A company's success or failure, and its performance growth or decline, are decisively influenced by people, aside from unavoidable factors. Motivating employees is a key concern for every business leader, and performance assessment is the work most closely related to employee motivation. Whether the performance assessment standards are reasonable, and whether management implements and controls the assessment fairly and accurately, directly affect the motivation of frontline salespeople; in turn, the motivation and performance of salespeople have a direct and significant impact on the company's profitability. Therefore, decision-makers and managers must grasp the interactive nature of performance assessment and use rational, scientific methods to conduct assessments.
I. Standards for Target Sales Volume and Assessment Methods
The primary standard for assessment is usually sales volume. Is the target sales volume set correctly and reasonably? This is the first issue encountered. Should it be based on population, per capita consumption, or per capita income? Or based on last year's sales plus an average growth rate? For example, if target sales are set based on per capita consumption, is the population count accurate? Has a large portion of the population left the area? Are there many migrant workers?
The second issue: Should assessment be based on a simple target sales volume, or should a comprehensive evaluation standard be established?
The third issue: Should the final assessment use pre-set standards or post-hoc standards?
In fact, each method has its limitations and imperfections. Companies should develop assessment standards that are as scientific, accurate, fair, and reasonable as possible, based on their specific circumstances.
The author has worked as a business manager in two medium and large pharmaceutical companies for many years, and we have always tried to find a scientific, reasonable assessment method that can motivate salespeople through continuous adjustments. The company's president was an innovative and change-oriented leader. During a period, he required us to constantly propose new plans, changing the assessment scheme every three to five months. We found that the completion of sales tasks was directly related to the different performance assessment methods used at different times. Based on years of experience, we summarized an effective "3:7" performance assessment method. This method is also applicable to the food, daily chemical, and home appliance industries.
The "3:7" performance assessment method: comprehensive assessment accounts for 30%, and sales volume assessment accounts for 70%. Comprehensive assessment includes: company compliance, operational methods, market share, sales growth rate, etc. For this, 70% is based on pre-set objective standards assessed at the grassroots level, and 30% is based on post-hoc evaluation by leaders. For sales volume assessment, 70% is based on pre-set standards, and 30% is adjusted based on post-hoc assessment. Post-hoc adjustments include: special events affecting sales, objective difficulties, inflated sales volume, company products or policy impacts, etc.
The results of performance assessment are usually reflected through bonuses, and it is best to combine incentives with assessment results. Although the 30% comprehensive assessment and the two 30% post-hoc evaluation adjustments can motivate sales and avoid some unreasonable accidental factors, they strive to reflect "more work, more pay." Nevertheless, there will still be hardworking and talented people who, despite their efforts, may not see a proportional return due to markets in development or decline, or unreasonable target sales volumes, leading to unfairness and affecting motivation. In addition to performance bonuses, consider setting up individual awards such as growth awards, development awards, network building awards, and market order awards.
II. Dynamic and Interconnected Nature of Assessment Standards
It is a misconception that once assessment standards are set, they cannot be changed. Scientific assessment standards should be dynamic. Below is a brief introduction to the application of the PDCA cycle method in performance assessment. PDCA stands for Plan, Do, Check, and Action. The plan is the pre-set sales target; the execution of the sales target plan is the core work of salespeople; managers should promptly check (real-time monitor) the implementation of the plan; problems found during implementation should be corrected and adjusted in a timely manner. Based on specific circumstances (specific markets, trends, and personnel), the adjusted plan and assessment standards, which are more scientific, accurate, and timely, become the new round of the plan. Continuous improvement is achieved through the cycle. They are interconnected, with the end linking to the beginning, continuously cycling, organically linking the company's sales plan and performance assessment, promoting mutual progress and coordinated development. Below are the PDCA cycle diagram and the PDCA spiral upward diagram.
Sales target plans and performance assessment standards should be dynamic, not static. A good performance assessment philosophy and plan should be an organic part of the sales target plan and the entire sales management process. Performance assessment is the energy supply throughout the sales management process. Performance assessment should be systematic, not isolated. From plan formulation to implementation, information feedback, supervision and control, and handling adjustments, it participates in the entire sales management process. Scientific performance assessment helps achieve the company's sales targets.
III. Performance Assessment and Evaluation
Performance assessment and evaluation are generally hard indicators, focusing only on results and ignoring the process. Scientific performance assessment should emphasize process control, because only good processes produce good results; results are often difficult to change, but whether the process is correct and appropriate can be improved in real time. My experience is "the process determines gains and losses, and success or failure is judged by results." According to the "3:7" assessment principle, within the 30% comprehensive assessment, a phased implementation report should be established to facilitate timely monitoring and guidance by leaders. For example: a promotional plan, a phased work plan, summary, policy implementation during a period, adjustments to regional networks, etc. Whether the thinking is correct and the methods are appropriate, the superior supervisor can provide timely guidance and correction. Although the market is ever-changing, it also has its patterns; if standardized procedures are followed, mistakes will be reduced. Therefore, whether the process implementation and procedure execution are in place should be one of the main contents of performance assessment. Also, the 30% post-hoc evaluation adjustment is very important. Some salespeople have indeed made efforts, but due to errors in pre-set standards or objective factors, they cannot complete the hard indicators, and reasonable adjustments should be made.
The implementation of the "3:7" performance assessment method, like other methods, depends on the awareness and quality of middle-level managers, and also requires a group of grassroots supervisors (full-time or part-time) to monitor, adjust, and accurately and objectively record the entire sales target implementation process. The "3:7" method may not be suitable for every company; it is for reference and discussion. Its core content lies in interactivity and reasonableness.
Whether performance assessment is appropriate, reasonable, fair, and just directly affects the motivation of salespeople.
Behavior quality = Attitude + Knowledge + Skills (Willingness) (Understanding) (Ability)
Attitude is a key factor determining behavioral outcomes. The motivation of salespeople has a direct and significant impact on the company's profitability. Therefore, decision-makers and managers must grasp the interactive nature of performance assessment and use rational, scientific methods to conduct assessments.
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