Sales controlling serves to align sales resources with corporate goals; the corporate goals, in turn, are derived from the corporate strategy and the associated planning.
Especially in business with larger customers, the self-steering of the individual sales staff is the essential mechanism that can be operated with a sales controlling.
Let us approach the sales employee as an object of sales controlling: in sales, the share of variable remuneration in total remuneration is usually higher than in many other functions in a bank or savings bank.
Achieving the highest possible variable remuneration is therefore one of the most important personal goals of an employee in sales.
As a rule, this goes hand in hand with a corresponding achievement of targets and goals. A high level of target achievement leads to high variable remuneration – so a high level of attention is paid to achieving the targets agreed for the respective year. However, this also implies that sales controlling can only be successful if it is carried out in accordance with the goals set – or, to put it another way: sales controlling breaks down the sales goals in a suitable manner to the employees and creates opportunities to identify milestones and opportunities for discussion.
By sales goals I mean that part of the company goals for which sales are part of the performance obligation and – this is at least as important – can actually make a contribution.
When designing individual employee goals, one should keep in mind that an employment relationship has been established through the employment contract and that there is therefore no work contract. It is the effort that is owed, not the success. The employee as a non-managerial employee does not bear any entrepreneurial risk. And this must be adequately reflected in the agreed goals.
Excursus: there is nothing against offering a kind of profit-sharing as part of a variable remuneration for the workforce, but then it is. If variable remuneration is awarded for individual performance, then it is not a profit or loss sharing.
In the usual practice up to now, the target fields that are agreed with the employees are divided into qualitative and quantitative targets. Experience has shown that in sales, the focus is a little more on quantitative targets and goals.
The decisive factor now is how the previously agreed goals are dealt with once the goals have been achieved. I have very often experienced that if the quantitative goals were fulfilled very well or if the goals were overcrowded, the qualitative goals no longer played a role at all. One might wonder why these were then agreed in the first place. On the other hand, if the quantitative goals could not be achieved, then the qualitative goals have often become very important in order to move the overall goal achievement in a desired or at least accepted direction.
What does it say about the target agreement system and also about sales controlling when both the manager and the employee cooperate to influence the system backwards?
Of course, it is also the case that you can sometimes be lucky in achieving your own goals – just as bad luck is sometimes possible. But experience has shown that the happiness from the achievement of goals is not neutralized to the extent that all those involved try to neutralize the bad luck together. Bad luck seems to be therefore unfair, luck again not.
If we look back at the service contract, at the employment relationship, however, happiness is not an achievement. I can honor the activities and efforts that were the prerequisite for this moment of happiness to fall on fertile ground at all and that allowed this success to actually become possible in the first place, but not happiness per se.
In this respect, it is definitely worth considering to reduce the significance of the purely quantitative volume targets, regardless of whether new business volume, number of deals or gross profit margins (etc.), for a target agreement. In the individual cases it will always be very difficult to see how much luck and how much achievement was behind it – and objectively this will only be possible in the very rarest of cases. It therefore seems advisable to avoid these sham discussions from the outset and simply reduce the importance (= weight) of the goals that are susceptible to random outliers – in one direction or the other.
If I look at a customer portfolio for which, for example, individual customer planning was carried out together with the product specialists, then I already have a healthy number of sales approaches that can be translated into activities for the planning period. And I can arrange to carry out these activities. In addition, I could also translate the hoped-for economic success associated with these activities into my goals. Now I have a reduced weight for the goals with corresponding economic parameters, but at the same time opened up a further target field through the additionally planned activities, which in the end pays in the same direction.
The same can be done with an annual action plan or marketing plan; It is only important that the activities are specific and can be measured – for example in a CRM system.
This type of planning, i.e. based on activities, achieves various effects:
- Qualitative goals are no longer needed; I can translate all sales goals into activities.
- The subjectively used leeway in the interpretation of target achievement disappears for both the manager and the employee
- Sales and the company are forced to plan more intensively and realistically, since it is not possible to break them down into activities without operationalizing the planning
- The target agreement process, variable remuneration and sales management are brought into line
- The complexity of the destination map is reduced or at least can be reduced
- The goals are more specific and can be visibly influenced by the employee
When changing the goal-setting process, there is often more resistance from managers than from employees. At the beginning the employees may have reservations about the realism and the attainability of the goals; Here, the intensive discussions with the respective executives usually lead to an appropriate relaxation. The executives, however, mostly feel deprived of a piece of competence and freedom, namely in the distribution of affection in monetary form.
There should be companies in which all employees get 100% target achievement or do not go outside the range of target achievement of 90% to 110%. There should also be companies in which target achievement has no effect on the variable remuneration – or only in those cases where target achievement is above 100% (and then of course a positive effect).
It can be said that it is not the employees‘ fault that this is the case in these companies. Here both the managers and possibly also the employee representatives may well touch their own noses. Be that as it may: if everyone receives the same thing over and over again, it is not variable remuneration. Whenever and by whomever, the target that was linked to the introduction of variable remuneration has not been achieved in the long term in these cases.
When setting the goals at the level of the individual employee, it is of course not only possible to look at the company, but the individual starting position and situation of the employee must also be taken into account. The goals must be set and agreed in such a way that every employee has the chance to achieve 100% goal achievement through their own performance (service contract!). The differentiation between employees and employee groups takes place via salary bands, categorization and, if necessary, different regulations on variable remuneration. The degree of target achievement per se is not a status symbol in the team.
In conclusion, I do not want to hide the fact that the employee representatives (i.e. the working council) may also initially develop certain reservations about such a system. At least that would be the natural reflex that would be expected. Ultimately, this system can only be developed in any bank or savings bank in cooperation between company management, sales controlling and employee representatives in mutual trust. The right perspective, however, is not to give every employee 100% as the lower limit, but to differentiate fairly based on personal performance (= developed (!) activities) – and that goes in both directions.
And as the last sentence: The manager retains the subjective competence and freedom if milestone discussions are held during the year and the target agreement is adapted and documented if necessary in coordination with the employee – in one direction or the other.
Vertriebsmanagement 