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Modern Sales Performance Management is all about ACTIONS, not OUTCOMES

Posted by James Pember on 5/16/16 10:37 AM

Being able to quantify performance inside an organization is one of the hallmarks of efficient management. Knowing exactly how your employees are tracking against goals and targets allows you to be able to react, coach and change direction as necessary.

However, there is a fine line between measuring KPI’s and full-on micro-management. That line is becoming finer and finer with each new generation of staff that come through our businesses.

I’ve written a lot about managing millennials (those born after 1980), and there is little doubt that when it comes to managing performance, the times, they are a’changing.

First though, a little background

Former GE CEO Jack Welch is often attributed to popularizing an intense focus on KPIs and annual performance reviews. Every year, the GE management would rank their staff on a number of core KPIs, and then fire the bottom 10%.

Staff would be placed on a curve, comprised of “A Players”, “B Players” and “C Players”. A players would be showered with bonuses and praise, B Players are are tolerated because they are such a large group and are often seen as the “core performers” and C players are let go.

During the 80’s and the following decades, this “rank and yank” methodology was picked up by the world’s biggest enterprises including IBM, Accenture, Adobe, Yahoo, HP, Cisco and many more. According to Dick Grote, a consultant who specializes on the topic, 60% of the Fortune 500 companies used some form of ranking in 2012.

Suffice to say, ranking and an intense focus on core KPIs has become a hallmark of business school teachings and operational management. However, what does the future hold for performance management?

A new era of management

As you may have already guessed, this level of ranking has become less popular over the years. I don’t want to dig into the theoretical details of why stacked ranking and Welch’s “Rank and Yank” model is becoming less popular, there are plenty of great articles to read on that topic. Here are a few.

What I want to focus on today is whether we should continue to vigorously rank and rate our salespeople.  

Sales is obviously a hyper-quantifiable function, where progress can be measured extremely efficiently and easily. In addition, sales is also an already competitive occupation, based on a) the easily measurable nature of sales, but more importantly b) the fact that most salespeople have a competitive personality type.

Whilst you must measure and track progress in order to drive engagement, the best way in which you do so is almost the most important question on the minds of management and sales leaders today.

“Command and control is what Jack was famous for. Now it’s about connection and inspiration”.

I love that quote above. Whilst the “stacked ranking” methodology was very much about Command and Control, the best managers now are thinking about Connection and Inspiration.

The key to engaging your staff is to give them purpose, make them feel recognised and steer them to perform the behaviours that lead to successful work.

The future of performance management

Adobe, GE and Accenture are just 3 examples of Fortune 500 companies who have ditched Annual Performance Reviews in over the past 36 months.

Interestingly, GE who popularized the rank and yank methodology, have also given it up - moving towards a more continuous feedback system, not purely focused on performance KPI’s, but pulling in other sources as well such as engagement and customer satisfaction.

When I think about the future of performance management, I think about 3 fundamental shifts that I think will define how we manage and measure our productivity and staff:

  1. A move from Annual to Continuous Feedback Loops
  2. Less focus on the past, more on the future
  3. More focus on softer values and “core behaviours” rather than purely results (remember, the right actions lead to the right outcomes - measure actions, not outcomes)

The world isn’t really on an annual cycle anymore for anything. I think some of it to be really honest is millennial based. It’s the way millennials are used to working and getting feedback, which is more frequent, faster, mobile-enabled, so there were multiple drivers that said it’s time to make this big change.Susan Peters told Quartz.

Ok, so finally - should we continue to rank and rate our salespeople?

The short answer is yes. Sales is a fundamentally measurable work and output must be measured. However, the ways in which we measure, report and deliver feedback must change. 

Performance Reviews look in the rear view mirror, and tell us how we performed last year. Best-in-class organisations will review performance on an ongoing basis and steer direction continuously based on that. Pretty exciting if you ask me.

     

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What is Sparta?

Sparta is an end-to-end sales performance solution that helps you coach, train and drive your team into higher performance.

Create sales competitions, set collabarative team targets and inspire your team to crush their goals! 

Click here to request a demo today.

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