Ongoing management. Low performers, mid-level performers and even high performers need it. It does not assume high performance, and once high performing, does not assume it will always continue. Everyone needs to be managed on a consistent basis. In sales, the goal of ongoing management is participation rate.
Participation rate is the percentage of sales team members who are at or above plan. For a sales team, participation rate is easy to calculate. On a team of 10 people where four are above their sales plan on a YEAR-TO-DATE basis, the participation rate is 40%.
Participation rate is a statistic that rarely scrutinized. Why? Sales managers are measured for making their quota. If the quota is $100 million, the sales manager’s goal is to get each sales person to deliver an average of $10 million. Some will produce $15 million and others will produce $5 million; the sales manager only needs the total to add up to $100 million. The sales manager is incentivized to keep average performers. A sales person who only delivers 50% of their quota is better for the sales manager than the 0% they would contribute if the sales manager let them go.
Research reveals that a participation rate of 60% or less will give sales managers a 10% chance of making their revenue plan. Sales managers must aim for a high (70%) participation rate to have a good chance of making plan, although it is not guaranteed.
Given this, why do sales managers tolerate poor performance? What stops them from having tough conversations? Sales managers are nice. They do not want to rock the boat. Their strategy is hope.
A sales rep’s performance can be evaluated on two criteria – behavior and results. Assessing whether a sales rep is or could be delivering results is fairly straightforward – it’s a math problem. There are four performer categories a sales manager works with:
- - High Performers = Deliver results + behave correctly
- - Coachable Performers = Behave correctly but results are not 100% yet
- - Tough Performers = Deliver results + behave poorly
- - Poor Performers = Poor results + poor behaviors
In an ideal world, a sales manager would have 100% High Performers. Neat concept, most likely not going to happen. What is the next best thing? One hundred percent High Performers and Coachable Performers. This is attainable but it’s not the norm.
Most leaders will have some Tough Performers and some Poor Performers. Imagine having 10 direct reports with two in these groups. Not bad, manageable. Now imagine four out of 10. Life is tougher and tough moments happen on a daily basis. At six out of 10, it is probably tough to get out of bed in the morning.
Ongoing management of performers involves monthly (minimum) One-on-ones, observational coaching with feedback, sit downs to try and help – all the day-to-day routines to try to lift behavior and results. When these fail to work, that’s when it’s time for the performance conversation, which has five key steps:
- Set a clear standard and set milestones of performance for the direct report.
- Inform the direct report where they are not meeting the standard and set milestones.
- Give the direct report the opportunity to meet the standard and set milestones.
- Offer assistance to meet the standard and set milestones.
- Advise the direct report of the consequences of not meeting the standard and set milestones.
Sales managers know how to do this – the issue is getting up the nerve. Sales managers need to have the conversation as soon as needed – putting it off spares no one. Sales reps who want to be with you will step it up and improve. Those who are not capable/not interested will show very quickly (weeks not months) after the performance conversation. If things still don’t improve, the sales manager can move to the final warning, consulting with HR to effectively handle this and how to go your separate ways if that is required.