When sales numbers are off, it prompts a performance review of the sales team as a whole and rep by rep..
The challenge is fairly evaluating the sales team without bias or poorly designed stack rank methods. The leadership team needs to know that performance isn’t based on the last big win or who can hold their own at happy hour.
If the VP of Sales can’t discuss specific performance against objectives, he’s likely winging it. In that case, it’s time to get the facts straight from HR.
In most organizations, HR has accountability for the performance evaluation framework. Individual business functions need to apply the framework.
Let’s look at both the HR and business function responsibilities to best understand and set up the CEO and HR for an optimal conversation.
Performance Evaluation: Whose Job is It?
HR has responsibility for developing and implementing a performance framework across business functions. But it is up to the individual business functions to apply the framework with specific actions:
- Metrics What are the metrics that performance will be measured against?
- Coaching Plans Who is responsible for administering the coaching plan, and what information is addressed in the plan? Download our 5 Secrets to Great Sales Coaching to see what you should be looking for in coaching plans. We discuss coaching best practices and answer common questions about designing an effective program.
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- Systemized Metrics What are the systems required for tracking performance metrics? Who is responsible for those systems?
- Management Processes Who is responsible for generating the paperwork for performance evaluations and development plans? Who is responsible for performance improvement plans when individuals aren’t making the cut?
Effective Performance Measurement: Consistency Across the Business Units
In an ideal situation, business functions will apply the performance management framework consistently across their unit. And each business function will apply that same framework, tweaked for their specific business unit situations.
In Sales, effective performance management entails:
- Systems for Monitoring Performance Systems include processes for regular performance appraisals and career development plans
- Leading and Behavioral Metrics Leading metrics indicate the employee’s performance to date. Behavioral metrics are the expectations for the role as well as how employees are doing against those expectations.
- A Bias Toward Documentation This includes non-intrusive documentation that captures results of coaching discussions, guidance conversations, performance accountability over time, and discussions about base and incentive compensation.
- Individual Development An Individual Development Plan documents performance gaps, skills and responsibilities to close those gaps, processes and systems to increase productivity and preparations for next assignments.
- Personal Improvement Plan This plan documents serious performance gaps and, ultimately, ensures all processes and metrics for terminating employment are properly documented.
Back to That Conversation Between the CEO and HR. HR has the data you need to make the right performance management decisions.
With all systems and processes in place, HR can provide all the information required to assess who is underperforming. Armed with the results, the CEO can consider applicable costs savings as well as revenue decreases to assess overall impact to the bottom line.
In a Proactive World
Proactively, HR might have already had conversation with business function leaders to ensure the HR framework has been followed and all documentation is in order.
It is also a good time for HR to remind the CEO of the impact of terminations, both budget considerations as well as cultural impacts.
Cost savings will be realized, likely within a 120-day timeframe. The termination process takes 60 to 90 days, so salary savings won’t be immediately realized. In addition, there will be severance costs and compensation for absence days. And remaining employees will have to absorb the tasks of terminated employees, impacting business unit productivity and possibly morale.
Tough Decisions Made Easier With Good Information.
Decisions affecting workforce are always difficult. But with a powerful HR framework and business function compliance, those decisions can be easier.