As 2019 draws to a close, I've been reflecting on this year's work. Today I want to share a topic that has been the bane of my existence: performance management. It's the work that surrounds me day and night, and it's also the most difficult aspect of all human resource management and enterprise management, being highly complex in practice.
The object of performance management is people. The biggest difference between people and machines is that people have thoughts and emotions, which cause fluctuations in performance. Therefore, investing in people has two major characteristics: first, high risk; second, high returns.
The basic concepts of the following two terms are clear to everyone, but they are hard to articulate. Let's first understand the definitions.
1. Performance: The input-output situation of an organization or individual over a certain period. Input refers to material resources such as manpower, materials, and time, or spiritual resources like personal emotions and feelings; output refers to the completion of work tasks in terms of quantity, quality, and efficiency. This leads to the concept of performance management.
2. Performance Management: A continuous cyclical process in which managers and employees at all levels jointly participate to achieve organizational goals, including performance plan formulation, performance coaching and communication, performance appraisal and evaluation, performance result application, and performance goal improvement.
The purpose of performance management is to continuously improve the performance of individuals, departments, and the organization. Now, let me share my work in this area this year.
When it comes to performance management, I personally feel that starting from three aspects makes it relatively clearer and simpler.
-01- What are the key management items for sales team management?
1. Positive work attitude, i.e., control of personnel work willingness I place work willingness in the first position. Under the same conditions of "timing, location, and harmony," the results achieved by someone who wants to work and someone who doesn't are vastly different. It's like you can never wake up someone who is pretending to sleep. Once a person completely loses work willingness, please persuade them to leave as soon as possible; otherwise, their emotions will spread and affect not just individual performance but team performance.
It is recommended to observe from these three aspects:
a. The completion of sales personnel's work forms, regular meetings, and work reports; b. Attitude and words and deeds in daily work, especially those who are full of complaints and grumbles; c. Awareness and participation in team collective campaigns. If problems are found, communicate promptly and act decisively.
2. Excellent sales skills, i.e., control of work ability Sales skills are one of the important productive forces and require regular training. Training must be followed by examination and acceptance, which can be written tests or situational interviews. Those who fail are absolutely not allowed to go to the market alone.
Last year, I encountered a problem. I thought it was simple product knowledge and had trained regional managers at least twice, but without examination and acceptance. As a result, during market visits, one regional manager misunderstood and led the team astray. Fortunately, we discovered it in time; otherwise, consumers in the entire region would have been "indoctrinated" with wrong product knowledge.
It is recommended to manage work ability from these four aspects:
a. When coordinating with frontline staff in market visits, pay attention to their professional product selling skills—are their scripts correct and communication efficient? b. Is product knowledge memorized? Don't sell products you don't understand. c. Master customer relationships and sales policies for both your products and competitors, knowing yourself and the enemy. d. In market planning, consider input and output, and whether there is simple business awareness. Let me emphasize the importance of examination: "Whatever is taught must be tested" is a basic principle.
3. Refinement in all aspects, i.e., control of the sales process system Let me give an example: A terminal store agreed yesterday to set up a floor display, but today the salesperson finds the store lacks stock, so they communicate orders and coordinate logistics. After the goods arrive, they find a shortage of merchandising materials, so they have to postpone the display or arrange another delivery. These are common trivial matters. What could have been done in one trip ends up requiring three trips. How can performance improve? Therefore, process control becomes prominent. It is recommended to connect from three aspects:
a. Continuously optimize the business system and operational processes, streamline steps, and operate efficiently; b. Reduce losses (time and things), improve team work efficiency and performance management; c. Efficiently coordinate company resources and internal support, avoid detours (route planning), avoid unnecessary expenses (cost-effectiveness), and focus resources on the cutting edge (key investments).
4. Continuous tracking and checking, i.e., control of the sales process "Checking is greater than trust" is a phrase I often say. Human nature requires supervision. First, monitor sales personnel's daily affairs and performance progress. The company should have a dedicated, professional supervision team.
Speaking of this, I suggest companies establish a manager-level supervision team. Only high-level personnel can identify problems among lower-level personnel. Some companies think hiring fresh graduates as supervisors is good because they are just out of society, upright, and follow orders. Actually, this is wrong because they cannot see the essence of problems; they only follow rules mechanically to find discrepancies, sometimes even affecting the sales team's morale.
Secondly, in the sales process, based on business progress and local successful experiences, provide targeted suggestions and help to the team so they can replicate quickly. Finally, conduct effective motivation and communication regarding the team's sales process, guiding team members to maximize benefits and efficiency.
-02- How to set sales targets that are effective and reasonable?
1. How to set sales targets scientifically and feasibly? Target setting is not one-way. Many companies plan next year's sales targets based on their own needs, resulting in difficulty achieving targets, employee performance appraisals not meeting standards, directly affecting employee income, and demoralizing the team. They are forced to adjust during execution, which is only a temporary fix, and the company's authority is challenged.
The process of setting corporate sales targets is actually a top-down, bottom-up, fully communicated, and consensus-reaching process. Here are five suggestions: a. Formulate the company's development strategy for the coming year, i.e., top-down direction setting. b. The sales team, based on its actual situation (dealer inventory, market inventory, opportunity points, growth directions, etc.), reports challenge targets, sprint targets, and baseline targets for the coming year, while also needing mechanisms to match the achievement of indicators. The mechanism design must adhere to two principles:
- More work, more reward; encourage the team to dare to challenge themselves; 2. Accurate reporting, more reward; prevent the team from underestimating themselves and lowering self-requirements, i.e., bottom-up target reporting. c. Combine the data from both sides, compare them, seek differences, and communicate deeply. d. Communicate until consensus is reached on the target, determine the final target, and sign a responsibility pledge. This signing ceremony must be solemn and serious. e. Around the target, break it down into quarters, months, days, product items, and channels, and reach a consensus on the implementation plan. Finally, the target decomposition must be: specific, measurable, achievable, relevant, and time-bound.
2. How to decompose sales targets to ensure plans match reality? First, consider a question: Where does the company's next year's performance come from? Part of it is existing sales volume, which is relatively stable. As long as dealers, company teams, and products are stable, there generally won't be major changes.
The other part is incremental growth. Where does the increment come from? New products carving out market share? New channels developing market share? Blank markets and blank outlets stocking to capture market share? These questions must be considered clearly. Task decomposition must consider: What is the existing volume for each month? What is the incremental part? Where are the opportunity points? How to implement the sales plan step by step?
For example: A market did 100,000 in September this year, and plans to do 130,000 next September. How? To achieve 130,000, you need to plan in advance to add 100 new outlets, which need to be distributed across 3 channels, requiring 1 new staff member and 1 tricycle. Also, consider whether existing customers will decrease and how to supplement. All these must be completed before September; otherwise, the 130,000 target is just empty talk.
3. What are the key points for achieving sales targets? How to grasp them? This is the key point of performance management. For frontline employees, after targets are assigned, they must be helped to plan how to achieve them. A leader who only "gives birth" to targets but doesn't "nurture" them is not a competent leader.
At this point, consider the following two questions from top to bottom: a. From the team perspective, the formula for completing tasks is: Performance = Attitude * Skills * Company Support. Here I use multiplication; these three aspects are indispensable. If one tends to zero, the result is disastrous. Of course, if all three are done well, performance growth will be geometric, which is also one of the cores of performance management: grasp all three simultaneously and make them all strong. b. From the market perspective: Performance = Market existing volume + Horizontal growth + Vertical growth. This can be understood as: maintain the existing market volume, increase cooperative outlets, and increase the SKU count per cooperative outlet to achieve next year's target. Here I use addition; performance growth is multifaceted and independent. As long as you work, there will be increment; the more you work, the more increment.
4. How to evaluate sales targets to provide useful help for the next step? From "The Art of War" (Sun Tzu): "Know the enemy and know yourself, and you can fight a hundred battles without defeat; know yourself but not the enemy, and you will win one and lose one; know neither, and you will lose every battle." Target evaluation must be based on full understanding of market information, considering the following two aspects. a. External market factors must be fully analyzed, including but not limited to competitive environment, industry trends, policies and regulations, economic environment, etc. b. Internal market factors must be fully analyzed, including but not limited to customer quantity and quality, products, available resources, team building, scientific management, model innovation, etc.
-03- How to use performance appraisal to manage sales team performance?
1. Four questions that must be clarified in performance appraisal: a. What is the specific work of the sales team? Use the sales team's organizational chart to solve communication issues, use process mapping to solve normal operation issues, and use department responsibilities and job descriptions at each level to solve specific work issues. b. To what extent should the sales team work? At this point, determine the important, phased work objectives and assessment targets for the sales department, and establish evaluation criteria. c. What rewards are there when the sales team meets its targets? Reward measures, promotion mechanisms, bonus mechanisms. d. What penalties are there when the sales team fails to meet targets? Punishment measures, demotion, salary reduction, and persuasion to leave mechanisms.
2. Performance appraisal should be tabulated and quantified Generally includes: monthly KPI, weight, assessment criteria, self-score, supervisor score, comprehensive score, etc.
3. Performance interview work in performance appraisal a. Review and summarize the sales team's work over the past period, fully analyze gains and losses in the work process, summarize simple and replicable experiences, how to leverage strengths and avoid weaknesses, and plan the next stage's sales volume targets and work direction. b. Systematically evaluate employee performance based on daily meetings, market performance, joint visits, etc., and formally and in writing convey the next stage's work elements. c. Preparation items for performance interviews:
- Determine the interview's goals and main themes; 2. Analyze the employee's current situation; 3. Discuss and draft improvement plans; 4. Obtain the employee's commitment; 5. Tell the employee about career development paths, clarify job titles, compensation, promotion conditions, reasons for demotion, etc., and encourage employees to strive and sprint.
Final Thoughts: Regarding performance management, I am still in the learning stage. Managing people is much more difficult than managing the market. People management is multidimensional; things with thoughts require more advanced thinking modes to control.
Practical experience is one thing, theory is another. Some theories come from sociology, statistics, operations research, psychology, etc., which are not easy to summarize from practical experience. Therefore, it is necessary to refer to books in these areas.
Extended Reading:
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