Ongoing management: Low performers, mid-level performers and even high performers need it. It does not assume high performance, and once high performing, it 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 YTD basis, the participation rate is 40 percent.
Participation rate is a statistic that is rarely scrutinized. Why? Sales managers are measured for making their quota. If the quota is $100 million, the sales manager’s goal 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 percent of their quota is better for the sales manager than the 0 percent they would contribute if the sales manager let them go.
Research reveals that a participation rate of 60 percent or less will give sales managers a 10 percent chance of making their revenue plan. Sales managers must aim for a high (70 percent) 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:
1. High Performer = Delivers results + behaves correctly
2. Coachable Performer = Behaves correctly but results are not yet 100 percent
3. Tough Performer = Delivers results + behaves poorly
4. Poor Performer = Poor results + poor behaviors
In an ideal world, a sales manager would have 100 percent High Performers. Neat concept, but it’s most likely not going to happen. The next best thing is 100 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. That’s manageable. Now imagine four out of ten. Life is tougher, and tough moments happen on a daily basis. At six out of ten, 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, and other daily routines to try and lift behavior as well as results. When these fail to work, that’s when it’s time for the performance conversation, which has five key steps:
1. Set a clear standard and set milestones of performance for the direct report.
2. Inform the direct report where they are not meeting the standard and set milestones.
3. Give the direct report the opportunity to meet the standard and set milestones.
4. Offer assistance to meet the standard and set milestones.
5. 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 necessary. 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 or not interested will show themselves very quickly after the performance conversation. If things still don’t improve, the sales manager can move to the final warning, consult with HR to effectively handle the situation and determine if parting ways is required.