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Welcome back to The Weekly Pitch! Our mission is to cover news, offer insights, and profile rising stars in the sales community.
In this week's Feature Story, we offer a shift in thinking when it comes to underperformance. Expectations for sales are at an all-time high, forcing too many of us to fall short of our quotas, but the last thing that works is a Performance Improvement Plan (PIP). We offer five alternatives.
In The Closer, we offer up an assignment to make some $$$! Are you attending SaaStr Annual in person? If so, check the bottom for more details. We also link to two attention-grabbing articles.
Let's dive in with our Weekly Chart.
Research from RepVue shows out of 988 sales teams, only 31 have more than three-quarters of their sales reps hitting quota in the last 12 months.*
RepVue offers three hypotheses:
“Is Your Sales Team Hitting Quota? Probably Not.” RepVue, Aug. 16, 2021
By: Korrin Bishop
Does the phrase “performance improvement plan” (PIP) make you shudder? If so, you’re not alone. However, despite their bad reputation and near-zero success rate, a surprising amount of sales leaders and companies still use them to drive performance.
If you’re ready to join the “RIP PIP” movement and put this outdated model to rest, this article is for you. We’ll briefly cover what PIPs are, why they’re problematic, and approaches to try instead.
A performance improvement plan, or PIP, is a tool that managers and human resources departments use as a corrective action for underperforming employees.
For example, if a sales rep regularly misses their targets, a manager might suggest a PIP. The PIP would outline goals a sales rep needs to meet within an established timeframe to realign expected performance. It would detail steps the employee must take to meet their goals and the metrics managers will use to gauge progress.
PIPs typically last between 30 to 90 days. If an employee doesn’t meet PIP goals within that timeline, managers use that as evidence to terminate them from the position.
When employee performance is lagging, managers can’t just ignore that and hope it changes. Yet, there are several reasons why PIPs aren’t the right approach to addressing the issue.
1. PIPs take the place of effective management and communication.
If sales leaders effectively communicate with their teams on an ongoing basis, they can identify and correct performance issues along the way rather than waiting for prolonged problems. PIPs become an easy way out when managers haven’t taken on leadership earlier to nurture their employees’ skills.
When managers communicate directly with their employees, they can better identify a performance issue at hand or if one of their sales reps is going through a rough patch. Communication is essential, as PIPs could ultimately drive out the wrong employees if they target dedicated sales reps who have a tough month.
2. PIPs create a major blow to employee morale and company culture.
Even if PIPs started with good intentions, they now come with a stigma. Many leaders view PIPs as an excuse to let people go rather than showing interest in their success. PIPs are seen as documentation that managers tried corrective action before firing employees to have better legal protection.
When professional development efforts protect profits over people, that hurts overall morale. And if a sales rep even meets their PIP goals, they’ll likely have one foot out the door, as the process doesn’t set up sales reps for long-term happiness with the company.
Meanwhile, employees on PIPs may negatively discuss the experience with colleagues, influencing their view of the company culture and how sales leaders may not value their time and efforts either. Misery loves company, and the PIP process can accelerate shared burnout and reps feeling unappreciated.
3. PIPs focus on short-term rather than long-term solutions.
The events that lead to a PIP are often more nuanced than the simple targets a PIP asks an employee to meet. While the employee might meet those short-term targets, the process ignores any root causes for the issues that led to the underperformance in the first place. Without coming up with long-term solutions for those issues, another PIP could be in the future.
PIPs often happen when managers can't put their egos aside and get to the bottom of things. Management itself could be a root cause for a team’s performance lags.
4. PIPs waste time and resources.
PIPs typically require ongoing documentation and meetings for 30 to 90 days. This extra work distracts the team from other initiatives. Given that most PIPs end in termination anyway and that the average new hire eats up an average of $4,129 and takes 42 days to fill, is the PIP worth the administrative burden?
Evidence is mounting for why managers and companies should do away with traditional PIPs, but that still leaves the question of how to address performance gaps. Luckily, there are already better approaches readily available.
1. Communicate early and often about expectations.
Communication is key. Let new hires know expectations up front and meet regularly to discuss them. Making sure everyone is on the same page from the start can avoid surprise PIPs.
One way to accomplish this is through the OKR framework – Objectives and Key Results. This goal-setting approach leaves employees with tangible ways to measure their progress and establish realistic benchmarks for their growth. If you're familiar with the framework, aim for committed objectives over those considered aspirational or learning.
2. Talk about weaknesses upfront.
No new hire is going to excel in every single skill. Please don’t shy away from talking about potential weaknesses upfront. Discuss what parts of the sales process they might struggle with and figure out what support they’ll need as a result. Have a plan ready for them to succeed despite their weaknesses.
3. Listen to your sales reps.
A major downfall of PIPs is that they don’t provide any agency to the sales reps who have to follow them. The plan to improve a sales rep’s performance might not help them, given how they best work.
Create regular meeting agendas together with your sales reps. Learn what they’re most interested in, what strategies work best for them, and what they think they most need to succeed. Your sales reps are the experts on themselves, so listen to what they say works for them.
4. Remember, we’re all human.
There’s a decent chance your employee doesn’t have a performance issue but instead is facing a personal hurdle. Childcare planning, health problems, and relationship issues are just some of the challenges we all face as human beings. Dealing with these on top of stressful work deadlines and expectations can be taxing.
Create a culture where your team knows that it’s okay to be human and that you’re here to support them when life impacts their work. Begin your conversations by genuinely asking how your sales reps are doing. Be interested in their lives. You can also lead by example. Being vulnerable enough to tell your team when you’re struggling with something creates a space where they can feel comfortable speaking up, too.
5. Shift people to better-suited roles.
If you’re invested in your team members and communicate with them regularly, you’ll learn what their strengths are. In doing so, you might find that you’re not so much facing a performance issue as you are a skills mismatch. In these cases, don’t waste time on a PIP. Instead, see where else in your company you might be able to shift that person so they can succeed.
For example, a sales rep may not be good at making cold calls and closing deals. However, once a new business deal is won, are they great at customer service? See if there’s a customer service position open within your company where they might be happier and more productive.
Yes, some of the original thoughts behind PIPs were noble, but, let’s face it—PIPs kind of need a PIP. Sales leaders can say, “RIP PIP,” and cultivate stronger teams through improved communication, strategic goal-setting, and a people-first approach.
Korrin Bishop is a freelance writer and editor with publications in The Motley Fool, Sierra Magazine, Shelterforce Magazine, and Fodor's Travel, among others. You can learn more about her work and contact her at: www.korrinbishop.com.
“It's Time We Finally Do Away With Performance Improvement Plans,” Forbes, Jul. 9, 2019
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