Sales leaders are facing a new set of challenges in the workplace. The unique demands of today’s sales staff and the ever increasing rate of employee disengagement are all putting strain on today’s leaders. Performance management, or building a successful and high-performance sales culture requires a new set of skills.
Unfortunately, many organisations are struggling to keep up and the numbers look bad:
- Inside most organisations, 20% of the staff produce 80% of the results
- Only 13% of the global workforce are engaged in their work
- 40% of employees Americans say they’d work harder if they were recognised more at work
- More than 50% of global salespeople will miss their annual targets in 2017
To get the most out of people you need to give continuous feedback, you need to give clarity around instructions, you need to give recognition and you need to reinforce behaviours in real-time. In summary, you need to become an expert at motivating your salespeople if you want to succeed in 2017.
The time to act is now. We’ve put together a 5-part course for managers and sales leaders looking to take their performance management to another level – in order to help you build a truly high-performance sales culture and organisation. You’ll learn about what really motivates people to perform at work, how to deal with unmotivated or disengaged staff, what metrics or KPIs to focus on, giving feedback and evaluating performance.
This course is broken down into 5 chapters, all to help you to build a high performance culture and organisation.
- Building a “high performance” culture
- Rewarding on the right behaviours, metrics and KPIs
- Giving feedback and building trust
- Dealing with unmotivated or unengaged staff
- Evaluating performance and summary
I think 2016 will go down in the history books as a landmark year for high performance management. In general, the idea of “high performance management” as a true discipline separate from sales management has become more mainstream in 2017.
Accenture’s research on performance management from April 2016 shows how much momentum is behind it.
According to their report:
- “94% of surveyed leaders believe performance management improves performance”
- “79% of organisations have made changes to their performance management over the past 5 years”
- “89% of employees believe their performance would improve if performance management were changed further”
It’s becoming clearer and clearer: sales organisations need to continue to evolve to tackle the changing landscape. Here at Sparta, sales performance management is something we think about daily.
After 100+ personal discussions with VP Sales within the enterprise during 2016, here are the 3 things I learnt about sales performance management:
- Sales leaders are starting to understand the importance of employee engagement
- Sales leaders are starting to be more thoughtful when it comes to designing initiatives to motivate their sales teams
- Despite this, sales leaders are struggling with getting sales strategy from the boardroom to the sales floor
Let’s dig in.
1) Sales leaders are starting to understand the importance of employee engagement
2016 is truly the year that “employee engagement” went mainstream in the business world. Whilst it’s easy to ignore it and call it “the latest fad that everyone will forget about in 6 months time” – I promise you – employee engagement is real, and you need to be thinking about it.
There are plenty of problems with how companies go about improving employee engagement today, but the premise is simple: employees who are engaged in your company’s purpose, mission, leadership and goals should consistently outperform those who aren’t. If you don’t believe that, well… email me and let’s talk!
This year I probably spoke with over 100 VP Sales in leading enterprises. Almost all of them are thinking about employee engagement, and how they can improve it. Compared with even just two years ago, that’s a vast improvement. Sales leaders have understood that building an engaged sales force will have a measurable impact on their results and bottom line.
If nothing else, that’s a positive step forward for our industry, which has typically been about celebrating mavericks, “sell at all costs” and “if you perform, you can do what you want”.
2) Sales leaders are starting to be more thoughtful when it comes to designing initiatives to motivate their sales teams
In years gone by, sales leaders had a very simple methodology for keeping their teams engaged and motivated. Pay them generously on success. “Hit your target and you get paid well”. Simple as that. Easy to implement, easy to explain.
2016 is undoubtedly the year in which VP Sales started to be more thoughtful about sales compensation, what they reward, where the gaps are in the existing incentive models and what gives their teams the best chances of succeeding in the long term.
The truth is: the “you get paid well if you succeed” model kind-of sucks. Yes, if you crush target you must be paid well. I’m not opposed to commissions or paying people generously when they succeed.
However, the problem is, most teams have 10-20% of their sales reps hit target. What about the rest? Most importantly, what about the people who are “almost there” and end up at 70% of target every month/quarter?
In 2016, sales leaders started to understand that, their biggest opportunity for revenue growth is in helping “mediocre/middle” performers move upwards – not give more away (i.e. accelerators) to those who are already crushing it.
The problem with sales is – everything is about results. This year though, I felt sales leaders softening up on this issue. What about the people who try their guts out, do everything right, perform all the behaviours that you want, have satisfied and happy customers, yet fall short of their number? Should they be recognised and rewarded, or kicked to the curb whilst the small group of high performers are stuck up on the wall and paid huge bonuses?
The problem when you only celebrate success in terms of hitting target is – you leave the majority of your company out in the cold, the people who ironically are the ones who need your recognition, your coaching and your encouragement the most.
This year, we saw enterprises changing up their compensation models, start to pay bonuses based on behaviours not just outcomes and start tracking activities as opposed to just “Closed Won”. Exciting times, if you ask me.
3) Despite this, sales leaders are struggling with getting sales strategy from the boardroom to the sales floor
Despite the improvements I outlined above, the biggest challenge facing sales organizations heading into 2017 is how to actually implement a given sales strategy. Many sales leaders feel “trapped” inside their existing compensation models and feel they “encourage one thing” but “pay bonuses on another”.
The best example of this disconnect is trying to drive high customer satisfaction amongst your team, whilst still paying bonuses on sales. Many industries are struggling with this, and is most evident in B2C industries such as Telco, Banking and Insurance.
I believe 2017 will be the year in which global enterprises start to take a step away from purely sales commision models, and start to build additional incentives around the behaviours that align with strategy. Everyone knows the classic Drucker quote, “what gets measured gets done”, but very few organisations keep this in mind when thinking about why their salespeople do one thing, when they are told to do another. Again, I think this will be one of the huge shifts that occurs during 2017.
2016 was a year of positives for the sales industry. We’ve started to reflect more, look at where we need to improve, and most importantly: big companies are being more thoughtful about their staff, how to keep them happy and focused, and have finally understood that, therein lies the key to increased sales performance.
We’ve all seen the classic “what gets measured gets done” quote, but so often we actually measure, manage and reward the wrong things.
Let me tell you a little story, based on a real experience we’ve been having here at Sparta HQ.
A couple of months ago, we started noticing that whilst our sales were growing and we were rapidly acquiring new customers – customers were often investing in our solution for quite different reasons.
Whilst this is completely natural (customers have unique problems and the software provides a tailored solution), we weren’t capturing this information effectively enough – which meant that our ongoing customer success work was not always able to leverage the “motivation” for why a customer had invested in the solution. If they don’t know the motivation for buying – how can they leverage it?
In addition, sales reps were often not able to leverage this information to effectively move a deal forward through the sales cycle rapidly. Lastly, not knowing the true value of the product in the customers eye means contract values are harder to increase.
Ok so we want to increase contract values, decrease sales cycle BY knowing more about what our customers think about our product value.
This is how we solved it:
To tackle this issue, we added an activity to our Sparta campaigns – which was that each sales rep is rewarded with 25 points every time they ASK the customer for the top 3 reasons they would invest in Sparta, IN the meeting, IN PERSON. These 3 reasons need to then be shared with the entire company via the Sparta platform.
What happened next was magical.
Obviously we started collecting more information about why customers were investing in us – which was to be expected. We set a reward on an action, and the action increased. Obvious, not particularly rocket science. We measured something, so people did more of it.
However, this simple little reward has had a huge and lasting impact on the company.
Firstly, everyone in the company (including product management and software engineers) are seeing in real-time what the market is saying about our product and our messaging. This gives everyone more insight, more quickly, gets everyone excited about what we’re doing and of course gives us a chance to react to these insights in terms of new product development or tweaks to messaging or positioning.
MOST IMPORTANTLY HOWEVER THOUGH, small changes in what you measure and the behaviours you encourage can have huge impacts on your outcomes and KPIs:
- Sales cycles have improved because we know exactly the problems we are solving and the value we are delivering. Sales reps are more focused on the value, meaning deals progress faster.
- Contract values are increasing because we know more about the true value the product delivers to a customer. We don’t waste time on features and buttons, we talk values and true benefits. This makes capturing more business up front a no-brainer for a customer.
In my mind, this represents how sales organisations will operate in the future. We’ll be driven by actions and behaviours, not outcomes and results.
Teresa Amabile has a fantastic keynote in which she describes why “tracking small wins is the best way to motivate big accomplishments” and I couldn’t agree more.
Faced with these issues, most organisations would simply set goals on sales cycles + contract values and hope for the best. Sparta thinks differently and I’m proud of that!
To succeed with a change, break down your goals into actionable behaviours, reward people for doing them and encourage people to change their behaviours. Then you’ll get the outcomes as a result.
I recently met an enterprise company (60,000 employees globally and a Fortune 500) who are in the midst of a huge cultural transformation. They are a huge, global, household name, but in an ever increasingly competitive world – they, like most companies, need to keep evolving. I won’t go into the details of the strategic journey they are undertaking – but the high level details are relevant. Like most global giants, they are struggling to maintain fantastic customer experience in a world becoming more digital, and a consumer mindset which craves personalised and on-demand information.
How do you get 60,000 people to start acting more “customer-centric” and help deliver a customer experience which matches the consumer expectations?
Whilst I certainly don’t definitely have a tried and tested formula (I’d be a very successful man if I had the secret formula!) – I do have some experience with helping large enterprises engage a large group of employees and get them to focus on a cultural or strategic shift.
The key to driving strategy alignment and adoption is simple: micro-behaviours.
The funny thing about culture and strategy alignment is that it’s the little-things that actually matter the most. What people DO is the culture, and what people DO will tell you whether employees are adopting a strategy or not.
As leaders, we often get caught up in the complex and big-things. We run workshops, we try run internal education programs and we have meeting after meeting to try get our teams to focus on the the things we’re telling them are important.
But, time and time again – big companies struggle to drive real change. Why?
Companies rarely measure or even acknowledge what people DO at work all day. We look at outcomes, results and KPIs. Yet, we sit back and wonder why our staff aren’t being more customer-centric, and we wonder why our customer satisfaction numbers aren’t going up? “We held a workshop and everything?”
To drive strategy adoption and real business change – you need to measure and reward people for performing the micro-actions that align with your goals.
Let’s go back to my original case/story.
Let’s say you need to increase customer satisfaction within a call centre. Instead of telling your team that they must work to improve their Customer Satisfaction scores, reward them for doing customer-centric behaviours such as asking for feedback from a customer after a call, wishing the customer a great day after a call, asking the customer if “there is anything more I can help you with today?”.
You get the idea – take outcomes, take KPIs and take goals – and break them down into the micro-behaviours that your staff can actually do every day. This makes it EASIER for your team to focus on the right things, it rewards the MAJORITY of your team because everyone can perform those actions, and amazingly – it will actually help you achieve your outcomes because ACTIONS lead to OUTCOMES in the end anyway.
The declining value and prevalence of Annual Performance Reviews has been well documented. It is estimated that nearly 50% of the Fortune 500 have now scrapped Annual Performance Reviews in favour of more agile, more frequent reviews of performance.
With everything we understand now about employee engagement and driving performance at work – it totally makes sense that we move away from something so slow, strict and as outdated as annual performance reviews. Great employees want to know how they can improve every day, and make changes to their behaviour in order to drive performance.
How often should you review performance?
Ok, the million dollar question. “If an ‘annual’ cadence is so 1985, what should I do then?”
My answer is simple: the best thing you can do for your organisation is to make feedback an ongoing, continuous part of your daily workflow. If that sounds like a nightmare – you probably don’t have the right tools or mechanisms in place to enable continuous feedback and more importantly: you might need to re-consider your career choice to be a manager!!!
Feedback is the fuel that helps turn potential into performance. If you want to be an all-star leader of a high-performance organisation – you better get used to giving feedback constantly – both negative and positive.
Most importantly, what should you review?
Of course, when “reviewing” performance – you must look at outcomes and results. When “managing” performance, my view (which my subscribers will already well know!) is that you should review actions and behaviours, not just outcomes. However, as I say – when formally reviewing performance over an extended period of time, you will need to look into the outcomes, results and KPIs that you have set.
My top tips for giving more feedback and building routines around more feedback
- Invest in a “tool” or solution to make giving feedback simple. Whether it’s something as simple as a chat tool like Slack, an intranet solution or a full-on performance platform like Sparta – get something that allows you to a) see performance in real-time and b) communicate and give feedback to your team in real-time. It should preferably be mobile, real-time and easy-to-use.
- Learn to LOVE giving feedback (especially more negative or constructive criticism). As I said before, feedback is the fuel that turns potential into performance. If you don’t enjoy tough conversations, or sitting and talking with your employees about their performance – you need to learn to love it. Read up on the science of feedback to understand how to get the most out of your coaching sessions. Just as you ask your staff to be well briefed on their skill set – you should be constantly learning about coaching, feedback and the sciences of psychology and motivation at work.
- Giving great, constructive, clear and actionable feedback isn’t something we’re born with. You need to practice, practice, practice. You won’t be a superstar coach and feedback-giver tomorrow – but if you keep practicing, you’ll get there.
Remember, #FeedbackIsFuel 😃
We’ve written a little bit about motivating sales people and practical ways you can do it here on this blog, but we’ve discussed very little about the science behind motivation, and motivating reps. In this post, we’ll try delve a little deeper into the science behind motivating sales people. If you have unmotivated or unengaged staff, before the practical stuff, you must understand the theory behind motivation and performance.
The trick to motivation is to find the intrinsic reward in our work and to enjoy it.
Much has been written about sales motivation, and for years – it was believed by most sales leaders that commissions and cash were the key drivers of sales performance. However, alot of those theories have been debunked, perhaps most famously by author Daniel Pink in his book “Drive: The surprising truth of what motivates us“.
‘The more prominent salary, perks, and benefits are in someone’s work life, the more they can inhibit creativity and unravel performance. As Edward Deci explained when organisations use rewards like money to motivate staff, “that’s when they’re most demotivating.” The better strategy is to get compensation right – and then get it out of sight. Effective organisations compensate people in amounts and in ways that allow individuals to mostly forget about compensation and instead focus on the work itself”.
According to Pink, there are three fundamental factors which drive performance and internal motivation:
- Autonomy – the desire to direct our own lives
- Mastery – the urge to get better and better at something that matters
- Purpose – the yearning to do what we do in the service of something larger than ourselves.
For sales managers, these three factors must be top of mind when designing incentive programs and managing your people. Give them the responsibiltiy and automony to create their destiny, allow them to improve and master their craft – and make sure they feel as they are part of a bigger cause – always striving toward a common goal.
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. I also spoke at length previously in this series about why engaging the Middle, or your “B Players” is the key to rapid growth, better company culture and improved performance.
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:
- 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.
Summary and Takeaways
As I wrote at the start of this guide, the world is changing and performance management must change with it.
What worked before won’t necessarily work now. “Traditional incentives” such as cash, holidays and fancy prizes are becoming less and less effective every day. Business leaders need to step up their game!
To get the most out of people you need to give continuous feedback, you need to give clarity around instructions, you need to give recognition and you need to reinforce behaviours in real-time.