Pharmaceutical Executive Europe - May 2008 - (Page 29) Pharmaceutical Executive Europe May 2008 Sales and Marketing 29 As each product in a portfolio may have its own associated incentive compensation plan, remuneration packages may, over time, start to look very complex and detract from the need to provide clarity of plan design to the sales force. This lack of clarity will be compounded if the company’s communications to the sales force about IC is also less than satisfactory. Barriers to change Unpublished research commissioned by IMS about IC conducted in February and March 2008 has also shed light on the barriers to change that pharmcos (in France, Italy, Germany and the UK) perceive. The barriers tend to hold companies back from reviewing IC frequently enough to make it fully effective as a strategic business tool. They include: ● work councils/unions (Germany, France, Italy); ● a general desire for stability; ● the inertia/effort required to undertake an internal review of IC (only 60% of companies surveyed undertook projects internally). Interestingly the companies surveyed reported that the sales force itself rarely presents a barrier if changes to IC plans are communicated sensitively. A minority of companies surveyed reported that changes to IC plans were, in fact, made in response to feedback from their sales teams, although these typically took the form of ‘tweaks’ rather than more wholesale changes to the scheme. Germany and Italy the pay mix is very difficult to change therefore it is very likely that this part will be left out. By pay mix we mean how total remuneration is broken down into its constituent elements of salary and bonus and the potential size of the bonus available for exceptional performance. The right pay mix depends on many factors including the status of each product, the composition of the product portfolio and market dynamics. Figure 3 shows four market scenarios and an appropriate associated pay mix. Reading the market for a product wrongly can leave companies exposed to a high level of financial risk — particularly if bonuses are uncapped and too many reps get too much bonus because it was easier to achieve target than had been expected when the plan was designed. One of the particularly interesting discussions that occurs at Step 2 in the design process es around how companies decide to spread the bonus. Sometimes they may want to engineer a situation where more reps achieve a higher percentage of their bonus. In other Figure 2: Four stages of the new IC plan. Best practice — four-step IC plan design The diagnostic phase that Steffen Maennche described in his last article typically provides the baseline for improvements moving forward and answers the following questions: ● Is the plan perceived by reps to be fair? ● Is the plan aligned with corporate goals/objectives? ● Is the plan too complex for reps to understand? ● Does the plan have right pay level relative to performance? ● Are high performers adequately compensated? ● Is there inherent bias in the plan? The plan design phase creates and optimises all plans and aligns them to product strategy. At IMS we split this phase into designing the plan itself and then goal setting (the subject of next month’s article). This activity is supported by work around agreeing the complete set of ‘eligibility rules’ — an important lever to ensure the payout is applied appropriately — and designing ‘Contests’ and special incentive programs aligned with new market situations or short-term actions, and ‘Award schemes’ that provide longer-term incentives. The plan design phase itself is broken into four steps as shown in Figure 2. Step 2 is around designing the plan structure. This has three major components: the pay level/mix; the type of plan; and the desired performance criteria. In many EMEA countries like France, Figure 3: Rewards determined by greater need for specialisation. http://www.nxtbook.com/nxtbooks/advanstaruk/pharmexeceurope0408/#/28 http://www.nxtbook.com/nxtbooks/advanstaruk/pharmexeceurope0408/#/28
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Europe - May 2008 Pharmaceutical Executive Europe - May 2008 Contents From the Editor News and Analysis Calendar Rising in the East Use Your Strategic Discretion A Blueprint for Success Market Access and the Patient Activating Effective Product Differentiation What Doctors Want IC Success in Four Steps Pharmaceutical Executive Europe - May 2008 Pharmaceutical Executive Europe - May 2008 - (Page Bellyband1) Pharmaceutical Executive Europe - May 2008 - (Page Bellyband2) Pharmaceutical Executive Europe - May 2008 - Pharmaceutical Executive Europe - May 2008 (Page Cover1) Pharmaceutical Executive Europe - May 2008 - Pharmaceutical Executive Europe - May 2008 (Page Cover2) Pharmaceutical Executive Europe - May 2008 - Contents (Page 3) Pharmaceutical Executive Europe - May 2008 - From the Editor (Page 4) Pharmaceutical Executive Europe - May 2008 - From the Editor (Page 5) Pharmaceutical Executive Europe - May 2008 - News and Analysis (Page 6) Pharmaceutical Executive Europe - May 2008 - News and Analysis (Page 7) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 8) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 9) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 10) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 11) Pharmaceutical Executive Europe - May 2008 - Rising in the East (Page 12) Pharmaceutical Executive Europe - May 2008 - Rising in the East (Page 13) Pharmaceutical Executive Europe - May 2008 - Use Your Strategic Discretion (Page 14) Pharmaceutical Executive Europe - May 2008 - Use Your Strategic Discretion (Page 15) Pharmaceutical Executive Europe - May 2008 - A Blueprint for Success (Page 16) Pharmaceutical Executive Europe - May 2008 - A Blueprint for Success (Page 17) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 18) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 19) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 20) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 21) Pharmaceutical Executive Europe - May 2008 - Activating Effective Product Differentiation (Page 22) Pharmaceutical Executive Europe - May 2008 - Activating Effective Product Differentiation (Page 23) Pharmaceutical Executive Europe - May 2008 - Activating Effective Product Differentiation (Page 24) Pharmaceutical Executive Europe - May 2008 - What Doctors Want (Page 25) Pharmaceutical Executive Europe - May 2008 - What Doctors Want (Page 26) Pharmaceutical Executive Europe - May 2008 - What Doctors Want (Page 27) Pharmaceutical Executive Europe - May 2008 - IC Success in Four Steps (Page 28) Pharmaceutical Executive Europe - May 2008 - IC Success in Four Steps (Page 29) Pharmaceutical Executive Europe - May 2008 - IC Success in Four Steps (Page 30)
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