---
title: "Stores Without Performance Management Have 3x Lower Sales per Square Foot Than Those With It"
description: "Team performance appraisal is a challenge for store management. This article explains the core principles of performance management with practical examples, covering why it's needed, basic models, target and process management, common mistakes, and a sample appraisal form."
author: "方瞳"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-07-06"
language: "en"
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---

# Stores Without Performance Management Have 3x Lower Sales per Square Foot Than Those With It

> Team performance appraisal is a challenge for store management. This article explains the core principles of performance management with practical examples, covering why it's needed, basic models, target and process management, common mistakes, and a sample appraisal form.

**Click image for details**
Team performance appraisal has always been a difficult area for store management to implement well. Therefore, in recent course follow-ups, the most frequently mentioned topic was store performance appraisal. So, let's revisit the core theories of performance appraisal management with practical implementation.
**Why do performance appraisal?**
The purpose of performance management is to motivate employee growth and improve human efficiency. Employee growth leads to mutual benefit between the company and employees.
On the other hand, performance management is to regulate employee behavior standards.
If employees fail to meet the boss's expectations, one possibility is lack of ability; another is lack of motivation to achieve the goal. In maternal and infant stores, it's often the latter. People are inherently self-interested; if a task lacks clear motivation, you can't expect it to be done well.
01
Basic Principles of Performance Management
1) Basic structure and actions: set indicators, evaluate results, take responsibility.
The core of performance management is to turn tasks into indicators and goals, evaluate these goals, and then take responsibility.
For example, you want to climb 6000 meters of Mount Everest. 6000 meters is the goal. If you only climb 4500 meters, you've completed 75%, which is the evaluation. If you climb to the top at 8844 meters, you should be rewarded; if you only reach 4500 meters, you should be punished. That's taking responsibility.
From a team structure perspective, we follow the principle that each level is responsible to the level above. The execution layer is responsible for its own performance and behavior; middle management is responsible for the performance and behavior of the team they manage and evaluates team members; senior management should set performance goals, rules, and conduct performance evaluations. Therefore, the lower the level, the simpler the tasks; the higher the level, the more complex and abstract the tasks.
2) Basic model of performance management – core components and complete model
The core components of the basic performance management model include goal management and process management. Goal management means good sales performance, while process management means behavior patterns that meet management requirements, thus deriving a complete model:
Employee compensation = base salary + performance commission * behavior assessment score + benefits + other deductions/payments
Many store owners encounter the need to add single-item commissions for employees. In fact, based on this complete model, it's simple to handle.
> ▼If you focus on behavior assessment, the calculation model adjusts to:
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> Employee compensation = base salary + (performance commission + single-item commission) * behavior assessment score + benefits + other deductions/payments
> ▼If you particularly focus on promoting a specific item or the commission for that item is paid directly by the manufacturer, then add the single-item commission to the original model:
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> Employee compensation = base salary + performance commission * behavior assessment score + benefits + other deductions/payments + single-item commission
> ▼A more complex approach is to incorporate the single-item commission indicator into the behavior assessment criteria. In this case, the performance of that single item directly affects the behavior assessment score, impacting the entire compensation system.
02
Performance Design for Goal Management
1) Types of performance goals
In the above examples, we used "turnover" as the standard goal for performance appraisal. In fact, there are many types of performance goals, such as average transaction value goals, number of transactions goals, profit goals, or even turnover for specific products, or a combination of total turnover + specific product turnover.
2) Designing performance goals
Let's still use turnover as the performance goal to simulate a commission scheme design:
> The main part of the scheme is [3% commission based on actual turnover]
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> First, we need to set a [baseline]: no commission if turnover is less than 10,000 yuan. The baseline is a basic safeguard measure to protect the store owner's basic interests and also serves as a minimum requirement for sales associates.
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> Then, with a baseline, there is an [excess reward line]: for the portion exceeding 50,000 yuan, commission is 5%. This gives more rewards to sales associates who exceed their tasks to motivate their fighting spirit.
After setting the [baseline] and [excess reward line], the portion between 10,000 and 50,000 yuan is called the [win-win zone], which enjoys the main reward policy of 3% commission. It is precisely this zone that is the point of mutual benefit between the boss and employees. The famous e-commerce company Alibaba Group provides us with a "172 principle" that well defines the reasonable distribution of these three zones: below expectation (baseline zone) accounts for 10%, meeting expectation (win-win zone) 70%, and exceeding expectation (excess zone) 20%.
The above 10,000 and 50,000 are just examples. So, as an individual maternal and infant store, what values should be used as reasonable line-setting standards? We suggest sorting the average sales performance of store sales associates over the past three months, slightly lowering the top 20% value as the [excess reward line], and slightly raising the bottom 10% value as the [baseline]. The area between them is the [win-win zone].
3) Example analysis
According to the above performance parameters and performance model design, without considering behavior assessment, a sales associate with a turnover of 60,000 yuan would receive:
Base salary (2000 yuan) + performance commission (50,000 * 3% + 10,000 * 5%) = 4000 yuan
4) Goal design for managers
After explaining the assessment of frontline employees, let's look at how to design goals for middle managers.
Here we find a common mistake: in most maternal and infant stores, the performance goals of store managers and team leaders are the same as frontline sales associates – sales performance! This is obviously unreasonable. Store managers and team leaders exist to manage or replicate their strong sales experience and abilities to frontline sales associates. If their performance goal is also sales amount, then they only need to focus on sales. What motivation would they have to drive others?
The correct goal design for managers should be: give them team performance, and their personal sales performance is also calculated but only at a certain percentage.
For example: a store manager has a target of 400,000 yuan in total store sales, with a commission of 3‰ upon reaching it; if exceeding 110%, the excess portion is commissioned at 5‰; if not reaching 85%, no team commission. Personal sales performance is calculated at a 30% share.
This design gives managers a sense of mission to improve the team's overall performance. Only when the entire team's sales go up can they receive the team performance reward. At the same time, their personal sales performance only counts for 30%, meaning that no matter how strong the store manager's personal sales ability is, it's not enough. She should consider how to replicate her abilities to the whole team rather than monopolizing sales resources.
03
Performance Design for Process Management
1) Basic principle: design a behavior standard, conduct a behavior evaluation.
"Behavior standard" means "when a customer enters the store, the staff must enthusiastically and loudly say 'Welcome'." "Behavior evaluation" means "if a spot check finds it not said once, deduct 1 point," and so on.
This principle adheres to the rule of "no indicator, no assessment," requiring quantitative design in behavior standards and weighted design in behavior evaluation. How to understand this? For example, a store owner walks into the store, sees packaging boxes thrown on the floor, and mutters about deducting 50 yuan from the staff. This assessment method itself is questionable. First, is "boxes cannot be stacked in the store" a pre-agreed behavior standard? If employees don't know that stacking boxes will be punished, then this cannot be an assessment standard. Only when it's clearly stated in the assessment content that "boxes cannot be stacked in the store; if found, deduct 50 yuan (1 point) each time" can it become a standard behavior criterion. So, store owners should think about whether they have refined their requirements into quantifiable indicators.
2) What do behavior standards include?
Behavior standards can be valuable behaviors or recent work priorities.
The following examples of behavior standards are for reference only; adjust according to the store's actual situation.
3) How to score
(Sales associate section) Sales associates are scored directly by their immediate supervisor.
1 Scoring is assigned to individuals, and both parties sign.
2 The immediate supervisor has a reward/punishment authority of 20 points per person. This 20 points gives flexibility to the assessment items, as sometimes the assessment items cannot cover all aspects; it also gives store managers (team leaders) a management tool, making their management not just superficial preaching.
3 Headquarters management has a reward/punishment authority of 10 points. First, it follows the principle of "no skip-level management," and second, using 10 points as the reward/punishment method during top-level management inspections draws attention.
(Management section) For store management, a "patrol + multi-person scoring" management model should also be established. For example, an evaluation team consisting of the operations director and store managers conducts 1-4 store inspections per month, deducting points for non-compliant behaviors, and these deductions are attributed to the store's management. This forms supervision from senior management over middle management, promoting a reasonable model where middle management both manages the frontline and is responsible to the top.
4) Example analysis
After explaining process management, let's combine it with goal management and revisit the previous example table:
Sales associate C: base salary 2000 + performance commission 2000 * behavior assessment 100%, so she can receive 4000 yuan salary.
If her behavior assessment score is only 70, then base salary 2000 + performance commission 2000 * behavior assessment 70%, actual take-home is only 3400 yuan. This is a complete performance appraisal.
04
Common Mistakes in Performance Appraisal
Doing performance appraisal makes team management more complex rather than easier, but it makes your management more effective and fair.
Performance appraisal is not a panacea; it's a quantitative and weighted management method. More often, direct communication between management and employees brings psychological unblocking and guidance.
Take wearing uniforms: not wearing a uniform deducts 5 points each time, which is just a reward/punishment record at the performance appraisal level. From a guidance perspective, we should do more: management should hold a meeting to explain that uniforms represent the company's image and give customers a clean, upward impression. These are goals that cannot be achieved solely through performance appraisal.
So, we first use performance for standardized management, plan employee job responsibilities, and train their behavior standards, ultimately forming the entire company's team culture and continuously influencing the next generation of employees. These aspects complement each other to build the entire team.
Performance appraisal often falls into the following mistakes:
> 1 Emphasizing results over process, eventually turning performance appraisal into a punishment tool.
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> 2 Not planning performance standards in advance, failing to follow through at the time of performance reward.
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> 3 Unreasonable performance appraisal leads to cost loss, with the "172" ratio imbalanced.
At the end of the article, we provide a sample performance appraisal form for sales associates. You can use this form to simulate and design your store's performance appraisal content. The most important thing is to combine it with reality: after designing a set of assessment standards, apply the store employees' past three months' performance to estimate, see if the final result meets your expectations, and adjust parameters if there are errors, ultimately forming the most suitable assessment plan for your store's operation and implementing it.
**Source: Zhongtong Observation (ID: chinabaobbei)**
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