Why it’s crucial to rethink your sales reps’ annual reviews (part 1)
At many companies, the start of the year is the time when employees take part in annual reviews led by HR departments that often put a lot of energy into reminding employees how important the exercise is, and explaining the process and deadlines.
For those in sales, these annual reviews—even when backed by the sleekest, most user-friendly HRIS software—are often viewed as a somewhat laborious administrative task that elicits little in the way of enthusiasm or motivation. There are several reasons for this:
- The skills matrices used are generic, far removed from the realities of the job, and rarely convey the full array of operational duties specific to the sales role and the business sector.
- Sometimes managers themselves are unwilling to properly prepare for the exercise and set aside ample time for discussion during the review; they often give input on performance rather than evaluate the seller’s skills.
- Lastly, the exercise is frequently viewed as a chore that has to be done at the behest of HR before moving on to what the sales rep is really waiting for: a reappraisal of their pay based on their past sales performance. Managers often fail to draw a clear line between the discussion of the skill evaluation and the time for assessing the degree to which targets were reached and the resulting decision on a jump in fixed and variable pay.
Faced with these difficulties, an increasing number of companies are simply nixing this ritual of skill evaluation and opting to focus the conversation between employee and manager on an assessment deemed more productive: comparing the past year’s results to the targets set and establishing new goals for the year to come.
Three risks arise from abandoning skills evaluations:
- Firstly, it’s an admission of weak management—tolerating a problem instead of trying to find solutions.
- Secondly, in this utterly uncertain, shifting environment impacted by the rise of technology and remote work, conducting an annual skills review, at the minimum, is a useful exercise vital to tailoring skills to the changes underway.
- Lastly, doing away with this exercise prevents you from factoring in the skills required for new business models taking shape, customer relationships being formed, innovative sales techniques, emerging approaches, etc. That creates the huge strategic risk of a mismatch between the company’s new business priorities and the resources available to meet them.
Not to mention the obvious effect on hiring decisions, which become random at best without a robust, up-to-date skills matrix. Assessing sellers’ skills during annual reviews or sales transformation project is becoming a crucial focus for many companies.
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