Evaluation of Sales Person Performance - Essay Example

Introduction Evaluation of sales person performance is a very essential issue especially in organizations that deal with selling. This in most casesis normally carried out at the end of every year. This is a tough task that needs great skill. Very many managers given the responsibility of carrying out this venture normally dread the whole process. This is because, after the evaluation process the organization can decide to lay off those sales people who are no-longer productive. (Klapholz, 2004) Therefore having the knowledge that one can play a role in someone losing his or her job makes it a very technical issue. This is not always case as some organizations use the analysis to lay down policies and also to find out the ways through which poor performers can be helped to improve and maximize their potential in selling. This paper is dealing with a case study concerning American Food Processors. It aims at evaluating the best and the worst performers in American food processors organization. Research reveals that evaluation of salesperson performance differs depending on the overall goals of the organization. It is very evident that the vice president in American Food Processors (AFP) has the culture of evaluating the performance of his sales force. It is very clear that this is not a very easy exercise as the vice president in this Company does not look forward to carrying out the evaluation of the sales people therein. It is very tempting for Mr. Jamie Walker to use subjective criteria in evaluating the sales personnel. Since the vice president in American Food Processors has good relations with the sales team, he understands the circumstances that affect their performance. Every sales team normally has got best and the worst performers. Calculation of the best and the worst performers According to the current year sales performance data in American Food Processors, there are eight sales people in the Company. The data shows each sales person’s previous years’ sales and the current sales. The names of the sales team are as follows; Steve Rodgers, Adam Murphy, Vicki Doyle, Rick Randall, Brenda Palmer, David Chen, Marti Edwards and Kim McConnell. To calculate the best performing and the worst performing sales person, the current year/s sales and the previous year’s sales will highly be considered. The previous years sales will be subtracted from the current years sales. After this the annual sales expenses of each individual will be subtracted from the value got after the first calculation. (McMullen, 2006) Sales growth Sales rep Current sales Previous sales Difference of current and previous sales (x) Steve Rodgers 481,000 480,000 1,000 Adam Murphy 883,000 750,000 133,000 Vicki Doyle 613,000 576,000 37,000 Rick Randall 852,000 745,000 107,000 Brenda Palmer 860,000 765,000 95,000 David Chen 835,000 735,000 100,000 Marti Edwards 670,000 665,000 5,000 Kim McConnell 925,000 775,000 150,00 Using the above value x, the performance of the sales team will be evaluated at individual level. This will be carried out by subtracting each sales person’s annual expenses from value x. Sales rep Value x minus annual sales expenses Value Y Steve Rodgers 1,000 -9,300 -8,300 Adam Murphy 133,000 – 12,300 120,700 Vicki Doyle 37,000- 7,500 29,500 Rick Randall 107,000 -11,000 96,000 Brenda Palmer 95,000 -11,300 83,700 David Chen 100,000 – 11,500 88,500 Marti Edwards 5,000 – 10,800 -5, 800 Kim McConnell 150,00 -12,800 137,200 Therefore the rank from the best to the worst performer is as follows 1. Kim McConnell 2. Adam Murphy 3. Rick Randall 4. David Chen 5. Brenda Palmer 6. Vicki Doyle 7. Marti Edwards 8. Steve Rodgers The best sales person in American Food Processors (AFP) is Kim McConnell. This is because looking at his current sales quota, he has the highest compared to his colleagues. The current year sales performance data shows that Kim McConnell had the highest sales quota which was eight hundred and seventy five thousand. It is very clear that this sales person is quite hard-working. This is despite the number of days that he has worked. (Reilly, 2005) Sales Rep Current sales Current sales quota Sales to quota Steve Rodgers 481,000 575,000 0.84 Adam Murphy 883,000 835,000 1.06 Vicki Doyle 613,000 657,000 0.93 Rick Randall 852,000 850,000 1.01 Brenda Palmer 860,000 850,000 1.01 David Chen 835,000 825,000 1.01 Marti Edwards 670,000 720,000 0.93 Kim McConnell 925,000 875,000 1.06 Considering sales to quota performance in American Food Processors, it is still very evident that Kim McConnell was the best performer in the sales. This analysis however indicates that He tied with Adam Murphy. They were closely followed by three sales representatives. They are Rick Randall, Brenda Palmer and David Chen. The worst performer in American Food Processors (AFP), according to sales to quota is still Steve Rodgers. (Reilly, 2005) Sales per account This illustrates the ratio of the total sales per each representative in relation to their total number of accounts. This is calculated by dividing the sales with the total number of accounts. Sales Rep Current sales Total no of accounts Sales per account Steve Rodgers 481,000 1, 100 437.27 Adam Murphy 883,000 1,600 551.88 Vicki Doyle 613,000 1,150 533.04 Rick Randall 852,000 1,350 631.11 Brenda Palmer 860,000 1,300 661.54 David Chen 835,000 1,400 596.43 Marti Edwards 670,000 1,600 418.75 Kim McConnell 925,000 1,700 544.12 Analysis using sales per account to evaluate performance reveals that Brenda Palmer is the best performer followed by Rick Randall and Marti Edwards was the worst performer. Average Order size This is calculated by dividing the sales per sale representative by the respective number of orders. Sales Rep Current sales Number of orders Av order size Steve Rodgers 481,000 780 616.67 Adam Murphy 883,000 1970 448.22 Vicki Doyle 613,000 1020 600.98 Rick Randall 852,000 1650 500 Brenda Palmer 860,000 1730 497.11 David Chen 835,000 1790 466.48 Marti Edwards 670,000 960 697.92 Kim McConnell 925,000 1910 484.29 According to the Analysis in the sales department using the average order size, Marti Edwards is leading, followed by Steve Rodgers. The worst performer in this classification was David Chen. (Rally, 2006) Calls per day Sales Rep No of calls Days worked Calls per day Steve Rodgers 1300 235 5.53 Adam Murphy 1800 223 8.07 Vicki Doyle 1650 228 7.24 Rick Randall 1700 230 7.40 Brenda Palmer 1750 232 7.54 David Chen 1750 220 7.95 Marti Edwards 1550 200 7.75 Kim McConnell 1850 225 8.22 From the above calculations, one can realize that Kim McConnell has made the highest number of calls in a day. He is closely followed by Adam Murphy who has eight point zero seven. Looking at the number of calls per day that they made and their current sales, it is evident that these calls were aimed at improving sales. Therefore it is very essential to realize that these sales people used their time at work faithfully. Looking at an individual like Steve Rodgers, he worked for approximately two hundred and thirty five days and made only five point five three calls per day. This shows that there are high chances that Steve Rodger was at work but never maximized his time towards making sales in American Food Processors Company. In sales department, one of the major factors that lead to increase in sales is good connection and communication to the customers. This shows that the sales person is interested and persistence in most cases leads to increase in sales. (Tracey, 2006) Orders per call Sales Rep Number f orders No of calls Orders per call Steve Rodgers 780 1300 0.6 Adam Murphy 1970 1800 1.09 Vicki Doyle 1020 1650 0.62 Rick Randall 1650 1700 0.97 Brenda Palmer 1730 1750 0.99 David Chen 1790 1750 1.02 Marti Edwards 960 1550 0.62 Kim McConnell 1910 1850 1.03 The above grid shows the orders per call that are received. It evaluates how successful the calls made by each sales person in the sales department have been. Using the above table, it is very clear that Adam Murphy had the highest orders per call. He had a ration of approximately one point zero nine. He is closely followed by Kim McConnell who had a ratio of approximately one point zero three. He is then followed by David Chen who had a ratio of one point zero two. The worst sales performer according to the orders per call table is Steve Rodgers who had zero point six. (McMullen, 2006) Improving performance of worst performers Considering sales growth, sales to quota, sales per account, average order size, sales expense and calls per day, it is vivid that Kim McConnell has the best performance compared to the other sales representatives. The sales department has Steve Rodgers, Marti Edwards and Vicki Doyle as the worst performers. If I were Jamie Walker, I would first of all have an open discussion with the worst performers and get their view concerning the factors that made them to have such low sales. This is because it is evident that sales are a very tough venture that is highly affected by very many factors. Therefore it is essential to get their point of view in this integral matter. I would advise them to have a close interaction with the best performers get to know what makes them excel. I would advise them to maximize the time they have at work towards making sales. Their sales can be greatly improved through good and effective communication with the customers. Once one customer is served well, they always give word of mouth to other customers concerning the service of a sales person. This can greatly result in increase in sales. It is also important for sales person to strategize and know who their best customers are and where they are situated. This will help them to narrow down to the best clients to deal with. It is good for the worst sales people to know that failure to make a sale on one day does not mean that the next day they will not sale. They need to be very resilient so that they overlook the previous day’s failures and look forward to a better tomorrow. They have to remember that the aim is to make a sale; therefore they have to have a very convincing language to the customers. This will play a big role towards improving the sales of the worst performers. Another important issue is to try and maintain customers by finding out how they are doing. It is very good to develop a friendship relationship with customers for they will always come back to the sales person when they are in need of a purchase. (Klapholz, 2004) Limitations of using only ratios Looking at the ratios only highly limits the vice president in American Food Processors to evaluate other factors that are related to performance. For instance, ratios indicate that Marti Edwards is among the worst performers, yet looking at other qualitative data indicates other integral factors that affected her performance. It is evident that Marti Edwards had a maternity leave combined with her two weeks of vacation. This of course affected the number of days that Marti Edwards went to work. The ratios do not look at these factors and it gives an un-balanced result on evaluation of her performance. A sales representative like Rick Randall was affected by his customers going bankrupt nine months into the year. This was not his making or his mistake but it just happened. The ratios do not look at such factors at all but only uses numbers. There are factors that are beyond the sales representatives that affect their work. These discrepancies also need to be considered before making a conclusion. How Jamie would improve performance evaluation process It is quite essential that Jamie Walker improves the performance evaluation process in American Food Processors. It is very essential that the vice president of AFP incorporate qualitative performance of the employees during the evaluation. It is quite essential that Jamie Walker convince AFP to consider other information affecting sales people before making a decision. I highly recommend that Jamie Walker uses a balance score card during the evaluation process. When using a balanced score card, a sales representative is evaluated on all available parameters. These parameters include their leadership skills while at work. It is quite essential that the vice president in American Food Processors Company also check the entrepreneurial mind and skills of every sales person. Creativity is also another parameter that has to be included in the evaluation of sales performance. Creativity is quite essential and needs to be evaluated in American Food Processors Company during sales person performance evaluation. Time management of the employees also has to be evaluated. In this case there needs to be book to be signed by employees on their arrival and departure time. This is because there are some employees who come to work late and leave early. This greatly affects their performance at the end of the day. (McMullen, 2006) It is important that the vice president in American Food Processors considers how far each sales person adheres to the set rules in this organization. Every organization normally has rules that have to be followed by the employees. There are times that some employees simply do not follow these rules and they can affect the entire Company’s reputation. Therefore this should be evaluated at the individual level. Teamwork is also very important in the sales profession. It normally produces great results in the sales department than when the opposite is emphasized. This parameter is also good and has to be included when evaluating the salesperson performance in American Food Processors Company. It will enable the vice president to know how best each sales representative can work in a team. This is whether the sales people have best, good or poor teamwork skills or not. Their communication skills also have to be evaluated because they are very essential in the sales department. This is in relation to how the sales person talks to customers. There are some sales people who lose customers simply because they have got very poor communication skills. This can be easily carried out by the management giving questionnaires on customers served by each sales person. This should be in relation to how he or she was served by the sales person. If all these parameters are considered, the evaluation of the employees’ performance in the sales department will be fair and just. This should be carried out in conjunction with the quantitative data to make a hundred percent and then rated across the board. (Reilly, 2005) Conclusion Using sales growth, sales to quota, sales per count, average order size and calls per day data, Kim McConnell emerges to be the best sales person. The worst is Steve Rodgers. If I were Jamie Walker, I would advise the worst performers to have good customer relations as this would enhance their performance. Some of the limitations of using only ratios are that they don’t look at the qualitative information that affects employees’ performance. I order to improve performance evaluation process, Jamie Walker needs incorporate qualitative performance combined with quantitative to make 100% and then rate across the board. He should also use a balanced score card in his evaluation. Reference: Klapholz, R. (2004): theory of Constraints for sales; New York Prentice Press; pp 34-89 McMullen, B. (2006): Theory of constraints for sales management; New York; Prentice Press; pp 56-90 Reilly, P. (2005): Value Added Sales Management; New York; McGraw Hill; pp 67-100 Rally, S. (2006); Evaluation of sales person performance; New York; Free Press; pp 100-110 Tracey, K. (2006): Sales Management in organizations; New York; Macmillan Press; pp 49-98 Read More