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.
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
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:
“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.
On the 20th of May, Expressen were recognised as the "Swedish Sales Organisation of the Year", at the Stockholm Media Awards. We're super proud to not only have Expressen as a Sparta customer, but that we've also helped contribute to their success.
Netigate is Europe’s #1 provider of customer survey and customer insight software. Netigate is today around 75 people strong, and has a presence in the Nordics, UK and Germany. They have over 2000 happy customers in over 40 countries, including some of Europe’s biggest enterprises such as Electrolux, Casio, Deloitte and DB Schenker.
FindCourses Global AB, the company behind Educations.com - one of the biggest search marketplaces for education in the world have been using Sparta over the past 3 months - and have increased their sales by 12% since introducing Sparta competitions into their globally-distributed organisation. In addition, the team have seen a real boost in morale, energy and excitement which has of course been a big factor in that increase.
Eniro, one of Scandinavia's biggest and most well respected sales organisations recently ran a large 3 country, 75-person sales competition using Sparta. After just 3 days, they had increased their sales results by 40% and saw a real boost in competition participation, morale and spirit. Read on to find out more!
Sparta has celebrated a big milestone today, welcoming on our fifth international customer into our client roster, an achievement we're super proud.
We're now working with sales organisations in Sweden, Norway, Australia, Dubai and the USA!
Motivating sales people is a universal challenge, so we're looking forward to bringing our solution to sales organisations all over the globe!