Ingram et al. (2015) explain how a manager evaluating the sales organization\'s
ID: 335383 • Letter: I
Question
Ingram et al. (2015) explain how a manager evaluating the sales organization's effectiveness might reach different conclusions depending on whether they analyze sales dollars or sales units:
Analysis of sales dollars or sales units provides different evaluative information. It is possible that by analyzing only sales dollars all districts in a region might show substantial sales growth. But, when sales units are introduced, the dollar sales growth for all districts could be attributed almost entirely to price increases if units sold increased only minimally during the evaluation period. Sales figures likewise could be distorted by selling more lower-priced products or by granting larger price concessions. (Chapter 9, p.4)
Combine this information with the passage above. Think about the following questions:
"Raising the bar" is a common saying in the corporate world. How does the way in which the bar is set (e.g., using concepts described above, such as dollar or units) affect salesperson perception and motivation?
What issues may arise in measuring individual sales performance in light of overall team sales performance in terms of dollars versus units?
Explanation / Answer
Raising the bar, we as professionals may have heard this term from our senior or supervisors or mangers and may be even we have used this term and this term is very common in business organizations where the employees are said this for various aspects like for increasing the quality of work, generate more revenue, increase the efficiency , etc. Now, if we look at a business organization we will observe that at the end of the day it is revenue and p[refit that matters and the organization may want to achieve that by increasing sales or by increasing the price of the product by increasing the quality. Now there are other factors to that contribute to this aspect because if management evaluate the performance of the organization based on revenue generated from sales they might get a rising curve but if the evaluation is done based on unit of sales it may be observed that the growth is not considerable and there may be instances where there is no growth at all. The revenue growth was because of the increase in price and not increase in sales hence the manager in order to motivate employees may use the term "Raising the bar" which may help motivate employees and change their perception towards work.
While measuring performance of employees based on individual performance and based on team performance it will differ also based on unit of sales and revenue based on sales. The issue may arise that the team may perform very well based on unit of sales but it may also happen that individual performance of some employees are not as per the expectations. Again the reverse is also possible when some individuals in the team may perform far better than the collective performance of their team. As conveyed that there is Unit and revenue factor as well where the growth should be measured based on both the parameters for better understanding of the process.