Establishing Performance Objectives and Measurements

One thing to keep in mind is that you cannot do it ‘‘the same old way.’’ That would be like trying to drive an old oversized luxury car from the 1950s today. It may be beautiful to look at and comfortable to ride in, but the quality, gas mileage, and shortage of technologies will make it useless for anything but an antique auto exhibit.

There are four areas to consider when creating or setting performance objectives. These are:

1. Needs of the business

2. Performance needs

3. Training needs

4. Work environment needs

Do you notice the sequence? The order of solutions has usually been found to work best when you follow the above sequence. Remember, the sales department is not an island unto itself. You are performing the sales function to meet some organization-wide need(s), so start with the needs of the business and progress to the needs of the work environment. As you look at any desired performance objective, construct a process improvement analysis.

Step 1: What Is the Current Performance Level of the Organization?

• How are its measurements compared to where they should be right now? How is your overall organization performing against its stated objectives and goals? If you aren’t sure, sit down with the leadership and find out.

• What is the current sales organization’s contribution to the organization’s overall current performance? Be honest and explore this subject as you develop your performance improvement plan. Be realistic in a manner that will be relevant to all concerned. Don’t deny or minimize your department’s contribution to a shortfall in goal attainment by the company. At the same time, don’t fall on a sword that is not of your creation. Be honest so that you will be perceived by all as a true member of the organization’s management team.

Step 2: What Is the Current Performance Level of the Sales Department?

• Identification of current performance and organizational obstacles. Now that you know what performance levels you need to have as a sales organization, take a look at where you are now. Don’t generalize with such concepts as ‘‘we aren’t very good’’ or ‘‘we don’t make enough sales.’’ Be specific. In what performance areas are you currently lacking, and by exactly how many sales are you falling short? This analysis will give you a starting point to measure success in the coming months and years.

  Also, be realistic about organizational obstacles that might make it difficult to improve. Just because these challenges exist, however, does not mean you can treat them as excuses. If it were that easy, anybody could do your job. You are being paid to mitigate or find a way around the obstacles.

• Relative importance of all performance results. As you look at the current performance results, identify and categorize them enough to be able to prioritize or rank them in their importance for meeting the desired performance requirements demanded by your answers to Step 1. Everyone is limited by time, money, tools, and people. Make sure that you are working on the performance standards that will have the greatest impact on the successful achievement of your goals. This works for you in two ways. First, it helps keep the entire organization supporting your plans. Second, it keeps your sales team engaged since the performance improvement that you require of them is directly linked to organizational success and is not perceived as just busy work.

• Current skills to perform as required. Ask yourself specifically, what are the current skills of the sales team members (or those currently performing the sales function) in areas that have an impact on the highest priorities identified in the last question? If you have a sales team now, analyze each of them individually, not as a team. This will allow you to develop a performance improvement plan for each, rather than grouping them all together in an ill-defined initiative.

• Obstacles to performance. Make sure you consider any current obstacles that need to be addressed to reach your, and the organization’s, goals. Be realistic since some of them, such as current compensation models, HR-controlled benefits programs, inadequate product portfolio, insufficient supportive technology, available talent pool, decline in addressable markets, might affect your success.

• Skill gaps. This point is very important. Based on your analysis of what is needed to perform at the level required to meet organization or corporate objectives and the current level that the performance is at today, what is the gap? Whether it is per sales person or per the entire team, you now have a starting point, a finish line, and a distance you have to traverse to be successful. This gap will help you set the intermediate goals and milestones of measurement to communicate to the world that you are doing a great job.

Step 3: What Are the Organization’s Performance Objectives?

• Identification of internal business goals and challenges. A sales manager must always be focused on the organization’s goals, objectives, and challenges. Make sure you have a very clear understanding of the vision for the future held by the leadership of your business, association, or organization. Don’t make assumptions, have preconceived ideas, or jump to conclusions based on partial data. Sit down with your leaders and ask them specifically what performance level would they like to see the organization achieving. Not just the sales team, but the entire organization. Make sure that they discuss their views of what obstacles or challenges might lie in the way.

• Identification of customer goals and challenges. Additionally, review your S.W.O.T. on the customer segment you are targeting. Consider the goals and challenges of your most important customers. More than a few successful sales managers have engaged their targeted market in the performance-setting process for their sales team.

• Understanding the implications of performance as viewed by both functional management and the customer. The next action for Step 3 is to explore the way your organization’s management team perceives the contribution that the sales organization can make to achieve the overall organizational objective. This is critical! You must understand their view of the role of sales. It might surprise you.

Step 4: What Must the Sales Department Achieve to Meet These Objectives?

• Identification of required performance results. Now, find out your required contribution to the organization’s overall goal attainment. You can’t bear the whole burden on your shoulders, but as the initiating department for new orders, you do share a significant portion of the burden for organizational success. Be realistic about what sales performance levels are required of your team and don’t get bogged down in the ‘‘we can’t do that’’ mode of thinking. You can do just about anything if you address realities in your planning. Link your team’s contribution to some form of performance evaluation that is clear, concise, and measurable. Clear means that any reader will be able to understand it. Concise means it is to the point without bombastic wordage. Measurable means you are able to determine the impact. It might be a specific increase in gross margins on the average sale. Or it might be an increase in cost reduction through an increase in order entry quality as measured by returned orders. It could be issues related to customer retention as measured by lost customer rate. It might even be a reduction in internal conflicts between the sales department and other organizational departments as measured by cross-organizational surveys. Remember, if you can’t measure it, it doesn’t belong in the performance standards.

• Identification of customer’s required performance model. Spend some time with your most important customers, those you can’t afford to lose, and find out what they require in a sales professional that provides solutions to their business challenges. Make sure you focus on the field and hierarchal level you are selling into, such as IT management or enterprise-wide directorships, so the data will be clear about the point of interaction.

• Identification of senior management’s required performance model. Here we are analyzing, in partnership with our senior management, the requirements for a sales performance model. In other words, we understand from previous questions how they perceive the sales department in regard to its contribution to overall organizational success. But what departmental design or model do they require? In some organizations, the senior management or leadership demands accessibility to the sales team with some form of ability to influence daily activities. In other organizations, senior management prefers that the sales team be part of the marketing department or customer service. In others, you might have complete autonomy and independence. You can’t simply shape a perfect sales model and establish performance objectives without senior management’s input on a required or desired departmental model.

• Agreement with sales personnel for skills development actions. Whether they are new kids out of the gate or old seasoned veterans, you now have the basis for communicating to your sales personnel a plan for improving the skills that are necessary to meet organization goals and objectives, as outlined in individual performance improvement plans. You will get a greater acceptance of the plan and an agreement by your team to being measured by the new standards of performance because they are directly linked to the goals of the organization as a whole.

• Agreement with senior management for skills development actions. To ensure the support and confidence of your senior management team, as well as cross-organizational support, gain the agreement of your leadership to your specific plan of action to improve performance results. As you might be aware, leaders do not like surprises, and if they encounter any, you surely don’t want them to come from your sales plan.

Step 5: What Environmental Factors Outside Your Control Are Impacting Performance Results?

• What is the current state of your organization? As you step back and look at your company or association, what are the realities? I have been called in many times to work with companies that are in decline because of a lack of interest by the ownership or a disappearing target market. I’ve also been called in to situations where the global companies are challenged to communicate effectively in diverse cultures, where there is a demand for different approaches to success in localized markets. I don’t mean that we just give up in these situations, but we must incorporate them into a plan that accounts for any realities we need to work around and through if we want to attain success.

• Technology (hardware and/or software)

• Globalization

• Competition

• Customers

• Demographics

• Lifestyles

• Psychographics (consumer sentiment)

• Firmographics (business sentiment)

• Economy

• Regulatory practices

• Business practices

Be honest and explore each of the previous questions as you develop your performance improvement plans, and as you do, ask yourself the following questions:

• How good is your business intent? Is it in complete alignment with all realities?

• What are the key business drivers mentioned previously that will have the greatest impact on success?

• What do you know about the internal environment? Do you need to know more, and where will you go to get that information?

• What do you know about the external environment? Do you need to know more, and where will you go to get that information?