the effective delivery of strategic and sales goals. There is a clear and immediate correlation between implementing performance management and improved business and organisational results including:- Financial gains • Sales growth resulting from better decisions and more disciplined execution • Reduction in recruitment costs because you won’t lose the people you wish to keep • Alignment of sales goals with the corporate goals ensuring everyone is focused on the “right” activities • A decrease in the time it takes to make strategic or operational changes by communicating the changes through a new set of goals • A framework to allow you to manage out your poor performers and help your average performers improve significantly A motivated sales team with higher retention • Your sales team will be very clear on what they need to do to achieve plan (and overachieve) as their compensation plans will be aligned to specific goals • Improved sales team engagement because they will understand how they are directly contributing to corporate strategy • Better job satisfaction and career progression • Higher confidence in their sales compensation payouts being achievable
- 6. 7 | P a g e 4.0 Building Success Profiles Before you start to implement your performance management framework, it is useful to review the skills, traits and competencies of your sales team as compared to the ideal sales person’s success profile for your company. Every organisation will have a different success profile and you may wish to base yours on your current top performers. I have included some findings from my own experience of managing sales teams and my ongoing research. I built my own success profiles by capturing the behaviour, skills and traits of my top performers which I have included below. Prospecting and lead generation They have the ability, skill and tenacity to generate prospective clients. They create a call strategy and carry out client research. Qualification They don’t have “happy ears”. They are not afraid to ask difficult questions in order to hear “bad news” early so they don’t waste time chasing an opportunity that is unlikely to close. Initial client contact They can approach and involve the prospect in a positive manner. They don’t alienate the prospect by being too aggressive or lacking in knowledge before they get a chance to talk to them about your product or service. Presentations They have the ability to give productive and effective presentations that “hit the mark”. Overcoming Objections They are very knowledgeable and can answer all the prospects’ questions. They have the skills to help any potential buyer rationalise the purchase. Being Able to Close They can mitigate any uncertainties and risks raised by the client and formalise the contract to secure the order. This is
- 7. 8 | P a g e generally called the “point of persuasion” and this is where the sales person can make a real difference. Client facing activities They get the right balance between office based activities and client based activities and they spend the appropriate amount of time with their clients. They don’t just book appointments with the “easy to see” customers. They make sure they secure the difficult appointments with the decision makers. Sales Process They create sales plans, win strategies, undertake competitive analysis and always focus on deal development. They understand the difference between urgent and important. Relationship Building They build excellent relationships both internally and externally. They always manage to get the best “subject matter experts” working with them, as everyone wants to be part of the success. They are polite and courteous. Enthusiasm They have the motivation and willingness to continually meet with prospects. They very rarely suffer from periods of demotivation. A Sales Director’s success profile should include all of the above but they should also have other skills and traits such as hiring skills. In my role as a Search Consultant I see different levels of skill shown by Sales Directors who interview, ranging from excellent to extremely poor. Some of our clients appreciate the importance of their interview process when hiring key sales professionals and some can’t even be bothered to turn up on time. They leave excellent candidates whom we are trying to convince to change jobs
- 8. 9 | P a g e sitting around in reception wondering why they have bothered to turn up for an interview with someone who can’t manage their diary well enough to meet them on time. If the CEO or Sales Director is required to make decisions about hiring new sales people, can they interview effectively? Can they analyse the needs of the job opening and choose appropriate interview questions? Are they able to identify the strengths and weaknesses of a candidate to create a balanced sales team? Another example in a Sales Director’s profile might be managerial courage. You may find when you start the “willing and able” assessment in the next section that you need to think about managing people out of your organisation, so your Sales Director requires management courage. Time management They focus their support on the most important parts of the actual sale (initial qualification and deal closure). They devote the appropriate amount of time to proposals and reviews. They don’t get too bogged down with administration, tracking and non prime selling activities. Coaching and mentoring They spend the right amount of time coaching and mentoring their team to help them achieve their goals. They don’t micro manage. Planning and strategy They put greater emphasis on planning and strategy in order to deploy their teams to the best effect. Providing direction They state requirements clearly and provide directions for getting the work completed and recognise performance problems. Insisting on excellence They deny requests that are unreasonable and say “no” when necessary. They insist that high standards and requirements are met and they prefer to earn respect rather than “be liked”.
- 9. 10 | P a g e They give corrective feedback. Dealing with performance problems They face up to people problems quickly and directly. They confront and discuss performance problems openly with the individuals involved. They develop plans for performance improvement and articulate the consequences for not meeting performance standards. Taking appropriate actions They take corrective action with the appropriate level of severity. They ensure that the individual involved has had appropriate warning and coaching.
- 10. 11 | P a g e 5.0 Assessing your Current Sales Team Once you have decided upon your success profiles specific to your organisation you should assess your current sales team and management team to identify their development needs. An effective way of doing this is by carrying out a willing and able assessment. Working with HR and your Sales Director, each of your sales team and management can be placed within one of the boxes. Willing and Able Unable but Willing Consistently does things right Performs without being told Is not satisfied unless things are done right Puts in extra time to get the job done Finds ways to do the job better Current performance is satisfactory or better Lacks experience or expertise Recent performance is enthusiastic Pays close attention to instruction/direction Keen observer of good performance Invests personal time to learn and grow Unwilling but Able Unable and Unwilling Inconsistent performance Requires above average support/attention Lacks concentration and effective planning Avoids training and offers excuses Lacks confidence in self and work Seldom, if ever, performs to standards Performs below standard even with assistance and training Works only with close supervision Seems satisfied with below-standard results Pays little attention to direction/instruction When you are assessing the team you should identify and remove any potential obstacles like lack of training, insufficient sales collateral or a shortage of sales support resources. You must determine whether a performance deficiency exists and if so determine any contributing reasons. For example, does an individual have:- • the capability to perform as expected • the skill
- 11. 12 | P a g e • the knowledge • the attitude • the effort Typically, 20% of your sales team will probably fall into the Willing and Able section. Retention of these people is key and additional training, well thought out compensation plans and continued career development will be important. It may be that you place your more junior sales people in Unable but Willing as they may just lack experience, training or knowledge. Sales people in Able but Unwilling could lack confidence, but I would question why those in the Unable and Unwilling remain with your organisation. You should question whether you or their Sales Manager has the appropriate levels of managerial courage to deal with performance problems. 6.0 The Framework By the time you reach this point you should have:- • Built a success profile for the “ideal” sales professional and sales director within your environment • Assessed the results from the willing and able exercise to ascertain where your sales team are against your benchmark criteria You are now ready to implement the performance management framework, as the individual goals you need to set will be clear. Hopefully you are now beginning to see why performance management is a process, not a single event. It operates as a continuous cycle whereby progress is tracked together between manager and employee.
- 12. 13 | P a g e 6.1 Agreeing Goals The starting point in any performance management process is agreeing the annual goals. They should align with your overall sales strategy which, in turn, should align with your Corporate goals. They should also take into consideration the information you acquired from the “willing and able” assessment, your required “core competencies” and the “success profiles”. For example, what goals do you need to put in place to help people go from where they are now to where you need them to be? This phase should also include agreement on sales targets, performance development and training requirements. This will lead to drawing up plans between individuals and managers with continuous management, motivation, coaching and leadership throughout the year. 6.2 Reviews and Appraisals 360 degree feedback is my preferred method. It became increasingly talked about in the 1990s but wasn’t used widely until recently. It consists of performance data generated from a number of people including the person to whom the individual being assessed reports, people who report to them, colleagues, and internal and external customers. It can also include self assessment. In my opinion, 360 degree feedback will provide a more rounded view of people with less bias than an assessment conducted by one individual. This is especially important in the sales function as performance management is linked to compensation and pay.
- 13. 14 | P a g e 6.3 Reward and Development Performance management should also be linked to your compensation plans. If used correctly it is an important motivational element. It delivers the message that performance and competence are important. Please feel free to download our compensation planning white paper which will step you through the process of designing a well structured and well thought out plan. 7.0 Rolling Out The Process 7.1 Setting individual goals You are now ready to start setting the goals and revenue targets. You certainly don’t need me to remind you, but for the sake of completeness I shall use the acronym “SMART” goals. Specific Goals should be straightforward and emphasise what you want to happen based on the assessment criteria from the willing and able assessment. I find “specifics” help you to focus your efforts and clearly define what you are going to do. Specific is the What, Why, and How of the SMART model. • WHAT are you going to do? Use action words such as direct, organise, coordinate, lead, develop, plan, build. • WHY is it important to do it at this at this time? • WHAT do you want to ultimately accomplish? • HOW are you going to do it and by WHEN? Measureable What good is a goal that you can't measure? If your goals are not measurable, you will never know whether your sales team are making progress towards achieving them. Not only that, but it's tough for your sales people to stay motivated to complete their goals when they have no milestones to indicate their progress. Attainable When you identify the goals that are most important to your organisation you begin to figure out ways you can make them attainable. You develop the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing previously overlooked opportunities to bring the organisation closer to achieving its’ goals. You can attain most goals you set when you plan steps wisely and establish a time frame that allows you to carry them out. Goals that may have seemed far away and out of reach eventually move closer and become attainable. When you list your corporate goals, you build the company you want
- 14. 15 | P a g e to see this time next year and beyond. Your sales strategy should align with your corporate goals resulting in attainable objectives for your sales team. Relevant Goals must be an important tool in the grand scheme of reaching your company's vision and mission. You may have heard that 80 percent of productivity comes from only 20 percent of activity. You can guess where the other 80 percent of work activity ends up! This relationship comes from Italian economist Vilfredo Pareto's 80/20 rule. The rule, which states that 80 percent of the wealth of most countries is held by only 20 percent of the population, has been applied to many other fields. Relevant goals address the 20 percent of the sales team’s activities that have the greatest impact on performance, and bring your organisation closer to its vision. (Source: Blanchard, Schewe, Nelson, & Hiam, Exploring the World of Business.) Goals must represent an objective toward which you, as a manager or CEO, and your team are able to work, but be sure that every goal represents substantial progress. Additional ways to know if your goal is realistic are to determine if you have accomplished anything similar in the past, or ask yourself what conditions would have to exist to accomplish this goal. For example, if your goal is to acquire new customers and you are setting the goals for a new business sales person, perhaps you should review how many new clients were acquired during your last financial year and what would be a realistic expectation for the current financial year. Timely Goals must have starting points, ending points, and fixed durations. Commitment to deadlines helps your sales professionals to focus their efforts on completion of the goal on or before the due date. Goals without deadlines or schedules for completion tend to be overtaken by the day-to-day crises that invariably arise in any organisation. Every individual should clearly understand their goals, understand the impact to the overall success of the organisation and understand how progress will be reinforced and measured. Goals should be tied to an individual development plan inclusive of coaching, reward and recognition. As you step through your performance management process, reasons for poor performance may not be obvious. You should look for:- • Bad or no sales process (see our white paper on Sales Process) • Personal issues • Relationship conflicts with other colleagues • Work overload • Focus on urgent versus important (80/20 rule)
- 15. 16 | P a g e You should also take a look at your own behaviour. How often and to what extent have you intervened in your sales person’s area of responsibility? Have you:- • Taken over a sales meeting? • Acted without their input? • Not acted on their input? • Over-ruled their decision without an explanation? • Not involved them in decisions that affect them? • Been guilty of lack of follow-up or follow-through? • Not paid sufficient attention to detail? • Insufficiently developed the career of a top performer? By taking all these points into consideration you should be able to set SMART goals for the sales team and sales management. These will drive sales growth from better decisions and more disciplined execution. 7.2 Monitoring, Reviewing, Coaching and Appraising Once you have set each individual sales person’s goals you need to monitor, coach and eventually appraise, and there are some important points you should consider during this phase. Feedback – Provide information about performance that allows an individual to understand their performance in relation to past or desired performance and allow them to make the necessary adjustments. In order to produce the desired results a manager must have conviction in their purpose. They must also have the courage to have uncomfortable conversations whilst showing compassion for the interests of their team. Mentor – Be a wise and trusted counsellor and someone who cares about the development of each member of the team. Coach – Coaching is intended to prevent errors or mistakes. Coaching is also the art of catching people in the act of doing something positive and then advising them as to why you feel what they did was positive . Coaching is prioritising their interests over yours. Coaching is a 52 week process. I was fortunate to have a coach when I was responsible for Symantec’s UK Consulting Sales Division. I was running my sales meeting with my team of 20 and my coach was present. After the meeting we were left alone to evaluate and I thought I had done a pretty reasonable job. I’d provided an agenda, stuck to it, got the information I needed from my team and finished on time. I was eagerly
- 16. 17 | P a g e awaiting my praise when all my coach said was “What value did your sales team get from that meeting?”. A “light bulb” moment you could say!! The overall annual process should include:- • Appropriate 1:1 reviews of activities. I have managed sales teams of 3 up to 20 and I would always recommend activity reviews to be bi-weekly. Rather than just focus on the information you want, you should always ask yourself, as my coach reminded me, “What will my team member get out of this session?” • Quarterly sales performance reviews. Review SMART goals to ensure they continue to align with strategy and that they are being met • Performance improvement process. How should sales performance below 100% be treated? What are the consequences and what actions are required to bring performance up to par? • Monthly review of each individual’s development plan • Annual 360 degree appraisal 8.0 Conclusion I hope this guide has assisted in highlighting the importance of performance management and triggered questions in your own mind about how it can be applied in your organisation. For your organisation to continue to grow, you need to find and hire the best sales people. Organisations can mostly find the average ones themselves, but they engage people like us to seek out top performers from their competitors on their behalf. Headhunting activities have, up until now, largely focused on senior executive positions due to the high retainers charged, but not anymore. Technology and more emphasis on networking has made it practical for organisations like ours to find top performers and entice them out of their current roles without the high cost previously associated with this activity. I will reiterate here that the only time I experience difficulty is when a sales process exists and a performance management process is linked to a well thought out compensation plan. Then it becomes almost impossible to entice them away as sales people thrive in a structured environment. By coming up with lots of excuses such as “We’re too small to bother about this performance management stuff” or “We should be out there selling, not filling in forms”, you are leaving yourself open to losing your top performers. You are also allowing your poor performers to remain part of your organisation and you are not maximising the potential of your average ones. My point is a simple one. Performance management helps you keep the people you want, manage out the ones you don’t, improve the results of the average ones and align sales goals with corporate ones. The result, increased revenues. Convinced?