Pharmaceutical Executive Europe - April 2008 - (Page 32) 32 Sales: Incentive Compensation April 2008 Pharmaceutical Executive Europe Key diagnostic steps The initial step involves gathering four different types of planning data — including personal feedback from reps and other stakeholders — that will help diagnose the current plan and give insights into what works, what is broken and where there are opportunities for improvement. This ‘unified’ approach brings quantitative/hard and qualitative/soft data together to provide a thorough overview of the situation. Having gathered the data the next step is to assess the current plan to measure its accuracy and overall fairness. From this we will discover, for example, the number of reps who receive too little or too much payout because of calculation errors; whether there is a level playing field across all the territories and product areas or whether there is an unintentional inbuilt bias; if the distribution of payouts follows expected patterns; and if there is a clear link between performance and payout. In short, we will have a good view of the efficacy of the plan and be well placed to recommend any improvement options. About the Author Steffen is a principal in IMS’s EMEA Sales & Account Management practice. He has extensive pharma consulting experience from more than 120 projects in over 20 countries across Europe, Asia and Africa. He also has in portfolio optimisation and pricing and market access experience. Previously, he was a consulting principal in IMS’s German organisation. Steffen started his career at Scicon, a German-based consulting company, in 1996 (Scicon was acquired by IMS 1994). There, he worked for both pharma and manufacturing clients including BMW, DaimlerChrysler, MettlerToledo and Schwäbisch Hall. Steffen holds a degree in management science and operations research. Payback According to Gartner, there are substantial gains and avoidable losses to be saved from a properly administered incentive compensation plan. Furthermore, where the design of the scheme is improved to turn lost opportunities into new business, the potential revenue gain can be as much as 5% of sales. ■ Best practices in designing compensation schemes will be the subject of the next article on incentive compensation to be published in June 2008.
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