MBO Examples to Kickstart Your Sales Team Engagement
When was the last time you thought to check-in on the goals you set for your employees? Even better, when is the last time you followed-through and actually turned that thought into action? More often than not, the answer to both of those questions is not very often. Management by Objectives, aka MBOs, are goals set for employees to improve overall sales performance, as agreed up on by sales manager and rep.
If you aren’t employing a solid MBO program, especially one that is automated, then your answer is probably close to never. MBOs can be an extremely useful tool in addition to your sales commission structure because they give each rep individual goals to strengthen the overall sales organization. And, they can have a big impact on sales team engagement and motivation.
How MBOs Affect Sales Team Engagement and Motivation
While your situation might not be that extreme, the point is we often take employee engagement and motivation for granted. We go through great pains ensuring we hire top talent candidates that should be a “good fit” with company culture, and we fight like mad to help improve morale when sales team’s work or attitudes go south—but all too frequently, there is no in-between.
To help, we’ve created MBO examples to get you going in the right direction and help you visualize how goals and objectives might differ by industry and role (Note: the same should apply for compensation and commission plans), whether it’s in sales, marketing, or manufacturing. These examples demonstrate how successful companies go through the process of making achievable goals alongside their reps for the entire sales organization—and not against them.
Setting Goals That Drive Sales Engagement
With 70 percent of employees not fully engaged (according to a recent study), nearly three out of four of your sales reps are more or less “checked out”—which is a big red flag for missing sales quota. It’s extremely important to keep reps engaged and motivated to meet quota. How exactly do you do that?
We need to be doing more.
Meaning, we need to do more than sleepwalk through the traditional activity of “goal setting” for sales teams. We have all been involved in far too many conversations about goals, setting what might actually be some pretty good ones, only to virtually flush them down the toilet by not tracking progress or ever talking about them again—until it’s too late.
You already know the traditional method of coming up with and tracking goals is manual and cumbersome. In order to truly see success and drive performance, sales leaders must revisit goals periodically, analyze results, and adjust strategy to keep reps on track. You know your goals need to be SMART-er (Specific, Measurable, Achievable, Relevant, and Timely), and that the process needs to be automated to ensure maximum visibility and buy-in.
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MBO Examples to Motivate Reps and Drive Performance
There’s no question cloud computing is growing fast, and is extremely competitive. Thus, customers expect immediacy and perfection, and that their providers are up to date with the absolute latest and greatest. As a result, you might see a traditional organizational goal for those in software sales stated as something like “Sell 1,000 units of new product.” Fair enough.
Now, think about it. As a manager, if you stopped right there, what percent chance of success would you put on your people achieving that goal? With such a general statement, how could you know? Where do you even begin other than giving the directive to “sell more”?
In an MBO program, the organizational goal is translated into a personalized objective, and attached to the MBO bonus—which can only happen when manager and employee collaborate and set the goal together. During such a discussion, you’ll probably talk about what needs to happen first in order to enable the team to sell the new product. One action item could be that reps need to learn about the new product themselves in order to pitch it. Another might be letting existing accounts know the new product has launched, and so on. And, because you should be setting SMART goals, the following questions would need to be answered:
- Which specific accounts should reps be educating?
- How many of their accounts need to be educated?
- Why is educating accounts on the new product important?
- What is the deadline for educating the accounts? Are there different goal stages?
After all of that, you might be left with a personal objective of: “Educate ten tier-one accounts on new product by 9/30/16 and another ten by 10/31/16 to help increase awareness, and next quarter sales.” In reward for meeting that goal, the rep might be compensated $3,000, or maybe even $1,500 for completing the first half, and $1,500 for the second.
How does this goal stack up against commonly-held MBO principles?
- Have you translated an organizational goal to an employee objective? Yes.
- Is the goal specific, measurable, achievable, relevant, and time-sensitive? Yes.
- Did the employee participate in setting the goal? Yes.
As you can see, an MBO program is more than a manager setting goals for their employees. It is manager and employee working together to break those goals down into smaller objectives. And, if you had an automated system in place, as employees set out to meet their goals, they could have visibility into how their related compensation would be impacted for meeting or missing goals—encouraging and motivating successful behavior in real-time.
Download the "2018 Sales Compensation Administration Best Practices Executive Guide," for incentive compensation trends, best practices, and tips to drive the right sales behaviors to kickoff your sales compensation planning.
An MBO program is a great tool for driving the behavior of non-sales-related activities, too. For instance, those in digital or online marketing are tasked with something along the lines of increasing site traffic, conversions, etc. A broader organizational goal in this regard could be something like “Increase brand authority and become an industry influencer.” Putting that goal in MBO form could look like:
Joe Smith; Q3 2016; Target: $3,000
Goal: Publish 30 blogs that demonstrate our authority/status as industry leader by 10/31/16.
-Brainstorm list of 50 blog topic possibilities by 8/15/16 (10%, $300)
-Schedule 30 blog topics by 8/31/16 (10%, $300)
-Publish 15 Blog Posts by 9/31/16 (40%, $1,200)
-Publish 15 Blog Posts by 10/31/16 (40%, $1,200
Again, an MBO system requires you really understand the scope of employee responsibilities, and which goals will positively impact the company the most. For an engineer, maybe it’s something around attaining X hours of personal development each quarter (to support the organizational goal of staying on the cutting edge of the industry), or finding and correcting 10 product bugs (to support the organizational goal of providing a flawless user experience).
Whatever the goal, think about rewarding the right behavior, though. If you’re paying by bugs found and fixed, bugs will be found and fixed—no matter how significant or resource-intensive those bugs might be. Employees go to great lengths to achieve bonus compensation, which is great when you’re rewarding the right behavior, but detrimental if not thought through completely.
Thanks to complex buying cycles and manufacturing processes, success here depends on leveraging data for the identification of new opportunities, and then mobilizing teams to meet new market and technology demands. MBO examples might center around international OSHA laws, return management, productivity improvement, or employee training.
Many business leaders are utilizing automated MBO solutions as tools to reach goals like surveying sustainable manufacturing—motivating, and rewarding their teams to produce less waste and emit fewer greenhouse gases during manufacturing.
Download "Designing Sales Compensation Plans" to learn best practices for building incentive plans that drive the right behaviors.
Pharmaceutical Sales MBO Examples
Talk about a juggling act—regulation, generic competition, constraints of costs, health care reform, and more are all challenges those in pharmaceuticals need to overcome. Thus, measurable goals on things like appointments set each month, doctors talked to each week, and quantity of product sold within a given period are all suitable examples that will help each individual contribute to the greater organizational goals. Employee performance management software can assist in mitigating the risk of losing critical data about events and documents, while allowing you to easily follow the audit trail.
With all of these examples of MBO, the visibility an automated solution provides allows managers to easily see how well employees are performing on agreed-upon goals. And, giving employees a simple way to see how their objectives are tied to their bonuses – and being able to pay them immediately after period close – has a significant impact on performance and company culture.
From there, employees are inspired to do their best work—and their part in helping meet the larger goals of the company.
Driving ROI: The Business Case for a Comprehensive Sales Performance Management (SPM) Solution
Hobson & Company, a research firm focused on ROI and Total Cost of Ownership (TCO) studies, worked with Xactly to explore these challenges. The white paper highlights examples of operational and business benefits that can be realized with Xactly's comprehensive sales performance management solution from Xactly across sales planning, execution and optimization.