• Matthew Haller

How to Create a Sales Performance Improvement Plan [Free Template Included]

Creating an effective performance improvement plan can be the key to adjusting sales behaviors - and saving your team culture

There is always an air of excitement when a company brings on a new rep. The team expands, new ideas and experiences are added to your sales team, and your sales leadership team is excited that the business is one step closer to achieving revenue goals. With the right training everything should work out, right?

Not always. Even with the best training and coaching, sometimes those new hires struggle. What started as the new hire being a bit slow out of the gate turns into missed forecast calls, significantly lower closed won as compared to the rest of the team, and a sales management layer that is growing increasingly frustrated. After all, they feel as though they have thrown everything at helping this rep perform - with nothing to show for it.

This is when management pulls out the last tool available to them - the Performance Improvement Plan (PIP, for short).

What is a Performance Improvement Plan?

A Performance Improvement Plan, at its core, is a series of steps, milestones, and outcomes that are agreed upon between a rep and the company that enhance a rep's skills to a satisfactory level as compared to the sales team. In many cases (but not all), the PIP is also a legal artifact that is used to document rep performance in the event the rep is terminated (side note: this isn't a legal blog and nor is it written by lawyers, so always consult your HR legal team to get the best course of action for your company). Although many people believe that a PIP should only be used when reps consistently underachieve, there are many additional use cases for deployment PIPs:

  1. Rep consistently fails to complete forecasts on time, which impact the company's ability to effectively manage cash flow

  2. Rep consistently fails to attend key sales and/or product training that impact their ability to accurately speak to customers and achieve quota

  3. Rep consistently presents negative behaviors that impact the morale of the sales team around him/her

Although the above examples all can affect a rep's ability to achieve quota, they are not all directly tied to revenue/quota targets. At the end of the day, a PIP is the last-ditch effort you have to provide tangible goals to your reps that can cut out bad behavior and promote positive selling environment for your company.

Typically there are two components to think about with any SIP-eligible Performance Improvement Plan (PIP) - how to enable the rep (sales/sales ops) and how to protect the company in the event the rep needs to be terminated (legal). When creating a PIP, it's best to think about setting goals with the intention of retaining the rep in question, so companies should create goals and criteria that are measurable, achievable, and (if possible), tied to specific competencies and skills for the assignee's particular role and level.

What Goes Into a Performance Improvement Plan?

When designing a Performance Improvement Plan, it's important to think about the PIP as a supplement to the commission plan. Start by looking at the commission plan, the rep's quota, and other metrics that may shed light on why the rep isn't performing. Are they struggling with pipeline generation? Are they still trying to figure out the ins and outs of your product? Diagnosing the problem - including the rep as a key contributor to that conversation as well - can provide a good starting point for the Plan.

What behaviors does that rep need to change in order to enhance their performance? How often do these behaviors need to be repeated? When will they be measured? By documenting these behaviors and creating a step-by-step plan, you are ultimately giving the rep a roadmap back to performance level. Where possible, it's also best to ground these performance expectations within company policies and terms and conditions of your compensation program for maximum effectiveness (e.g. having a bad quarter isn't necessarily punishable but having a bad quarter AND not consistently failing to submit forecasts is).

Typically, the metrics tracked for Performance Improvement Plans include the following:

  1. Revenue/Production Targets: Give the rep a roadmap to success by helping them plan to hit their revenue target; if they are going to meet their performance expectations, how many emails/meetings/calls do they need to make to have a pipeline that will reasonably allow them to achieve?

  2. Educational Mandates: Create a plan for the rep to attend additional product/sales training materials (if available), shadowing a certain number of calls from successful AE's, and likely establishing additional 1:1 time with their manager to set this rep up for success.

  3. Process Mandates: Set a target for when certain tasks need to be completed (and at what accuracy level). For example. in the case of the above rep that isn't submitting their forecast on time, a good PIP metric would be "# of forecasts submitted before deadline" or "% of forecast that needs to be cleaned before submission." These things help address the negative behavior and establish documented metrics of performance - those may come in handy in the event of a rep dispute.

Finally, your Performance Improvement Plan should also have language that tells the rep what will happen if they don't improve behavior or fail to meet metrics included in the PIP. Typically this means the rep is terminated, but companies can exercise other options as well, such as delaying the rep's promotion or moving the rep to a different role in the company (although consider the morale impact on both the old and new teams if opting for this option. Work closely with your HR counsel on the specific language for your company and make sure this is a document that both the PIP rep and a company representative sign.

Make no mistake - placing a rep on a performance plan is a lot of work; not just to come up with the right metrics, tracking criteria, and PIP itself, but also to enforce it and ensure the rep has more than a decent chance to be successful. Otherwise, what was billed to the rep as a means to better themselves is really just a thinly veiled express exit from the company.

Are you struggling to define a performance improvement plan for a member of your sales team? Download Incentiv's Account Executive Performance Improvement Plan today!

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