How to Make a Performance-Based Sales Termination

By Butch Bellah

When you have to terminate someone based on sales performance, it’s not always as cut-and-dried as action-based or behavior-based offenses. Many times performance-based termination is the culmination of a process — you set out your minimum performance standards and determined someone isn’t going to be a long term part of your team.

It’s not easy, but keep in mind that you’re only responding to the employee’s actions or inactions. However, in order to cover yourself, follow a series of steps and handle it the same way every time.

Steps to follow for a performance-based sales termination

  • Establish and publish minimum performance standards.

    It’s important to not only establish your minimum performance standards but to publish them. Discuss them and ensure your entire team understands what is expected of them.

  • Communicate breaches of standards.

    When someone is falling below what you determined is acceptable levels of performance, communicate that (possibly verbally at first). Let your salesperson know that you’re aware of his performance and that it doesn’t meet the company’s criteria. Make it exceedingly clear what future ramifications are regarding his lack of production.

  • Counsel an underperforming salesperson.

    If the salesperson’s numbers don’t improve after an initial warning, sit down for a more detailed discussion of how you can help him. Ask what he feels is keeping him from achieving your goals. Does he need more training? Does he need access to something that hasn’t been available to him? Make sure he leaves the discussion with a set plan of action to improve his sales.

    Don’t assume you know what the problem is without sitting down with someone who isn’t meeting standards and asking questions.

  • Give a written warning.

    The step before termination should be a written warning. Let the underperforming employee know for certain that his performance is substandard and subject to termination. Don’t sugarcoat it. Make sure he knows the next step is the final one. This written warning should be signed by both parties and made a part of the employee’s personnel file.

Make the decision to fire a salesperson based on the data

One of the reassuring things about performance-based termination is you can really take all emotion and judgment out of it. Either the salesperson is or is not living up to expectations. There really is no decision to be made. The salesperson makes this one himself. You simply have to follow through with what you’ve said you’re going to do.

If you don’t have a timeline for the process from slipping standards to termination, establish one and stick to it. Every time! Perhaps when a new salesperson is hired you put him on a 90-day probationary period and make clear he’s expected to meet certain criteria.

The minimum performance standards are just that: minimum! You’re not talking about someone who’s just short of being a champion salesperson; you’re concerned about people who are barely making the cut. You have minimum performance criteria, and they aren’t meeting it. Others in your organization are not only meeting it, they’re far surpassing it — that’s why it’s a minimum. Don’t start to think you’re letting go of one of your best salespeople. You’re not.

After the 90-day probationary period if a new employee isn’t up to the minimum, you can issue a verbal warning and give him two weeks to get his numbers up. At the end of that two weeks, you sit down and counsel him to see whether he’s made any strides at all. You’re now four months in with this person.

After another two-to-four weeks, issue the written warning and give him 30 days to either meet your standards or be terminated. This puts you pretty close to a six-month mark with someone. You’re making a significant investment in him, and at this point you know if he’s going to get it or not.

If you put a step-by-step process in place, you must follow it every time. You can’t keep someone who is substandard because you like him or he’s a friend of a friend. If you do, you’re opening yourself up to some issues you probably would rather not face. You’re going to have enough problems without bringing some on yourself. Don’t put it off. Stick to the program.