I was digging through the 2015 State of Sales report last night, put together by Salesforce.com and I came across some very interesting stats. This will be a short post today, but are my key 2 takeaways.
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.
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.
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. Herearea 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.
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:
A move from Annual to Continuous Feedback Loops
Less focus on the past, more on the future
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.
At the start of every year, I read a handful of articles online predicting “The Death of The Salesperson”. E-commerce, the internet and an increasingly globalized world have many predicting the death of the salesperson. 2016 they say, is the year that we finally get rid of those pesky salespeople.