Salesperson Evaluation Using Relative Performance Efficiency: The Application of Data Envelopment Analysis

The authors propose a data envelopment analysis (DEA) based approach that provides a measure of relative (to best) performance efficiency and outlines several evaluation methods currently in use and their pros and cons.

Abstract

A recurring, but unresolved, issue in salesforce research is the choice of salesperson performance evaluation methodology. Salesforce compensation is typically based on some form of evaluation, and hence the assessment method used is critical. The authors outline several evaluation methods currently in use and their pros and cons. Some methods are purely output or purely input based, and often employ only one indicator of performance. Still other methods use absolute ratios of outputs to inputs, or compare performance with the “average” performance rather than the “best.” The authors propose a data envelopment analysis (DEA) based approach that provides a measure of relative (to best) performance efficiency. An empirical example illustrates the proposed method of salesperson evaluation. The advantages of the proposed approach are discussed along with a description of situations in which its use may be more appropriate.