Friday, September 10, 2010

The PIP: Performance Improvement Plan

If you've been in sales long enough, you'll hear about the three letters you don't want associated with your name:  PIP, otherwise known as a Performance Improvement Plan.  I've heard salespeople refer to it as "the write-up of death."  As a Sales Manager, the PIP is simply a tool (used sparingly) to fully emphasize to the underperforming salesperson that things are bad and here's a road-map to make things better.

Sales best practice stipulates that the PIP should be a plan that both the salesperson and sales manager believe is realistic.  I've seen way too many PIP's that cannot possibly be realized by the salesperson.  In these cases, I really do believe that the PIP is used as a means of documentation prior to termination.  Let's face it.  If your under-performing, you have little pipeline and/or few activities, there's little chance you'll suddenly be able to do something like 25 calls a day, 3 appointments a week, 3 new proposals and $250k in sales.  These are the metrics that sales reps should have had months before so they could have worked towards these objectives.

Here's my Sales Management strategy in dealing with an under-performing sales rep:
  • Upon hiring, set clear expectations (in detail) as to what sales success looks like at your company.  I'm not just talking about how much sales bookings they need, I'm referring to the activities that lead to those bookings.  Make sure you're both on the same wavelength.
  • Give adequate time for the rep to pave his/her way.  Your way isn't the only way to see success.  This freedom supports creativity and gets the rep into a rhythm.  Impose requirements too soon and you'll be left with nothing but a relationship based on micro-management (which no rep enjoys).
  • Sales performance can only be really understood in weekly 1-on-1s with your reps.  What's that you say?  You don't hold weekly 1-on-1 to review pipeline and activity?  Shame on you.  Shape up and do your job.  In these meetings, you'll clearly see trends both subjectively and objectively of their performance.
  • When it's clear that the rep is performing, tell them so right then and there in the meeting.  Maybe expectations need to be reset.  Tell them that they must improve and be specific as to what you expect.  Follow-up with an email summarizing your meeting.
  • If performance fails to appear, set a "come-to-Jesus" meeting with them.  This is formal meeting where you'll tell the rep that things aren't going well.  Tell them what they need to do to improve and this is the first place where I ask them flat out, "Are you happy here? and Do you want to Stay?"  This gives them a way out if they want one.
  • If these methods don't work, it's time for a PIP.  You've already told them what you expect and this is what should be in a PIP, a realistic plan to get them back in the action.
  • When you put them on a plan, they need to sign it and it needs to have strong language that if they fail to meet the metrics in the plan, it could mean a termiatnion.
In my experience I've seen a few reps actively embrace the plan, get through it, and become some of my most successful salespeople.

Done right, PIP is a tool that can be a tell-tale sign of an impending termination OR a way to dig yourself out of the hole and come up clean.

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