It's approaching that time of year. I'm getting calls from clients: "Dave, we will be starting our planning process in September. We will have to commit to 2010's numbers and budget, we will have to develop a commission plan that motivates our sales people to hit the goals..... We're going to need your help."
These conversations got me to thinking about a mistake I think many organizations make in thinking about sales performance management. Too often, people make the mistake of thinking the cornerstone to sales performance management is the commission/incentive plan. "If we get the sale incentive plan right, then we will get the right behaviors, actions, and we will hit the numbers. Performance management is all about getting the right compensation plan in place."
The incentive plan is an important element to help drive sales performance, but it is just one of the levers the organization has. The incentive/compensation plan is somewhat limited in driving performance. It basically focuses on the issue, "here is how you will be paid for what you sell." To the degree that people are money motivated, it is a powerful element to sales performance management.
The more important lever, is the Performance Plan.
Unfortunately, performance planning is not taken as seriously, both as a tool to drive performance and a tool to drive individual development. It is a powerful and underutilized tool that every sales manager should leverage to drive performance.
The performance plan should set the expectations of sales people in a number of areas. The performance plan sets baseline expectations and behaviors that I sometime call "conditions of employment," for example showing up for work is one of them, perhaps keeping the CRM system might be another (I'm not trying to provoke a CRM discussion, just some examples that I've seen.).
But the performance plan can go far beyond that, it should set expectations about how we want to see people sell, the types of relationships we want them to establish, it can talk about how we want sales people to collaborate with their peers and others in the company.
The performance plan is where management has the opportunity to establish the ideal behaviors and best practices for selling, establish goals and metrics (both hard and soft) to drive the highest levels of performance. It becomes the road map to the sales person for outstanding sales performance.
Too many sales managers don't understand the power of the performance plan as a tool for developing their people and driving performance. Most tend to look at it as "one of those tasks HR forces us to do."
Properly utilized, good performance plans, coupled with well designed incentive/commission plans can be two of the most powerful tools for sales managers in driving, measuring and evaluating performance.