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The Power of the Contract in Performance Management
By Allan Mackintosh

Summary: While written with respect to salespeople this article focuses on how to create a common understanding between manager and employee about how they will work together, goals, objectives, expectations and more. The more that manager and employee are on the same page with common understandings, the better the performance contributions will be, the less grief there will be, and the easier evaluations will be.

An essential step in managing the performance of salespeople is that of establishing a sound and agreed contract between manager and the salesperson. A contract in this context is simply an agreement between the manager and the salesperson as to how best they are going to work together. It is a chance for each party to outline expectations, hopes and fears and is a superb opportunity for both the manager and salesperson to fully understand each other in terms of personality style, motivators and de-motivators. It is also an opportunity for the manager to ensure that the salesperson fully understands their role and their responsibilities as well as their sales and activity targets.

So, how does contracting work?

Contracting should start right at the beginning of a manager: salesperson relationship. The manager should meet with the salesperson and each person should have aims in respect to the meeting which are along the following lines:

For the Manager:

? To ensure that the salesperson feels welcomed and part of the team.

? To ensure that the salesperson understands their role and responsibilities.

? To ensure that the salesperson knows what the team/company rules and regulations are.

? To ensure that the salesperson knows what their sales and activity targets are and how they are going to be measured.

? To outline the manager?s expectations of the salesperson in terms of behaviour, attendance, personal qualities etc.

? To explain what management style the manager has and what motivates the manager and de-motivates them.

? To understand what motivates and de-motivates the salesperson

? To begin to understand the salesperson?s personality styles and preferences.

? To agree what support the manager is going to provide in relation to the salesperson?s progress and development.

? To agree a communication process.

For the Salesperson:

? To fully understand how the manager likes to operate.

? To understand exactly what the role requirements are in terms of responsibilities, objectives and measures.

? To understand any administration procedures such as e-mail, expenses etc.

? To know a bit more about the team and culture.

? To understand any team rules, responsibilities and meetings dates.

? To address any hopes and fears that they may have.

? To understand how best the manager is going to support the salesperson.

? What does the salesperson do if they need help?

In reality, how many of these aims are actually realised in a first meeting? Chances are that the meeting will be very ?one way? with the manager doing a lot of talking and outlining what is expected of the salesperson both in terms of the company regulations and the salesperson?s activity and sales targets. If the manager?s approach is very ?one way? then they are missing a tremendous opportunity to get to understand the salesperson?s personality, not to mention their strengths and development areas. The chances are also high that the salesperson will sit back and listen as opposed to being pro-active and outlining exactly what they need to know and whatever else is going on in their head!

Our culture is still very based on the hierarchy where a manager tells the salesperson what to do. As a result there is always the danger of not getting the best out of the salesperson by taking this approach. Simply by employing more questions and listening to the answers will reveal not only more about the salesperson in terms of their capabilities and understanding, but will also start to make the salesperson feel valued and as a result, trust and respect will start to build between the salesperson and manager. This is the basis for a productive relationship.

By taking more time in the initial meeting and by employing questioning and listening techniques the manager can establish quick rapport and also start to understand exactly what makes the salesperson ?tick?. In other words, they will learn what ?buttons to press? in order to ensure constant motivation in their salespeople. Too many managers still do not know, even after working with some of their salespeople for some time, specifically what motivates and de-motivates each individual. Many managers will claim they know, but when you ask them to outline what each of their salespersons? primary intangible needs are, you almost inevitably get the ?silent stare?!

Contracting is a vital skill and one which needs to be ?two way? ensuring that both manager and salesperson get the opportunity to talk and to understand each other. It is not just about outlining roles, responsibilities, rules, objectives and measures; it is about listening, understanding, and building rapport, trust and respect. The meeting needs time and depth. A quick telephone call is totally inadequate ? it must be face to face.

Too many managers do not spend enough time with their salespeople in the initial stages of the relationship and even when they do spend time it can tend to be very much ?one way?. The manager then runs the risk of not ensuring understanding, stifling opinion, creativity and innovation together with potentially causing frustration and subsequent de-motivation. This is inadequate performance management.


About Company

Bacal & Associates was founded in 1992 by consultant and book author, Robert Bacal. Robert's books on performance management and reviews have been published by McGraw-Hill. He is available for consultation, training and keynote speaking on performance and management at work.


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  • Performance management and appraisal MUST be a partnership between manager and employee where BOTH benefit.
  • Performance management can be the lever for improved employee engagement.
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