Strategic Performance Management (SPM) is defined as aligning your employees and their performance with your Company’s mission, goals and strategic objectives. In sales, we also associate compensation with SPM, because as every sales manager knows, the most illiterate sales person in the world can read and sell to a comp plan.
Successful SPM initiatives begin with a clear vision and a long-term plan of execution. As Stephen Case, AOL's founder always said, "Vision without executions is pretty much a hallucination." Some key aspects of Strategic Performance Management are:
· Strategic Performance Management allows you to evaluate how your business is performing against stated goals and objectives in a Dynamic, changing environment.
· Strategic Performance Management consists of strategy execution, performance modeling, motivating employees, business results, & defining key competitive advantages.
· Strategic Performance Management includes Role Descriptions, employee development goals, learning initiatives, compensation structures, and strategic growth initiatives.
· Link performance measurements to business planning. Tie performance metrics to overall business results.
· Design Training & Orientation Programs to help employees understand how their own performance affects the company’s bottom line.
· Involve teams in the PMP (performance measurement project) and get feedback on how the PMP will affect them.
· Link performance measurements with other people management processes (Coaching, mentoring, training).
· Separate Professional Development and Performance Evaluation to help all workers increase skill & competency levels.
· Successful PMP requires senior leadership buy-in.
· Hire a management consultant to help you design a balanced scorecard including metrics for your Industry.
· Consider using performance management software to establish baseline credentials and provide continuous measurement.
I. Create a compensation plan that aligns with the strategic corporate objectives.
a. Avoid scenarios where Sales Professionals can achieve quotas without hitting strategic objectives (for instance, driving 50% of revenue from new accounts)
b. Consider including components for customer retention rates, strategic accounts or margin preserving initiatives.
II. Motivate & Reward Achievements with contests SPIFs and non cash rewards
a. This allows you to react quickly to changing product strategies or market shifts
b. Create short term rewards to encourage long-term gains
III. Model & Forecast your Compensation plans prior to rollout and deployment.
a. Project how certain performances will affect cash flow & commission expenses
b. Forecast commission expenses at a Macro (plan) and Micro (Individual) level.
c. Monitor activity to gage actual attainment & costs against models in order to quickly react to unforeseen influences and results.
IV. Use Analytics to drive sales performance.
a. Avoid allowing consultants and sales managers to measure their own performance.
b. Plans should reward the Sales Professional and Company in equal measure (Otherwise sales will determine where they are best rewarded and sell to that plan).
V. Integrate CRM & Compensation Management
a. Determine Key Performance Metrics and Measure for at least 6 months before starting any new training or compensation program in order to effectively measure their impact.
b. Provides dynamic, real time Understanding of performance instead of a historical view, allowing for quarterly tweaks to drive performance.