The HBR article, Are you leading through the crisis or managing the response, tells us that in a crisis executives will need to make immediate choices and quickly allocate resources. The pace is fast, and actions are decisive. Leading, by contrast, involves guiding people to the best possible eventual outcome over this arc of time from the beginning, middle, and to the end of a crisis.
While making quick decisions and being decisive, our focus, as leaders, also needs to be anticipating what is likely to come next and preparing to meet it. That means seeing beyond the immediate to anticipate the next three, four, or five obstacles.
To support anticipating what obstacles could be ahead, we continue our series of sales blogs addressing probably one of the most critical factors driving the behaviour of salespeople, managers and leaders.
How do you appraise, develop and reward your salespeople for remaining competitive, into an uncertain future?
In the first sales blog in the series – How will you adapt to the new world of sales? we considered the risks companies face who do not review and overhaul their existing appraisal, development and reward processes.
How these processes can become more an obstacle, you need to anticipate that will turn sales talent away and hold back your salespeople, managers, leaders, and company’s success.
The next sales blog in the series – Your sales teams’ generation diversity has power we discussed the untapped potential you can muster and release in your company by better managing generation diversity within your sales teams.
In this sales blog, we focus on anticipating obstacles and challenges within your appraisal, development, and reward systems and processes. This discussion prepares the ground for the next sales blog – How should I develop and reward sales talent? to adapt your methods for building the workforce you need for the future.
How effective are your current appraisal and review systems and processes?
In the article, The Performance Management Revolution, Harvard Business Review referred to a study by the advisory service CEB, that the average manager reported spending about 210 hours—close to five weeks—doing appraisals each year. And that managers hated doing reviews, as survey after survey made clear. Willis Towers Watson found that 45% did not see value in the systems they used. Deloitte reported that 58% of HR executives considered reviews an ineffective use of supervisors’ time.
In the sales blog, Your sales teams’ generation diversity has power, we consider why more regular conversations focused on sales performance and development, releases both managers and salespeople’s time.
Regular conversations will also be valued more within your business because they are an effective use of time allowing salespeople, managers and leaders to perform their role better. Time management will be especially important coming out of the current crisis as many sales pipelines will be weak and require their full attention and focus on supporting a quick recovery.
That does not mean you should stop your annual appraisals. Instead, use them at the end of a reporting period, to reflect on the progress and benefits continuous performance reviews and development have delivered.
Adapting to how sales managers and salespeople work rather than disrupting their work regimes will lead to more effective collaboration and skills development that helps them strengthen their sales pipeline and forecast accuracy.
Build the workforce you need to be competitive into the future
The challenge many companies face is their processes and systems that Sales, Sales Operations, and HR teams have built and evolved over the years. These revolve around performance ratings that reward past performance. Many company processes often give little attention to talent and skills development.
According to the Harvard Business Review article – The Performance Management Revolution. With their emphasis on financial rewards and punishment and their end-of-year structure, these practices and systems hold people accountable for past behaviour at the expense of improving current performance and grooming talent for the future, both of which are critical for organisation’s long-term survival.
If you were to encourage, foster and reward more regular conversations about performance and development, you would support salespeople and managers to remain in the present rather than the past. Your focus would shift to build the workforce needed to be competitive both today and in the coming years from now.
It is also essential to manage change as an evolution of your current processes rather than a revolution replacing them. Step back and consider how your company and sales operate, how your appraisal, development and reward processes can be better integrated into salespeople’s and their managers’ current work regime.
I discuss in the sales blog – How should I develop and reward sales talent? Why focusing on the regular deal reviews sales managers have with their salespeople is one of your ideal points in their working regime to focus.
Once you have decided to overhaul your appraisal, development and reward systems and processes. Your next challenge to anticipate is how to manage and steer the company change that rewards the behaviour you require for longer-term value growth, while still maintaining accountability for achieving short-term sales quota goals.
Keep evolving your appraisal, development and reward processes
No one changes their behaviour unless they understand the consequences. Only when they know the consequences of their actions and the pain experienced is significant enough, will they change their behaviour.
Back in the 1980s, when Jack Welch championed forced ranking at GE to reward top performers, accommodate those in the middle, and get rid of those at the bottom; it proved successful, and many companies adopted this approach as part of their appraisal, development and reward process.
The challenge today for many companies, is they continue to use this same approach managing and rewarding salespeople. Consider your current sales commission, incentive and reward plans. Have they moved away from those principles Welch put in place for GE over thirty years ago?
Your current sales commission, incentive and reward plans could well be an obstacle you need to anticipate. It is interesting GE has continued to evolve its appraisal, development and reward processes implemented back in the 1980s. Many other forward-thinking companies have been evolving their processes for some time.
In 2012, Adobe ended annual performance reviews, in keeping with the famous “Agile Manifesto” and the notion that annual targets were irrelevant to the way its business operated. I discuss this further in the sales blog – Break the status quo holding back your success.
In 2016, Deloitte, PwC, and others that tried going numberless reinstated performance ratings but using more than one number and keeping the new emphasis on developmental feedback.
Incentive and rewards is a complex area that has a direct impact on salespeople’s, managers and leaders’ behaviour, actions and output. It is no surprise businesses struggle with what to do. Some try an approach, as did Deloitte and PwC, and having learnt from their experiences, adapt and implement a more suitable method for their business.
These are examples of progressive companies who acknowledge they must overhaul and evolve their appraisal, development and reward systems and processes.
If it’s not broken, why fix it?
Many other companies, however, continue with their tried and tested processes. Often their position is, “If it’s not broken, why fix it”. They reward top performers with quota club or some other types of reward, believing those in the middle will be incentivised to knuckle down and focus on achieving their quota plan.
As for the consistent poor performers, what options are available to them?
Company procedure will point sales managers towards HR for support and guidance. Employment law and the disciplinary processes are often transactional requiring set processes and procedures to be followed. At some point, if the situation requires, you may have also placed one of your salespeople onto a Performance Improvement Plan (PIP). I discuss this PIP process and its shortfall shortly.
“Okay”, pushing back, some still may say, “Our appraisal, development and reward processes may be rooted in a thirty-something-year-old principle, but if it’s not broken, why fix it. What could be wrong with this model?”
First, have a chat with your head of HR. Internal processes, time pressure, increasing pressure to achieve your quota number, organisation structure, a salesperson requiring development and coaching time you don’t have, their attitude, and so on. There can be numerous reasons that can contribute to the current situation.
Ultimately, the responsibility for sales attrition needs to be shared between the salesperson, manager and with the senior leadership.
Several obstacles will be leading to challenges within today’s sales environment; the current model creates. Here are three reasons that may create an obstruction.
- Firstly, these programs have not adjusted to the more complex and rapidly changing way business, and salespeople need to function to remain competitive in the faster “always on” technological world we work and sell.
- Second, these systems and processes often have not adjusted to the need for balancing accountability achieving quota targets, with improving current performance, grooming raw sales talent for the future and retaining good sales talent.
- Third, forward-thinking companies recognise that individual salespeople’s and managers’ commission and reward plans often conflict with the need for team-based work, collaboration and development to remain competitive.
Who are the winners and losers?
These, I believe these are some of the reasons why we continue to see sales teams struggle to achieve quota attainment—according to CSO Insights, Selling in the Age of Ceaseless Change: The 2018-2019 Sales Performance Report. Quota attainment has increased only slightly between 2017 to 2018, moving from 53.0% to 54.3%. These rates are still below 2014 statistics at 63% quota attainment.
According to a Salesforce survey, sales teams are struggling, 57% expect to miss their quota targets this year, which is a lower attainment figure than that presented by CSO Insights. In other words, salespeople’ performance consistently achieving quota is not getting better; it is getting worse.
However, the same 2018-2019 Sales Performance Report from CSO Insights highlighted that over 90% of companies are achieving their fiscal plans.
According to Xactly Corp, a global leader delivering sales performance and incentive management solutions, their survey reports 69% of enterprises to achieve their annual revenue goals.
Reward processes that facilitate situations such as this where leaders can achieve their rewards while over half their salespeople are not, represents a broken system.
Pulling it all together
For a company to achieve its longer-term value growth objectives and build the workforce to be competitive in the future, it must anticipate the obstacles standing in its way today.
One obstacle a leader must anticipate is whether their appraisal, development and reward processes are creating winners and losers.
Forward-looking companies are recognising these as signs and red flags to rethink how they appraise, develop, reward their sales teams, managers and leaders.
In the next sales blog – How should I develop and reward sales talent? Having anticipated the world of sales will be different when this crisis nears its end, and the next three, four, or five obstacles ahead. We turn our attention to adapting how you can improve and better appraise, develop and reward our sales talent.
We uncover your secret weapon – the silver bullet you have up your sleeve that is surprisingly simple if you have the right tools. With them, you can better adapt to your managers and salespeople’s work regime rather than disrupting them.
Integrating sales tools like the Conversational Solution Sales Scorecard and Training Platform included with the Sales Pipeline Development Platform, can provide you with the data you need. This data will support you adapt to more continuous appraisal, development and reward processes that are better suited to the new world of sales.