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Research Brief Measuring Sales Manager Performance Research underwriter June 2015

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Research Brief

Measuring Sales Manager Performance

Research underwriter

June 2015

Copyright © 2014-15 the Sales Management Association. All rights reserved.2

First published June 2015.

Sales Management Association 1440 Dutch Valley Place NE Suite 990 Atlanta, Georgia 30324 USA +1 (404) 963-7992 http://salesmanagement.org

Copyright © 2014-15 The Sales Management Association, Inc.

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publishers.

Research Brief: Measuring Sales Manager PerformanceThis document has been prepared by The Sales Management Association for use by its members. The Sales Management Association has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and The Sales Management Association is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Sales Management Association nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by The Sales Management Association or its sources, or b) reliance upon any recommendation made by the Sales Management Association.

Descriptions or viewpoints contained herein regarding organizations profiled in this material do not necessarily reflect the policies or viewpoints of those organizations.

About The Sales Management AssociationThe Sales Management Association is a global, cross-industry professional organization for sales operations, sales effectiveness, and sales leadership professions. We provide our members with tools, networking, research, training, and professional development.

Our research initiatives address topics relevant to practitioners across a broad spectrum of sales effectiveness issues. Our research is available to members on our site at www.salesmanagement.org.

In addition to research we publish best practice tools, archived webcasts, and expert content. Visit our website at http//salesmanagement.org to learn more.

Author Robert J. Kelly Chairman The Sales Management Association

Copyright © 2014-15 the Sales Management Association. All rights reserved. 3

Research Brief: Measuring Sales Manager Performance

Contents

1 Research Summary 51.1 Study Objectives: What Determines Sales Manager Success? 51.2 Summary of Key Findings 5

2 About the Research 72.1 Research Approach 72.2 Research Timing and Scope 72.3 Research Underwriters 7

3 The Sales Manager Role 83.1 One Size Won’t Fit All 83.2 Sales Managers’ Most Important Responsibilities 8

4 Quantifying Sales Manager Effectiveness 104.1 Sales Manager Capability Gaps 114.2 Sales Managers’ Most Critical Performance Priority: Improving Salesperson Effectiveness 11

5 Sales Manager Competencies 135.1 Competency Profiles are Not Widely Used 135.2 Focused Sales Manager Competency Use Correlates with Firm Performance 15

6 Sales Manager Performance Measures 166.1 Sales Manager Performance Measures, Frequency of Use by Firm 166.2 Mean Weightings by Performance Measure 186.3 Comparing Sales Manager Performance Measures in High- and Low-Performing Firms 20

7 Respondent Demographics 237.1 Firm Size 237.2 Firm Performance 237.3 Sales Force Size, Structure, and Management Span of Control 257.4 Job Role 26

Copyright © 2014-15 the Sales Management Association. All rights reserved.4

Copyright © 2014-15 the Sales Management Association. All rights reserved. 5

1.1 Study Objectives: What Determines Sales Manager Success?

Sales managers crucially influence their firms’ performance. Accordingly, this research examines how sales managers’ personal performance is defined, measured, and assessed, and offers a broad survey of practices related to sales manager performance measurement in business-to-business firms.

Our research shows sales managers are assigned wide-ranging responsibilities. More significantly, their responsibilities are considered highly impactful to business performance. Our research confirms that sales managers represent a critical position in the firm, based on their breadth of scope, and magnitude of impact.

1.2 Summary of Key Findings

Sales managers’ most critical contributions are realized through the teams they build, develop, and lead. Sales manager responsibilities deemed most important are hiring, holding salespeople accountable, and coaching. Manager activities associated with team building, talent management, and salesperson development outrank in importance activities connected to administrative responsibilities, such as pricing decisions, reducing salespeople’s administrative work, solution development, new program communication, and managing sales meetings.

Despite their vital role, we find ample evidence that sales manager responsibilities and skills may not be adequately focused in many organizations. Unsurprisingly, sales managers’ effectiveness ratings lag ratings of importance in many key activities. And, the use of competency models is inconsistently

Research Summary

Research Brief: Measuring Sales Manager Performance

1

Copyright © 2014-15 the Sales Management Association. All rights reserved.6

practiced and (even where practiced) is too often poorly targeted to the sales manager role.

Team revenue, team profit, and MBO achievement are most widely used by firms as performance measures. Team revenue is given a 47% mean weighting across all respondent firms in determining pay, but was less important in determining overall performance (40% mean weighting), or in awarding promotion (42% mean weighting).

Competency assessments are weighted only 6% on average when judging overall performance, and only 4% in determining pay, yet command a 13% average weighting in manager promotion decision criteria.

Respondents’ most important improvement priorities for sales manager performance are a cluster of activities focused in improving salesperson performance. These are: coaching salespeople, conducting performance reviews, and helping salespeople focus time effectively. This cluster of activities represent sales managers’ past, present, and future impact on salesperson development. As much as any other finding, it suggests the extraordinary combination of short- and long-term objectives sales managers must balance, as well as their essential role as enablers of others’ performance.

Research Summery

Copyright © 2014-15 the Sales Management Association. All rights reserved. 7

2

Research Brief: Measuring Sales Manager Performance

About the Research

2.1 Research Approach

This study aggregates participating firms’ responses to a web-based survey. The Sales Management Association developed the survey and recruited participants from our membership and broader audience of sales managers and sales operations professionals. In exchange for participating, we offer respondents advance copies of the detailed study report.

Before reporting results, we eliminate invalid or ineligible responses, and sometimes contact respondents to clarify their responses. Survey results are only reported in aggregate, and never in a way that would compromise the identity of any single respondent. All individual respondent data are treated with strict confidentiality.

2.2 Research Timing and Scope

This research represents summarized data from 104 participating firms, directly employing more than 130,000 sales professionals. Data was collected during the months of October, November, and December 2014 . Respondent demographics and descriptive information is summarized in report section seven below.

2.3 Research Underwriters

This study was made possible in part through the underwriting support of Business Efficacy and Qvidian. Our research underwriters provide annual financial support to the Sales Management Association. Underwriters may suggest research topics, participate in ongoing research projects, and encourage participation or otherwise promote research initiatives.

Underwriters are not involved with research administration, data collection, analysis, interpretation, or report development, unless explicitly noted in the report. Also, unless noted, underwriters do not pay a research-specific fee or directly commission research initiatives.

The Sales Management Association is grateful for the support underwriters provide to our research efforts.

Copyright © 2014-15 the Sales Management Association. All rights reserved.8

3.1 One Size Won’t Fit All

Most firms have more than one sales manager role. Among survey respondents, just 30% have a single sales manager role; 55% have between two and five unique sales manager roles; eight percent have six to 10 sales manager roles; and seven percent have more than 10 unique sales manager role.

Firms differentiate sales manager roles based on channels or market segments managed, geographical assignments, or industries served.

As might be expected, the use of multiple sales manager roles increases in proportion to sales organization size, as larger organizations typically have more complex requirements.

On average, firms using a single sales manager role employed nine sales managers; those with two to five unique manager roles employed 51 sales managers; those with six to 10 roles employed 122 managers; and those with greater than 10 unique manager roles employed an average of 467 sales managers.

3.2 Sales Managers’ Most Important Responsibilities

Sales managers are assigned a broad set of responsibilities. We asked respondents to rate the importance of a long and varied set of sales manager activities, and were surprised how important all were considered.

All activities in our list received ratings above the median value of four (“somewhat important”) on a seven-point scale, where a rating of one is “not at all important,” and a rating of seven is “extremely important.” Considered most important among sales manager activities are hiring, holding salespeople accountable, and coaching. Least important (though still considerably important): pricing, reducing salespeople’s administrative activities, and solution development.

The Sales Manager Role3

Number of Sales Manager RolesPercentage Distribution of Firms

55%Two to Five

30%One

8%Six to 10

7%More

than 10

3.1 Seventy percent of firms surveyed utilize more than one sales manager role.

Copyright © 2014-15 the Sales Management Association. All rights reserved. 9

Manager activities associated with team building, talent management, and salesperson development outrank in importance activities connected to administrative responsibilities, such as pricing decisions, reducing salespeople’s administrative work, solution development, new program communication, and managing sales meetings.

Research Brief: Measuring Sales Manager Performance

Given the breadth of sales managers’ job responsibilities, as well as the magnitude of their impact, our findings suggest the importance of properly focusing sales managers on the activities considered most essential and strategic for sales organization success.

Sales Manager Activities, Ratings of Importance by Firm

Importance to SMs’ Impact

3 62 5Not at all ExtremelySomewhat

1 4 7

Hiring

Holding sales force accountable

Coaching salespeople

Motivating salespeople

Monitoring salesperson activity

Providing informal feedback

Conducting performance reviews

Helping salespeople focus time

Helping with customers

Training salespeople

Helping with internal resources

Territory or account planning

Conducting sales meetings

Communicating new programs

Helping develop solutions

Cutting admin work

Pricing decisions

6.14

6.08

6.00

5.98

5.88

5.78

5.55

5.44

5.33

5.31

5.24

5.18

5.14

5.05

4.87

4.81

4.73

3.2 Recruiting, developing, and managing salespeople rate among the most important sales manager responsibilities.

Copyright © 2014-15 the Sales Management Association. All rights reserved.10

We also asked respondents to rate sales managers’ effectiveness in the same set of activities. Effectiveness ratings are less uniformly high, and in each case lag the corresponding rating of importance for an individual activity. Sales managers are rated most effective at helping with customers, holding salespeople accountable, and providing informal feedback; they are less effective at developing customer solutions, helping salespeople focus time, and coaching salespeople.

4

Sales Manager Activities: Importance and Effectiveness

Ratings of Importance and Sales Managers’Effectiveness by FirmImportance to SMs’ ImpactSMs’ Effectiveness

3 62 5Not at all ExtremelySomewhat

1 4 7

Hiring

Holding sales force accountable

Coaching salespeople

Motivating salespeople

Monitoring salesperson activity

Providing informal feedback

Conducting performance reviews

Helping salespeople focus time

Helping with customers

Training salespeople

Helping with internal resources

Territory or account planning

Conducting sales meetings

Communicating new programs

Helping develop solutions

Cutting admin work

Pricing decisions

6.14

6.08

6.00

5.98

5.88

5.78

5.55

5.44

5.33

5.31

5.24

5.18

5.14

5.05

4.87

4.81

4.73

4.71

4.80

4.32

4.72

4.66

4.76

4.47

4.31

4.96

4.41

4.64

4.52

4.64

4.53

4.31

3.68

4.41

Quantifying Sales Manager Effectiveness

4.1 Sales managers’ effectiveness ratings lag importance ratings in all responsibility areas surveyed.

Copyright © 2014-15 the Sales Management Association. All rights reserved. 11

4.1 Sales Manager Capability Gaps

To illustrate these results with greater focus, we summarized them in a few additional formats. First, we calculated the absolute variance between ratings of importance and effectiveness for each activity. These variances might be considered sales manager capability gaps. Those activities with the largest variance between respondents’ ratings of importance and current manager effectiveness have the largest capability gap. Such gaps are shown in ascending order below.

The largest sales manager capability gaps are in coaching salespeople, hiring, holding salespeople accountable, and motivating salespeople. The smallest gaps relate to pricing decisions, assisting customers, managing sales meetings, and communicating new programs.

We further refined this analysis to isolate sales manager activities considered among the most important, and also rated among the lowest in manager effectiveness. Those activities meeting both criteria are considered the top-most improvement priorities. (This analysis approach is further explained below.)

4.2 Sales Managers’ Most Critical Performance Priority: Improving Salesperson Effectiveness

We further refined this analysis to isolate sales manager activities considered among the most important, and also rated among the lowest in manager effectiveness. Those activities meeting both criteria are considered the top-most improvement priorities. (This analysis approach is further explained below.)

Three activities met these criteria: coaching salespeople, conducting performance reviews, and helping salespeople focus time effectively. Each of these activities are squarely focused on improving salesperson effectiveness. These results reflect an unusually clear consensus among our research panel; namely, that sales managers’ most critical improvement need is in coaching and developing the salespeople they manage.

This cluster of activities represent sales managers’ past, present, and future impact on salesperson development. As much as any other finding, it suggests the extraordinary balance in short- and long-term objectives sales managers must balance, as well as the importance of enabling the performance of those they manage.

Research Brief: Measuring Sales Manager Performance

Copyright © 2014-15 the Sales Management Association. All rights reserved.12

Plotting Sales Manager Importance and Performance

4.1 6.8

5.4

3.7

x = 4.5

x = 5.4IMPORTANCE

PERFORMANCE

Coaching salespeople

Hiring

Holding sales force accountable

Motivating salespeople

Monitoring salesperson activity

Cutting admin work

Helping salespeople focus time

Conducting performance reviews

Providing informal feedback

Training salespeople

Territory or account planning

Helping with internal resources

Helping develop

solutions

Conducting sales meetings

Communicating new programs

Helping with customers

Pricing decisions

4.2 This analysis plots ratings of importance and effectiveness on an x-y axis, assigning effectiveness ratings y axis, importance ratings to the x-axis. The two axes intersect at the respective mean value for each rating scale (a mean importance rating of 5.4, and effectiveness rating of 4.5, both on a seven-point scale). This forces manager activities into one of four quadrants, as illustrated below. Manager activities ranked in the top 50% by importance rating are sorted on the right half of the chart; those ranked in the top 50% based on performance rating are forced to the top half of the chart.

Those activities in the bottom right quadrant are considered the most important aggregate improvement priorities for our respondent firms. These activities are rated among the most important, but least well-performing, activities assigned to sales managers.

4 Quantifying Sales Manager Effectiveness

Copyright © 2014-15 the Sales Management Association. All rights reserved. 13

Our study examined how firms measure quantifiable manager performance; we also examined how respondents identify and measure more qualitative measures of manager performance. Manager competency profiles, which define essential clusters of skills, behaviors, and capabilities, are an accepted management standard in this area. We therefore focused a significant portion of the research on examining how competency tools are utilized by respondents for measuring sales manager performance.

5.1 Competency Profiles are Not Widely Used

The use of defined competency profiles is far from standard practice among respondent firms, however. Only sixty percent of firms use competency assessments to evaluate their sales managers’ overall performance; these firms assign a mean weighting of 10% for performance to competency standards versus other performance criteria. Yet few firms are using competency assessments in a consistent fashion; fewer still focus competencies on essential skills unique to the sales manager role.

5

Firms’ Use of Competency-Based Sales Management

Agreement Rating (Seven-Point Scale)

7 Completely Agree

6

5

4 Neither Agree Nor Disagree

3

2

1 Completely DisagreeAssessed at

least annually

WrittenUsed to hireFocused on SM skills

3.964.40

4.52 4.54 4.67

Consistently emphasized

Research Brief: Measuring Sales Manager Performance

Sales Manager Competencies

5.1 Sales manager competencies are not consistently emphasized.

Copyright © 2014-15 the Sales Management Association. All rights reserved.14

Just 36% of respondents believe their firms emphasize sales manager competency standards; only eight percent indicate complete agreement that sales manager competencies are consistently emphasized (based on a seven-point agreement scale, where a rating of 1 represents ”complete disagreement,” a rating of 4 represents “nether agreement nor disagreement,” and a rating of 7 represents “complete agreement.”

More consistently implemented is the practice of maintaining written competency standards. Of the five competency-related

5 Sales Manager Competencies

practices we asked about, it was most frequently present in respondent firms (though fully 40% of respondent firms do not maintain written competency standards for sales managers).

Our research also found that even among firms with a competency model in place for sales managers, a significant number of firms rely on a generalized set of “sales” or management” competencies, rather than those highly-targeted to sales management.

Of firms utilizing sales manager competencies, just 42% characterize their competency models as more “focused” than “generic.”

Only seven percent “completely agree” that their competency models are highly targeted to the sales manager role.

How Generic (or Targeted) Are First-Line Sales Manager(FLSM) Competencies?

30

20

10

01 2 6 743 5

Percentage Distribution of Firms

Competencies' Degree of Focus on FLSM

Generic Highly Targeted to FLSM

Somewhat Specific to FLSM

5.1.1 Competency tools used to manage sales managers are insufficiently focused on unique sales manager competencies.

Copyright © 2014-15 the Sales Management Association. All rights reserved. 15

Difference in High-Performing Firms’ Use of First-Line Sales Manager (FLSM) Competencies

Firm Rating of Sales Manager Competency Focus

Low Performing FirmsHigh Performing Firms

7 Highly Focused on FLSM

6

5

4 Somewhat Focused on FLSM

3

2

1 Generic in Nature

4.26

3.58

5.2 Focused Sales Manager Competency Use Correlates with Firm Performance

Using sales manager competency profiles correlates with overall firm sales performance. High-performing firms (those that met or exceeded the prior 12-month revenue objective) were 14% more likely to use sales manager competencies as a part of the hiring process, and 14% more likely to utilize them at least annually in judging sales manager effectiveness.

Differences in Sales Manager (SM) Competency Programs, High-Performing vs. Low-Performing Firms

Percentage Variance in Effectiveness Rating

+15

+12

+9

+6

+3

0

-3

Written

Consistently emphasized

Focused on SM skills

Assessed at least

annually

Used to hire

Research Brief: Measuring Sales Manager Performance

High-performing firms also use competency profiles that are less generic, and more focused on competencies specific to the sales manager role. Compared to low-performing firms, high-performing firms rate their competency profiles as 19% more focused.

5.2 Firms that focus competency tools on sales manager-specific competencies, use competencies in sales manager hiring, or incorporate competencies into regular assessments rate the overall effectiveness of their competency programs 10 to 14% higher than other firms.

5.2.1 High-performing firms used competency tools more focused on unique sales manager traits.

Copyright © 2014-15 the Sales Management Association. All rights reserved.16

We compared sales manager performance measure usage in three contexts: judging overall sales performance, in the compensation program as a means of delivering incentive pay, and for the purpose of promoting sales managers into more senior positions within the firm.

•Team revenue is given a 47% mean weighting across all respondent firms in determining pay, but was less important in determining overall performance (40% mean weighting) or in awarding promotion (42% mean weighting).

•Competency assessments are weighted only six percent on average when judging overall performance, and only four percent in determining pay, yet command a 13% average weighting in manager promotion decision criteria.

•Team revenue, team profit, and MBO achievement are most widely used by firms as performance measures.

6.1 Sales Manager Performance Measures, Frequency of Use by Firm

The charts in this section summarize frequency of use, by firm, of sales manager performance measures for (a) measuring overall manager performance, (b) determining annual compensation, and (c) as criteria for promotion.

Team revenue performance is used by almost all firms as a sales manager performance measure. Team revenue performance includes the revenue or revenue quota achievement expectations assigned to the manager, including personal selling responsibilities, direct reports’ assignments, and assigned indirect revenue expectations.

Other widely used performance measures are team profitability and “MBOs.” Both are used by more than half of respondent firms for measuring overall manager performance, determining annual manager compensation, and promoting managers. “MBO,” or “Management by Objective” refers to flexible measurement components that are more frequently changed than other performance measures, or that vary from manager to manager according to individual performance priorities.

6 Sales Manager Performance Measures

Copyright © 2014-15 the Sales Management Association. All rights reserved. 17

Performance Measures’ Frequency of Use by Firm in Measuring Overall Sales Manager Performance

Percentage of Firms

Team Revenue

MBOs

Team Profitability

Competency Assessment

Hiring or Headcount

Customer or Account Objectives

Personal Sales Objective

Product or Service Objective

Direct Reports' Balanced Performance

Process or Pipeline Objectives

Coaching-Related Objectives

Other

94%

73%

70%

61%

51%

46%

44%

41%

39%

28%

28%

8%

Performance Measures’ Frequency of Use by Firm in Determining Sales Managers’ Compensation

Percentage of Firms

Team Revenue

MBOs

Team Profitability

Competency Assessment

Customer or Account Objectives

Personal Sales Objective

Hiring or Headcount

Product or Service Objective

Process or Pipeline Objectives

Direct Reports' Balanced Performance

Coaching-Related Objectives

Other

94%

57%

55%

40%

39%

36%

27%

27%

25%

22%

16%

6%

Research Brief: Measuring Sales Manager Performance

6.1 Team revenue is used by 94% of firms surveyed in determining overall sales manager performance. Coaching-related objectives are utilized by only 28% of surveyed firms.

6.1.1 Team revenue is used by 94% of firms surveyed in determining sales manager compensation. Coaching-related objectives are utilized by only 16% of surveyed firms.

Copyright © 2014-15 the Sales Management Association. All rights reserved.18

Less frequently used measures for determining overall manager performance are coaching-related objectives (28% of firms), process or pipeline management-related objectives (28% of firms), and balanced performance of direct reports (39% of firms). (“Other” was specified as a criteria by 8% of respondent firms).

6.2 Mean Weightings by Performance Measure

For measuring overall sales manager performance, team revenue achievement is most heavily emphasized. On average (across all respondent firms), team revenue achievement was assigned a weighting of 43%. Team profitability achievement was given an average weighting of 22%, and personal sales objectives were weighted at 15% on average.

Least-emphasized performance measures for sales managers (for the purpose of evaluating overall performance) were customer or account objectives, weighted at 9% on average, coaching-related objectives (8%), and process or pipeline objectives (7%).

Performance Measures’ Frequency of Use by Firm in Promoting Sales Managers

Percentage of Firms

Team Revenue

Competency Assessment

Team Profitability

MBOs

Hiring or Headcount

Customer or Account Objectives

Personal Sales Objective

Process or Pipeline Objectives

Direct Reports' Balanced Performance

Product or Service Objective

Coaching-Related Objectives

Other

88%

61%

59%

56%

42%

33%

30%

28%

27%

25%

19%

16%

6 Sales Manager Performance Measures

6.1.2 Team revenue is used by 88% of firms surveyed in promoting sales managers into senior management roles. Coaching-related objectives are utilized by only 19% of surveyed firms.

Copyright © 2014-15 the Sales Management Association. All rights reserved. 19

Performance Measures’ Use in Measuring Overall Sales Manager Performance

Mean Weighting by Performance Measure, All Firms

Team Revenue

Team Profitability

Personal Sales Objective

Direct Reports' Balanced Performance

Other

MBOs

Hiring or Headcount

Product or Service Objective

Competency Assessment

Customer or Account Objectives

Coaching-Related Objectives

Process or Pipeline Objectives

43%

22%

15%

13%

12%

11%

10%

10%

10%

9%

8%

7%

Performance Measures’ Use in Sales Managers’ Compensation Plans

Mean Weighting by Performance Measure, All Firms

Team Revenue

Team Profitability

Personal Sales Objective

MBOs

Competency Assessment

Customer or Account Objectives

Direct Reports' Balanced Performance

Hiring or Headcount

Process or Pipeline Objectives

Product or Service Objective

Coaching-Related Objectives

Other

47%

17%

8%

6%

4%

4%

3%

3%

3%

2%

2%

1%

Research Brief: Measuring Sales Manager Performance

6.2 Team revenue is weighted 43% on average, in determining overall sales manager performance. Process or pipeline management objectives are weighted at 7% on average.

6.2.1 Team revenue is weighted 47% on average, in determining sales manager compensation. Coaching-related objectives are weighted at 2% on average.

Copyright © 2014-15 the Sales Management Association. All rights reserved.20

Performance Measures’ Use in Promoting Sales Managers

Mean Weighting by Performance Measure, All Firms

Team Revenue

Team Profitability

Competency Assessment

MBOs

Personal Sales Objective

Hiring or Headcount

Other

Customer or Account Objectives

Process or Pipeline Objectives

Direct Reports' Balanced Performance

Product or Service Objective

Coaching-Related Objectives

42%

14%

13%

7%

5%

5%

4%

3%

2%

2%

2%

2%

6.3 Comparing Sales Manager Performance Measures in High- and Low-Performing Firms

We compared differences in mean performance measure weightings in high-performing and low-performing firms. High-performing firms are those which met or exceeded firm sales revenue objectives in the prior 12 months.

High-performing firms give less emphasis to team revenue than do low-performing firms; high-performing firms’ mean weighting is six percentage points (or 600 basis points) lower than low-performing firms’. Also given less emphasis by high-performing firms: team profitability (three percentage points lower mean weighting compared to low-performing firms), and personal sales objectives (two percentage points lower weighting, on average).

Given greater emphasis by high-performing firms were hiring or headcount objectives (weighted five percentage points higher than low-performing firms’ weightings), direct reports’ balanced performance (four percentage points higher), and objectives related to specific customers (three percentage points higher).

6 Sales Manager Performance Measures

6.2.2 Team revenue is weighted 42% on average, in promoting sales managers to more senior management roles. Coaching-related objectives are weighted at 2% on average.

Copyright © 2014-15 the Sales Management Association. All rights reserved. 21

Variance in Mean Performance Measure Weightings Used by High-Performing and Low-Performing Firms in Sales Manager Performance Evaluation

Variance in Mean Firm Weighting

Team Revenue

Team Profitability

Other

Personal Sales Objective

Competency Assessment

Product or Service Objective

Process or Pipeline Objectives

Coaching-Related Objectives

MBOs

Customer or Account Objectives

Direct Reports' Balanced Performance

Hiring or Headcount

-6%

-3%

-2%

-2%

-1%

0%

0%

0%

2%

3%

4%

5%

Variance in Mean Performance Measure Weightings Used by High-Performing and Low-Performing Firms in Sales Manager Compensation

Variance in Mean Firm Weighting

Personal Sales Objective

Team Profitability

Process or Pipeline Objectives

Product or Service Objective

Other

Competency Assessment

Direct Reports' Balanced Performance

MBOs

Coaching-Related Objectives

Team Revenue

Customer or Account Objectives

Hiring or Headcount

-8%

-4%

-2%

0%

1%

1%

1%

1%

2%

2%

3%

3%

Research Brief: Measuring Sales Manager Performance

6.2.3 High-performing firms emphasize team revenue less, and hiring or headcount management more, in determining overall sales manager performance.

6.2.4 High-performing firms emphasize personal sales objectives less, and customer, hiring or headcount management objectives more, in determining sales manager compensation.

Copyright © 2014-15 the Sales Management Association. All rights reserved.22

Variance in Mean Performance Measure Weightings Used by High-Performing and Low-Performing Firms in Promoting Sales Managers

Variance in Mean Firm Weighting

Team Revenue

Competency Assessment

Personal Sales Objective

Product or Service Objective

Direct Reports' Balanced Performance

Coaching-Related Objectives

Customer or Account Objectives

MBO

Process or Pipeline Objectives

Hiring or Headcount

Team Profitability

Other

-6%

-4%

-2%

-1%

-1%

0%

1%

1%

1%

2%

4%

4%

6 Sales Manager Performance Measures

6.2.5 High-performing firms emphasize team revenue less, and team profitability more, in promoting sales managers to more senior management positions.

Copyright © 2014-15 the Sales Management Association. All rights reserved. 23

77.1 Firm Size

Seventy-seven participating firms ranged in size from small to very large. Forty-nine percent of respondents’ firms had annual revenue in excess of US$100 million; 5% were firms with annual revenues in excess of US$10 billion.

7.2 Firm Performance

Eighty-six percent of respondent firms met or exceeded firm sales objectives in the preceding 12 months, and 69% met or exceeded profit objective in the same period.

Respondents were asked to rate their firm’s achievement of profit and sales objective based on a seven-point scale (“1” for far underachieved objective; “4” for met objective; “7” for far exceeded objective).

Research Brief: Measuring Sales Manager Performance

Respondent Demographics

7.2 Respondent firm revenue objective achievement

7.1 Respondent firm size

Respondents’ Firm RevenuePercentage of Respondent Firms

29%US$10 million to US$100 million

26%US$100 million to

US$1 billion

25%More than

US$1 billion

20%US$1 to

$10 million

Respondents’ Sales Objective Achievement

40

30

20

10

01 2 6 743 5

Percentage Distribution of Firms

Firm Performance

Far Below Goal Far Above GoalMet Goal

Copyright © 2014-15 the Sales Management Association. All rights reserved.24

Respondents’ Profit Objective Achievement

40

30

20

10

01 2 6 743 5

Percentage Distribution of Firms

Firm Performance

Far Below Goal Far Above GoalMet Goal

We use this performance rating approach in order to normalize company performance across large and small firms, and high and moderate growth sectors.

Thirteen percent of respondents rated profit objective achievement in the highest two categories (“6” or “7”); 39% of firms rated sales objective achievement in the highest two performing categories.

7 Respondent Demographics

7.2.1 Distribution of firm profit objective achievement

7.2.2 Distribution of firm year-over-year sales growth

Respondents’ Year-Over-Year Sales Growth

50

40

30

20

10

01 2 6 743 5

Percentage Distribution of Firms

Firm Performance

Far Below Prior Year

Far Above Prior Year

No Change

Copyright © 2014-15 the Sales Management Association. All rights reserved. 25

Seventy-two percent of respondent firms had positive revenue growth in the preceding 12 months. Fourteen percent had flat revenues, and 14% experienced declining firm revenues.

Total Sales Managers by Firm

60

40

20

0

80

100

High

75th

25th

Median

Low

Mean

Total Salespeople by Firm

700

500

300

400

200

600

100

0

800

900

High

75th

25th

Median

Low

Mean

Ratio of Salespeople to Sales Managers by Firm

14

10

6

8

4

12

2

0

16

18

High

75th

25th

Median

Low

Mean

7.3 Sales Force Size, Structure, and Management Span of Control

Respondent firms have an average of 172 sales managers, and 1,295 salespeople; sales managers have 7.9 direct-report salespeople on average by firm; when calculated in aggregate, management span-of-control is 7.8.

Corresponding median values are 82.5 salespeople per firm, 8 man-agers per firm, and a salesperson-to-sales manager ratio of 6.7:1.

Twenty-seven percent of respon-dent firms’ salespeople were inside sales; the median value by-form was 12.5%. In aggregate, 36% of all salespeople in respondent firms were inside salespeople.

Research Brief: Measuring Sales Manager Performance

7.3.2 Sales management span of control

7.3.1 Sales people by firm7.3 Sales managers by firm

Copyright © 2014-15 the Sales Management Association. All rights reserved.26

7.4 Job Role

Respondents are predominately sales operations leaders in their firms. Twenty percent of respondents are first-line sales managers (i.e., they directly manage salespeople). An additional 18% are senior sales leaders, managing sales managers. Fifteen percent are in non-sales-related management positions, and 4% are salespeople.

Respondents’ Job RolePercentage of Respondents

33%Senior Sales Leader

(Manages SMs)

29%Sales Ops

24%Sales Manager

(SM)

13%Manager

(non sales)

7 Respondent Demographics

7.4 Respondents’ job role