There are many challenges to rolling out meaningful individual objectives as a part of your Performance Management system. One of the biggest? Sales Performance Management - do you care about how they get to the number as long as it happens ethically? Or do you want to track the activities that contribute to it? Are your reps Tommy Boy (it's all about the relationship) or Glengarry Glen Ross (leads="sits"=signed contracts)?
My experience? The bigger the sales job, the less metrics are tracked. Companies usually don't do Sales Performance Management per se. Instead, since the sales department usually has the biggest scoreboard available (i.e. results, actual sales vs. quota), the sales comp plan as defined by quota usually serves as the performance management plan. Miss your monthly number/quota too many times, and you are on a formal plan. Pretty simple...
Is tracking the behavioral activities that drive results necessary for sales organizations? There are many different opinions on the topic. First up, from Incentive Intelligence:
"Most of the time the specific metric you want - the one relating to the behaviors - is not captured or tracked. Many companies will take a short cut and go directly to those things they currently measure and use that as a proxy for the real behavior they want to impact.
As an example: The company wants to increase sales. They determine their sales force has the most impact on that objective so they target their sales organization for an incentive program. They know that they have a high probability of sale if the sales people follow a specific process. However, they don't track those steps. They train and communicate the steps - they rely on sales management to reinforce those steps in their "huddle sessions" - but they don't officially track those steps. Therefore, when they announce the incentive program they use "sales" as the reward event. Those who sell, get the reward - all based on the assumption they are following the steps.
But as we all know - there are many ways to skin a cat and rewarding the sales event will increase the salesperson's desire to short cut the process, creating a lot of work with less than desirable results. What the company should do is reward the steps to the sale. So to really drive behavior and impact the business on a sustainable basis the company should create new metrics for their incentive program."
That would seem to indicate a need to track activities in the "sales funnel" that are known to lead to increased sales - prospecting, calls, appointments, presentations, etc. However, most sales execs I have known are loathe to make that a part of how they measure reps from a performance management standpoint, much less incent them for those activities rather than their actual results.
Ann Barnes of Compensation Force recently interivewed David Chichelli of the Alexander Group, a leading expert on sales comp. His feedback on the topic appears below:
"The most common and negative mistake is using too many performance measures. The rule of "no more than 3" is the best advice. And, these 3 results should be related to the sales results of the seller. The following measures should be avoided: corporate or division measures, compliance measures and activity measures."
So the trend continues - the sales experts say the details are demotivating and don't matter, the organizational sme's wonder if we shouldn't be measuring more than the final score to drive the right behaviors.
Me? I'd love to see a performance management system where Sales Reps get the annual review, but if they make the annual number they are at least a "Meets", then use the rest of the review strucuture to formally emphasize the behaviors, and how their strengths and weakenesses in each could help them become an "Exceeds" and put more money in their pocket.