Set objectives, critical success factors, and metrics
Maura was recently promoted to manager of a large sales group. Her company does not use a formal performance management system, so she and her boss work together to define objectives for her group. Since the company has defined a strategy for enhancing profitability and market share, Maura and her boss select several objectives—including increasing customer satisfaction, improving sales staff morale, and boosting sales revenues—that support those high-level goals.
Maura also defines critical success factors for each of her group's objectives.
For example, her CSFs for increasing customer satisfaction include "Reduce sales staff turnover," "Improve sales staff responsiveness," and "Reduce order-processing errors."
For many of Maura's objectives, reducing sales staff turnover is a CSF. As Maura explains to her boss:
- If turnover increases, customers become uneasy because the sales reps they've come to know are no longer available to them. Worried customers may start taking their business elsewhere.
- Turnover also affects morale among sales reps who remain with the company. If more sales staff start leaving, those who remain may start asking themselves why so many of their former colleagues have defected. They may decide to leave as well—further worsening turnover.
- Turnover burdens remaining reps with larger workloads, because it takes time to hire new reps to replace the defectors. Struggling under heavy loads, remaining reps may have difficulty closing deals—thus reducing the company's revenues.
After defining CSFs for each of her objectives, Maura translates them into metrics. For instance, her metric for sales staff turnover is "Percentage annual turnover in sales staff." Other metrics include "Revenue per sales staff," "Number of order-processing errors," "Customer loyalty," and "Number of calls required to resolve customer complaints and questions."