Evaluation of Selling Performance: A Study of Current Practices

Author(s): Donald W. Jackson Jr., Janet E. Keith and John L. Schlacter

Source: The Journal of Personal Selling and Sales Management, Vol. 3, No. 2 (Nov., 1983), pp. 4251
Published by: Taylor & Francis, Ltd.
Stable URL: http://www.jstor.org/stable/40471171
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42

JournalofPersonalSelling& Sales Management

Donald W. Jackson,Jr.is Professorof Marketingand DirectorofResearchin the CollegeofBusinessAdministrationat ArizonaStateUniversity.

He is a frequentcontributorto the businessliterature,
havingpublishedarticles
and theJournal0/theAcadin theJournal0/Advertising
Science
amongothers.Dr. Jacksonalso
emyofMarketing
serveson the EditorialReview Board of the Journalof
Marketing.He is an active consultantand has trained
NorthAmersalespeopleand sales managersthroughout
ica.

JanetE. Keithis a doctoralcandidatein the Department

She is a 1983ofMarketingat ArizonaStateUniversity.
84 recipientofa RichardD. IrwinDoctoralFellowshipand
an Academyof MarketingScience Scholarship.Her research interestscenteraround channels of distribution
and sales management.

is ProfesJohnL. Schlacter(Ph.D.,Ohio StateUniversity)

sor of Marketingat Arizona State University.He is involved in executive developmentprogramsat Arizona
Executives
and withSales and Marketing
StateUniversity
In addition,he is a consultantin boththe
International.
sectors,where he is a frequent
profitand not-for-profit
literature.
to themanagementand marketing
contributor

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November1983

43

A Studyof
EvaluationofSellingPerformance:
CurrentPractices
Jr.,JanetE. Keith,and JohnL. Schlacter
by DonaldW. Jackson,
Evaluationand controlof the sales organizationis
essentialin order to ensure that performanceof
salespeople contributesto overall corporateeffievaluationis
Performance
ciencyand profitability.
theprocessby whicha sales managermonitorsand
appraisesthe performanceof the salesforce.Judgmentaldecisionsrelatedto promotion,compensaand retentionof the salesforceare
tion,transfer,
based upon data obtainedin performance
appraisal
(Cocanaugherand Ivancevich1978,Kearney1976).
The high performershould receive recognition
throughincreased compensation,promotion,or
awards. The unsatisfactory
performershould not
should be counseled and,
receivethis recognition,
in the extremecase when necessary,should be
dismissed(Jolson1977).
Evaluationand controlof the salesforceis also
advantageousfortheindividualsalesperson,sinceit
providesthenecessaryfeedbackthathelpshim/her
to adjustto management'sexpectations.In fact,Jolson (1977) assertsthat "the ideal purpose of the
performanceevaluation is to uncover the areas
measureswillservetoimprovethe
wherecorrective
salesforcemember'sfutureresults."
The sales managementliteratureon performance
evaluationincludesconceptualor empiricalstudies
aimed at developingmethodologiesforeffectively
evaluatingsalespeople,studieswhichinclude evaluationas partofa largerstudyofsales management
practices,and studieson salesforceevaluationpractices. Since the literatureincluded few studies of
currently
employedevaluationmethods,the study
will examine the sales performance
here
reported
evaluareviewprocessitself,analyze performance
tionmethodsactuallyutilized,and offersuggestions
evaluation.
in performance
forimprovements
BackgroundLiterature
Several conceptual and empiricalstudies have
soughtto determinemethodologiesforeffectively
evaluatingthe salesforce.Behrman and Perrault
(1982) reviewed issues relevantto measuringthe
of salespersonsand presenteda selfperformance
scale developed foruse in inreportperformance
measureof perdustrialsales jobs. The self-report
formancewas consistentwithmanagerevaluations,

data, internalcompanyratings,and a
profitability
need forachievementrating.
Cocanaugherand Ivancevich (1978) presenteda
procedurefordevelopinga "BARS" (behaviorally
anchored ratingscale) evaluation systemfor the
fieldsalesforce.The systemwas based on thepremise thatmanagementcan determinewhich behaviors are associatedwith desiredsales performance,
and thatthesebehaviorscan be measuredor rated
forindividualsalespeople.
Jacksonand Aldag (1974) advocatedmanagement
by objectives(MBO) as a methodformanagingthe
salesforce.MBO involves settinggoals with the
to reachthesegoals,
salesperson,planningstrategies
and jointperformance
appraisal.The authorsmaintained thatMBO providesbetterand more clearly
definedperformance
objectivesand appraisalcriteria, therebyreducingambiguityin desired sales
performance.
and Stamper(1972)developed
Cravens,Woodruff,
and evaluatingsales territory
a modelforpredicting
was measured
Territory
performance
performance.
in termsof total unit sales. Determinantsof sales
volume includedin the model were (1) marketpoworkload,(3) salespersonexpetential,(2) territory
and effort,
rience,(4) salespersonmotivation
(5) companyexperience,and (6) companyeffort.
Cothamand Cravens (1969) presenteda method
ofanalysiswithwhichsales managerscan compare
both
a varietyof dimensionsof sales performance
withinand betweensales groups.The authorsmaintained thatif multiplemeasuresof sales performis evaluatedfrom
ance are utilizedorifperformance
data generatedacross a varietyof diverse selling
situations,then a methodis needed to make these
data more comparable.They suggestedusing the
standarddeviation,a measureofvariabilityin performance,to standardize performancemeasures.
This measure allows seeminglyincomparablepercomformancedata to be adjustedand performance
parisonstobe made acrossdiversesellingsituations.
Some studiesincludedevaluationofthesalesforce
as part of largerstudies of sales managementor
marketingpractices.For example, Dubinskyand
Barry(1982)examinedtoolsand practicesemployed
by chiefsales executivesin industrialcompanies.
The study explored seven key managerialareas,

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44

JournalofPersonalSelling& Sales Management

includingsupervisionand evaluation.Results disclosed the extensiveuse of expense reports,sales

managercoachingand,to a lesserextent,new business reportsand call/activityreportsto supervise
thesalesforce.Largecompanieswere morelikelyto
tool.
use management
byobjectivesas a supervisory
Performance
evaluationfocusedprimarilyon sales
volume, though large organizationswere more
profit,
likelyto also utilizepersonalcharacteristics,
and presellingactivitiesto evaluatesales personnel.
Finally,mostcompaniesused an annual performance appraisal.
Jackson,Ostrom,and Evans (1982) surveyedinto investigatethe extentto
dustrialmanufacturers
whichcontrolsegmentalanalysiswas used, and to
ascertainthemeasuresused to evaluatecontrolsegControlsegmentsexaminedinmentperformance.
cluded products,customers,sales territories,
geographicalareas, and order sizes. With respectto
cited
evaluationofsalespeople,the mostfrequently
Few
recriterion
was
sales
volume.
performance
measures
spondents reported using profitability
to profitor net profitin persuch as contribution
formanceevaluation.
Jacksonand Schlacter(1980) exploredthe use of
management
byobjectives(MBO) amongsales manof
wholesaling,retailing,and
agers manufacturing,
serviceorganizations.
The authorsfoundthatmost
did formally
evaluatesalespersons.The
respondents
most frequentlyused performancecriteriawere
such as attitude,
salesvolumeand qualitativefactors
productknowledge,and sellingskills.
Onlyone studyfocusedspecificallyon salesforce
evaluationpracticesofsales managers.Darden and
French(1970) examinedfactorsthat cause a sales
managertoadopta givensetofsalesforceevaluation
criteria.They notedthe absence of a universalset
ofevaluationcriteriawhich are weightedsimilarly
by sales managers.They concludedthatsalesforce
conappraisalcriteriawerea resultoffirm-industry
and productfeaditions,executivecharacteristics,
tures.
evaluThe nextsectionreviewstheperformance
ationprocessitself,delineatingthe stepsnecessary
in an effective
evaluationprocedure.
The PerformanceEvaluationProcedure
evalFigure1 depictsa modeloftheperformance
uationprocessthatis designedas an aid in underevaluationand
standingthepracticeofperformance
the steps reflectedin the literatureon evaluating
salespeople.The modelsuggeststhatthe evaluation
procedurebegins by definingthe bases on which
sales personnelwill be evaluated.Once thesebases

Figure1
EvaluationProcedure
The Performance
SELECT BASES FOR EVALUATION
Quantitative
Qualitative
-Output
- Input
' f

SET PERFORMANCESTANDARDS OR OBJECTIVES

Set by Management
Participative
) f

| MONITOR ACTUAL PERFORMANCE 1

| REVIEWPERFORMANCE
|
H.
andRichard
WilliamJ.Stanton
Source:Adaptedfrom
5th
the
Sales
Buskirk
ed.,
Force,
of
Management
(1978),
D. Irwin,595-606.
IL: Richard
Homewood,
standardsor objectives
are established,performance
mustbe set to determinethe level of performance
desired on each base. Next, actual resultsof the
salespersonare monitoredand, in the final step,
reviewedwiththe salesperson.
DeterminingPerformanceBases
A numberof bases could be used to evaluate a
bases may
Performance
salesperson'sperformance.
includeconsideration
ofbothquantitativeand qualitative variables. Quantitativevariables include
both outputor resultsfactorsand inputor efforts
factors.Their virtueis thattheycan be objectively
measuredto give an indicationof level ofperformance (Robertsonand Bellenger1980).Outputfactors
include variablessuch as sales volume,numberof
and numberoforderstaken.Input
accounts,profit,
on
the
other
hand,are reflectedin variables
factors,
such as numberofsales calls, sellingexpenses,and
variousancillaryactivitiesrequiredofthe salesperson such as numberof requiredreportsturnedin,
numberof customercomplaintsreceived,training
meetingsconducted,etc.
Performance
appraisalsystemsutilizingonlyoutfactors
maybe misleading.These systemsignore
put
environmentalfactorsover which the salesperson
has littlecontrolyet which may influenceresults.
Factorssuch as theeconomyand variationsin product qualitymaydetermineeffectiveness
as muchas
individualsalespersoneffort.Thus, appraisal systemsthatare used to dispenserewardsor to suggest

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45

November1983

in individualbehaviorshouldalso
improvements
has
includeinputfactors
overwhichan individual
can change(Kearandwhichan individual
control
or inputsis
ney1976).Evaluationbased on effort
outon
the
that
favorable
further
justified
grounds
of
favorable
effort
be
a
function
Qolson
putsmay
1977).
bases shouldbe derivedfromand
Performance
related
thesalesperson's
to
job description.
closely
Whereeffort
is closelyrelatedto results,output
utilizedin perfactors
maybe moreappropriately
beformance
evaluation.Wherethe relationship
doesnotexist,inputfactors
tweeneffort
andresults
Forinstance,
whenselling
maybe moreappropriate.
it
installations,
may take several
largecomputer
to
In
this
close
a
sale.
case,
years
utilizing
output
factors
alone to evaluatethe salespersonmaybe
misleading.
Another
set of variablesthatcan be utilizedto
evaluateperformance
are qualitativein nature.
are
assessedbysales
bases
Qualitative
subjectively
and
include
characteristics
as attisuch
managers
abiltude,product
knowledge,
appearance,
planning
etc.
ity,
basesare used in performAlthough
qualitative
anceevaluation,
are
they notwithouttheirlimitations.First,sincethesefactors
are subjectively
asthere
is
to
the
sales
mansessed,
nothing preclude
orbiasesinto
introducing
agerfrom
preconceptions
theevaluation.
factors
allowfor
Second,qualitative
differences
ofopinionsuchas whenthesalesperson
and sales managerdisagreeoverthe salesperson's
factors
cannoteasily
attitude.
Thus,sincequalitative
thesefactors
shouldbe
be relatedto performance,
evalusedas supplementary
evidenceinsalesperson
uation.
Standards
Performance
Establishing
evaluation
The secondstepin the performance
orobjecstandards
is
to
set
performance
procedure
dethelevelofperformance
tives.Thisdetermines
siredforeachofthebasesusedtoevaluateperformance.
Performance
standardsshouldbe specificand
whetherstated
in orderto determine
measurable
and
achieved
are
(Jackson
objectives actuallybeing
for
would
seem
to
This
speak quantiAldag1974).
ratherthan
tativebasesforevaluating
performance
harder
to
which
are
bases
specifyor
qualitative
measure.Nevertheless,
Jolson(1977)assertsthata
certainamountofinformal,
subjectiveappraisalis
anddesirable.
bothinevitable
or
Performance
levelsmaybe setbymanagement
maybe arrivedat jointlybetweenmanagersand

in setbythesalesperson
salespeople.
Participation
levels
tends
to
more
comgenerate
tingperformance
mitment
thusensuring
and to increasemotivation,
thatworkactivities
lead to statedobjectives
(JacksonandAldag1974).
Performance
Monitoring
is to
The thirdstepin theevaluationprocedure
This maybe accommonitor
actualperformance.
inrecords,
plishedthrough
monitoring
accounting
or
call
voices,orderforms,
reports;
expensereports,
informal
feedbackfromothersalespersons
through
andfrom
andthrough
directobservation
customers;
ofthesalesperson
the
sales
orsalesstaff.
by
manager
and
other
forms
of
data
can
Computers
processing
maketheaccumulation
ofthisinformation
timely
andavailableat a relatively
lowcost.
ReviewingPerformance
The finalstep in performance
evaluationis to
reviewperformance
withthesalesperson.
Theevaluationinterview
an
forfeedprovides opportunity
backandallowsforclarification
ofdifferent
perceptionsabout performance.
Actual performance
is
to
the
benchmark
standards
or
compared
objectives
in steptwo,above.Thus,theperformestablished
ance reviewis designedto correctdeviations
betweenactualand desiredresultsand to communiifdevelcatedesiredbehavior.It is also necessary
of
the
is
to
take
opment
salesperson
place.
Theevaluation
considerable
time
processrequires
andeffort
on thepartofboththesalesmanager
and
thesalesperson.
Performance
standards
mustbe fair
and equitableto ensureacceptance.Performance
inordertobe
appraisalmustbe accurateandtimely
useful.
In orderto examinetheperformance
evaluation
in U.S.
practices
actuallyutilizedbysalesmanagers
and distributing
a
manufacturing
organizations,
The studyaddressed
a numstudywas undertaken.
berofquestions,
including:
1. Whatbasesofperformance
are usedin performanceevaluation?
2. Whatprocedures
are used to evaluateperformance?
3. Howmuchparticipation
is inbysalespersonnel
cludedintheevaluation
process?
4. Whatsourcesofinformation
are usedto monitor
performance?
reviewperformance?
5. Howdo firms
reviewprocessform
The stepsin theperformance
a logical structureforthe study and providethe
organizationforthe restofthe paper.

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JournalofPersonalSelling& Sales Management

46

Table I

ProfileofRespondents
TypeofBusiness
ofindustrial
Manufacturer
goods
Manufacturer
ofconsumergoods
Wholesaler
Retailer
Services
Total

Percentage
44
16
9
4
_27
100

AnnualDollarSales Volume(in 000)

Over$100,000
$51,000-$100,000
$ll,000-$50,999
Under$11,000
Total

Percentage
46
12
27
Jj>
100

Position
Sales Management
Vice presidentsales
Nationalsales manager
Regionalsales manager
Zone sales manager
Fieldsales manager
titles
Othersales management
Total

Percentage
3
4
34
6
37
16
100

The Study
The questionnaireasked respondentsto indicate
bases theyactuallyused to evaluthe performance
ate salespeopleby placinga check nextto the base
on thequestionnaire.Questionswere also
identified
asked about settingperformancestandards,moniand reviewingperformtoringactual performance,
ance. Finally,demographicdata were collectedin
of the sample
orderto describethe characteristics
was then
instrument
The
included in the study.
of
sales
managersattendinga
pretestedon a group
International
Executives
meetingofSales Marketing
be
would
to ensure that questions
clearly underthat
and
stoodby respondents
questionalternatives
were relativelyexhaustive.
The final instrumentwas administeredto 213
participantsin sales managementseminars conductedby Sales and MarketingExecutivesInternationalin Atlanta;Chicago;Dallas; Los Angeles;New
York; and York,Pennsylvania.All participantsrea wide
spondedtothequestionnaireand represented
mansales
and
firm
of
sizes,
spectrum businesses,
of
Characteristics
respondents
agementpositions.
and the firmsthey representedare presentedin
Table 1. Overone-halfofthebusinessesrepresented
were manufacturersof industrialand consumer
goods,and about one-halfof the businesseshad an
annual sales volumeofover$100 million.
Bases UsedforEvaluation
Bases utilized in performanceevaluationdefine
will be evaluated.
the areas in which performance

Of the quantitativebases used by respondentsin

their evaluation procedures,more emphasis was
bases.
placed on outputbases thanon inputor effort
in Table 2 indicates,outputbases
As theinformation
employedby aboutone-halfor moreoftherespondentsin theevaluationprocessincludedsales volume
in dollars,sales volume to previous year's sales,
numberof new accounts,sales volumeby product
or productline,amountofnew accountsales, sales
volume in units,sales volume to dollarquota, and
sales volumeby customer.
Of particularnote was the lack of reliance on
profitmeasures to evaluate performance.Despite
as a
the call in the literatureforusingprofitability
measure of salesperson performance(Schiffand
Schiff1967), it did not seem to be utilized very
widely in practice. The most commonlyutilized
profitmeasurewas net profitdollars,employedby
only 26 percentof the respondents.In addition,
despitethe factthatsalespersonshave morecontrol
thannetprofitdollars,only
overprofitcontribution
in
14 percentof the firmsused profitcontribution
evaluation.
performance
Table 2
Evaluation
in Performance
Used
Bases
Output
Base
Sales
Sales volumein dollars
Sales volumeto previousyear'ssales
Sales volumebyproductor productline
Amountofnew accountsales
Sales volumein units
Sales volumeto dollarquota
Sales volumeby customer
Sales volumeto marketpotential
Sales volumeto physicalunitquota
Sales volumeperorder
Sales volumeby outlettype
Sales volumepercall
Percentageofsales madebytelephoneor mail
MarketShare
Marketshareperquota
Accounts
Numberofnew accounts
Numberofaccountslost
Numberofaccountson whichpaymentis overdue
Numberofaccountsbuyingthefullline
Profit
Netprofit
dollars
Returnon investment
Netprofit
contribution
Grossmargin
Grossmarginpersales
New profit
as a % ofsales
Orders
Order-callratio
Netordersperrepeatorder
Numberofcancelledordersperordersbooked

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Percent
Using
81
78
69
58
54
54
49
34
24
15
11
10
8
18
71
43
22
16
26
16
14
14
14
13
26
17
14

47

November1983

Table3
Evaluation
InputBasesUsedin Performance
Base

Percent
Using

Calls
Calls perperiod
Numberofcalls per numberofcustomers(by
productclass)
SellingExpense
Sellingexpenseto sales
Sellingexpenseto quota
Averagecostpercall
AncillaryActivities
Numberofrequiredreportsturnedin
Numberofcustomercomplaints
Trainingmeetingsconducted
Numberofletters/phone
calls to prospects
Numberofdemonstrations
conducted
Numberofservicecalls made
Numberofdealermeetingsheld
Advertising
displaysset up

57
17
41
22
13
44
31
28
25
25
24
15
12

Table4
Evaluation
BasesUsedin Performance
Qualitative
Base
Attitude
Productknowledge
Sellingskills
Appearanceand manner
skills
Communication
Initiative
and aggressiveness
Planningability
Timemanagement
Knowledgeofcompetition
Judgment
Creativity
Knowledgeofcompanypolicies
and submission
Reportpreparation
Customergoodwillgenerated
Degreeofrespectfromtradeand competition
Goodcitizenship

Percent
Using
90
89
85
82
81
80
78
73
72
69
61
59
59
50
34
23

Withrespectto inputbases utilizedin theperformance

appraisalprocess,Table 3 indicatesthat
extent
toanysignificant
fewofthesewereemployed
was
calls
one
perperiod,
Only base,
byrespondents.
use
Some
firms.
the
of
one-half
usedbymorethan
eviwas
evaluation
in
ofexpensedata performance
utilized
oftherespondents
denced.Almostone-half
in
their
to
sales
appraisalprocess.
sellingexpenses
fewfirmsmeasuredexpenses
However,relatively
in relationto quotaor calculatedaveragecostper
addifewrespondents
call.Furthermore,
employed
such
activities
ofancillary
measures
tionalobjective
shareperquota,numberofrequiredreas market
meetturned
in,customer
training
complaints,
ports
to
calls
prospects,
ings conducted,letter/phone
demonstrations
conducted,service calls made,
setup.
dealermeetings
held,oradvertising
displays

baseswerenotsystematically
Whilequantitative
evaluation
utilizedforperformance
byall respondents,qualitativebases were heavilyreliedupon.
bases
Table 4 indicatesthatalmostall qualitative
were used by
listedin the surveyquestionnaire
sales manmorethanone-halfof the responding
inmostcommonly
agers.Subjectiveassessments
intothisprocessincludedattitude,
prodcorporated
uctknowledge,
sellingskills,appearanceand manandaggressiveskills,initiative
ner,communication
ness,andplanning
ability.
Standards
Performance
Setting
The nextset ofquestionsexaminedtheprocess
wereestablished.
standards
bywhichperformance
Mostrespondents
specific
(91 percent)established
who
Ofthosemanagers
forsalespersons.
standards
72percent
didestablish
standards,
formally
assigned
and83 percent
totheirterritories,
incorpoweights
dataintotheprocess.Data mostfreratedterritory
on currentand
quentlyconsistedof information
and
customers,
pastsaleshiscompetition,
potential
and current
unit
volume
and
dollar
including
tory,
share.
market
As statedearlier,
bythesalesperson
participation
in settingstandardsensuresthat objectivesare
Results
andacceptedbythesalesperson.
understood
in Table 5 indicatethatsalespeoplehad totalor
withno
standards
forsetting
responsibility
primary
ofthe
in 3 percent
orlittleinputfrommanagement
stanof
the
In
55
firms.
firms,
percent
respondents'
and the
dards were jointlyset by management
23 percentoftherespondents
Another
salesperson.
in the
that
salespeopleat leastparticipated
replied
decifinal
the
made
management
although
process,
statedthat
sion.Only8 percentoftherespondents
stanin setting
thesalespeoplehadno involvement
dards.
Table5
ofSalespeople
Participation
orObjectives
Standards
in Setting
Participation
Salespeopleset theirown objectiveswithno inputsfrommanagement
Salespeopleset theirown objectiveswithsome
inputsfrommanagement
Salespeopleand managementjointlyset objectives
Managementsets objectiveswith some inputs
fromsalespeople
Managementsetsobjectiveswithno inputsfrom
salespeople
No response

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Percent
Using
0
3
55
23
8
11

48

JournalofPersonalSelling& Sales Management

Table 6
SourcesofInformation
Used in SalespersonEvaluation
Source

Percent
Using
56
Printedformforperformance
evaluation
50
foreach territory
Analysisofcomputerprintouts
48
Analysisofcall reports
44
Other(supervisory
calls,feedbackfromclients)

Table 7

Review
FrequencyofPerformance
FrequencyofReview
Weekly
Monthly
Quarterly
Semiannually
Annually

Percentage
ofRespondents
5
8
28
26
33

MonitoringActualPerformance
In orderto have information
available on which
toevaluateperformance,
a formalprocedurefordata
collectionmustbe instituted.Sources of data used
evaluationinby respondingfirmsforperformance
cluded call reports,computerprintoutsof territory
and accountsales, and, to a lesser extent,supervisorycalls and feedbackfromclients.Table 6 details
the proportion
ofrespondentsutilizingeach source
ofinformation.
As can be seen fromthe table,all of
the sourcesare used by approximately
one-halfof
therespondents.
ReviewingPerformance
Evaluationofperformance
involvescomparingresults with objectivesto determineif success has
been achieved. Eight-eight
(88) percentof the respondentsreportedthata formalevaluationof the
In a vastmajorityofthe
salespersonwas performed.
cases (83 percent),this was accomplishedthrough
an evaluationinterviewin which the salesperson
was evaluatedon his or herperformance.
However,
as evidencedin Table 7,thefrequencyofevaluation
variedfroma weeklyto an annual evaluation.Most
respondentsindicated that evaluation was either
done annually(33 percent),semiannually(26 percent),or quarterly(28 percent).
DemographicFactorsInfluencing
PerformanceEvaluations
In orderto examinethevariability
ofperformance
evaluationacross different
of
types firms,the data

were analyzed by several corporatedemographics.

practiceswerecomparedbetweenlarge
Specifically,
and small firms,between industrialand consumer
and between manufacturingand
manufacturers,
service firms.Contingencytables were developed
on questionsregardingsettingstandards,assigning
a formal
weightsto thestandards,and incorporating
Chi Square testsof inevaluationof performance.
dependencewere performedto determineif these
practicesdependeduponthesize ortypeoffirm.All
at the 5 perwere significant
reportedrelationships
centlevel ofsignificance.
In addition,testswere conductedcomparingthe
offirmswithineach industrytypeutilizproportion
bases. Again,comparithe
various
ing
performance
sons were made among large and small firms;inmanufacturdustrialand consumermanufacturers;
ofusingthe
likelihood
firms
on
the
and
service
ing
results
bases. Only significant
variousperformance
are reported.1
Analysescomparinglargerfirms(sales over $10
million)withsmallerfirms(sales under$10 million)
revealed that evaluationproceduresand performance bases utilized did not vary by firmsize. No
were foundamong largerand smaller
differences
stanto setperformance
firmsin relativepropensity
dards,assignweightstothosestandards,incorporate
into the standards,or
data about sales territories
evaluate
formally
salesperson performance.Furto use thevariousperformthepropensity
thermore,
ance bases identifiedin the questionnairealso did
notvaryby firmsize.
Similarly,evaluation procedures did not vary
No
amongindustrialand consumermanufacturers.
were foundin likelihoodofsettingstandifferences
standards,and in
dards,in factorsused to formulate
evalualikelihoodof havinga formalperformance
differences
tionprogram.However,two significant
bases utilized
existedwith respectto performance
in the evaluationprocess.Consumermanufacturers
to
were morelikelythan industrialmanufacturers
use sales volume by outlet type and number of
advertisingdisplaysset up as performancebases.
1T-testsof two
were performed
populationproportions
base
withthe level of significanceforeach performance
withina
adjustedso thatthe overalllevel ofsignificance
comparisonwas 5 percent.This
particularindustry-type
in theproportion
of
procedureeliminatesany differences
base thatmaybe due
firmsusinga particularperformance
to chance alone. Since 56 bases were comparedforeach
comparison,a p-valueof .05/56
particularindustry-type
= .00089 was requiredforsignificance.For additional
discussionof this technique,see Neterand Wasserman
(1974).

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November1983

49

Sinceconsumermanufacturers
are morelikelythan
industrialmanufacturersto distributeindirectly
througha varietyofchannels,thesebases would be
moreappropriate
forthe consumermanufacturer.
the
Finally, analysesrevealedseveraldifferences
and service firmsin proceamongmanufacturers
dures and bases used in performanceevaluation.
in theirtendAlthoughtherewere no differences
to
set
standards
for
ency
salespeople or to use a
formal evaluation process, manufacturerswere
morelikelythanservicefirmsto assignweightsor
to salespeople'sterritories
and to incorpopriorities
ratedata abouttheterritory
whensettingstandards.
In addition,manufacturers
and servicefirmsdifferedwith respectto bases used in performance
evaluation.As indicatedin Table 8, manufacturers
were more likelythan service firmsto utilize the
output bases, sales and profit,when evaluating
salespeople.Sales and profitbases moreoftenused
includedsales volumetoprevious
bymanufacturers
sales
volume
to marketpotential,sales
year'ssales,
volumeby customer,sellingexpense to sales, and
sellingexpenseto quota. The onlyinputbase manufacturers
were more likelythan service firmsto
use was trainingmeetingsconducted.Finally,manufacturers
were more likelythan service firmsto
use two qualitativebases- knowledgeof competi- when
tionand reportpreparationand submission
evaluatingsales performance.
Servicefirms,
on theotherhand,weremorelikely
to use certainaccount,orderand call bases to evaluate performance.
Bases morelikelyto be used by
servicefirmsincludedthe outputbases numberof
accountslost and numberof cancelled ordersper

ordersbooked,and the inputbases calls per period

and number of letters/phonecalls to prospects.
Thus, althoughmanufacturersand service firms
tended to use both outputand inputbases in the
evaluationprocess,theydiffered
withrespectto the
typeof outputand inputbases used. Furthermore,
manufacturers
were morelikelythan servicefirms
to use qualitativebases in performance
appraisal.
Conclusions
The resultsnoted above are subject to threecaveats.First,thesampleofsales managersselectedto
participatein the studywas not drawn randomly
ofsales manand,hence,maynotbe representative
in
Sales
executive
agers general.
managersattending
seminars
be
more
development
may
sophisticated
about performanceevaluation than their absent
due to theircompanies'interestin and
counterparts
theirexposureto such programs.Thus, resultsreported may reflecta positive bias in the use of
evaluationmethodsamongsales manperformance
in
agers general.
Second, the data were collectedover a one-year
economic
environmental,
period,and so different
factorsmayhave affected
these
However,
responses.
economicfactorswould be no morelikelyto affect
one typeoffirmthananother,so thatdifferences
in
evaluationproceduresamongfirmsare unlikelyto
be attributable
to environmental
factors.
Third,while all participantshad responsibilities
in the sales area, not all held the title"sales manager."Those not directlyinvolvedin salesforcesupervisionmay not have been intimatelyfamiliar

Table 8
in Performance
Bases Used
Differences
vs. ServiceFirms
Manufacturers
Base

Percentage of
Manufacturers
Using

Percentage of
Service Firms
Using

p-value*

<.000
58
86
Sales volume to previous year's sales
<.000
44
75
Sales volume in units
<.000
42
13
Sales volume to marketpotential
<.000
17
61
Sales volume by customer
<.000
75
34
Number of accounts lost
<.000
7
30
Number of cancelled orders per orders booked
<.000
81
48
Calls per period
<.000
19
50
Selling expense to sales
<.000
6
30
Selling expense to quota
<.000
60
12
Number of letters/phonecalls to prospects
<.000
9
36
Training meetingsconducted
<.000
55
81
Knowledge of competition
<.000
42
70
Reportpreparationand submission
* Differencesare
significantat the 5 percent level of significanceforthe overall set of comparisons. An individual p-value is significantifp
< .05/56 = .00089. In total, 56 bases were compared, although not all bases are presented in this table. For furtherdiscussion of this
technique, see Neter and Wasserman (1974).

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JournalofPersonalSelling& Sales Management

50

with the specifics of the performance review process. This event seems unlikely, however, since all
respondents held ultimate responsibilityfor evaluating performance.
Despite these limitations,several conclusions can
be drawn fromthe study. First,although literature
on salesforceevaluation has called forusing specific,
measurable bases in the performanceappraisal process (Jackson and Aldag 1974), sales managers
tended to place a great deal of emphasis on qualitative bases rather than quantitative bases. This emphasis was confirmedby responses to the question,
"What five factors do you use and consider to be
most important in the evaluation of salespeople?"
Criterianamed most oftenincluded fourqualitative
bases - attitude, aggressiveness, judgment/decision-making ability, and planning- and only one
quantitative base - sales volume.
Second, only a narrow set of quantitative bases
were used by most firmsin the evaluation process.
Quantitative bases employed tended to be sales related, whereas significantmeasures of success such
as net profit,gross margin, and profitcontribution
were less frequentlyutilized. Furthermore,of these
profitmeasures, net profitrather than profitcontribution was used most oftendespite the fact that the
salesperson has relatively little control over net
profit.In addition, measures of efficiencysuch as
selling expense to quota or average cost per call
were seldom utilized, although personnel expense
is oftenthe most significantexpense category fora
firm.
Third, evaluation of the salesperson on a narrow
range of selling activities suggests a relatively restrictedview on management's part of the salesperson's responsibilities.When performancebases are
limited, salespeople tend to concentrate on only
those areas in which they know they will be evaluated and rewarded. For example, if profitability
measures are not used to evaluate salespeople, it
followsthat salespeople are more likely to push fastmoving,low-marginproducts.
Given these findings,it may be useful for sales
managers to think through all of the activities inherent in the sales job and to develop more quantifiable bases for evaluation of sales performance.
Quantifiable bases enable more accurate performance assessment, enhance the credibilityof the performanceevaluation process, and help direct salesforceactivitiesto increase contributionsto the firm's
marketingand corporate objectives.
Sales managers should create performancebases
to reflectthe entire range of a salesperson's responsibilities. These bases should recognize output vari-

ables such as profit,accounts, and orders as well as

sales. Bases may also recognize input variables such
as call rate, days worked, selling expense, market
share, and various ancillary selling activities such
as number of required reportsturned in, number of
customer complaints, trainingmeetings conducted,
etc. Recognition of input is particularly important
when effortis not directly related to output as it
provides a more equitable way to reward or improve
salesperson behavior.
Finally, sales managers should place less emphasis
on subjective, qualitative evaluation bases. These
bases are difficultto assess and are subject to bias
and misinterpretation.To the extent they are employed, they should be utilized as complementary
ratherthan primarycriteria.
With regard to setting performance standards,
mostsales managers did establish objectives fortheir
salespeople, and most did so in conjunction with
their salespeople. However, there were still some
firmsin which standards were set unilaterally. Perhaps in these companies this management style is
effectiveand justifiable. However, an opportunity
would seem to exist to increase salesperson motivation and commitmentto performanceby involving them in the settingof performancestandards.
In the area of monitoring actual performance,
resultsindicated that various sources of information
were examined, including printed forms,computer
printouts,call reports and joint calls. However, it
may be appropriate for firmsto expand their data
collection. None of the sources of informationincluded in the study were utilized by more than 56
percent of the firms.Again, an opportunityis perhaps being overlooked to increase the validityof the
evaluation process by gatheringmore information.
Finally, with respect to performance review, a
majorityof the firmsused a performanceevaluation
interview. Almost 25 percent of the firms,however,
did not take advantage of this opportunityto share
results with salespeople. In these cases, valuable
two-way feedback may have been lost. The frequency of performanceevaluations also varied significantlyfromfirmto firm,rangingfromweekly to
yearly. There are several possible reasons for this.
First,sales jobs of the respondents' firmsmay have
varied enough to make the frequencies of evaluations justifiable on an economic basis. Second, sales
managers may have responded to the questions from
with some referringto
differentframes-of-reference,
informal, weekly meetings and others to formal,
year-end reviews. The important point, nevertheless, is that performance reviews should be done
systematically. There should be a predetermined

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51

November1983

timeframeforreviewthatis knownby the salespeople,and the timeperiodshould be determined

by the natureof the job ratherthan by some arbitrarymethod.
In general,theoverallresultsofthe studysuggest
thatsalesforceperformancereview takes place in
manner.More
an unsystematic
and oftenarbitrary
to the point,sales managersmay be missingan
tobetterdefinesales jobs,setstandards,
opportunity
and monitorand reviewperformance.
Jolson(1977)
noted that the evaluation procedureis improved
suchthattheevaluation
whenitbecomessystematic
is complete,freeof personalbias, consistentover
time,and comparablein scope forall those being
assessed.In addition,such a systemcan ensurethat
the sales job is definedproperly,can serve as an
earlywarningsystemto spotdeviationsin performofthe salesforce
ance,can ensurethatperformance
to marketingand corporateobjecis contributing
to sales personnel.
tives,and can act as a motivator
The data in this study indicate that salesforce
evaluation proceduresutilized in practice differ
somewhatfromthoseespousedin thesales manageThe discrepancymaybe caused by
mentliterature.
the factthatproceduresadvocatedin the literature
to operationalize.The lack ofemphasis
are difficult
on quantitativemeasuresand the overemphasison
qualitativemeasureswould certainlyseem to suggestthisexplanation.Carefulselectionof performance criteriaand evaluationand rewardofthesalesand performance
may
personon the basis of effort
involvemorethan sales managersfeel qualifiedto
handle.Whateverthe explanation,the resultssuggestthata moresystematicevaluationprocessmay
improvethevalidityofsalesforceevaluation.
TheauthorswouldliketothankSales and Marketing
ExecutivesInternational
fortheircooperationin the
studyand wouldlike to acknowledgethe valuable
suggestionsofferedby anonymousreviewerson an
earlierdraftofthisarticle.
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