Pharmaceutical Executive Europe - June 2008 - (Page 23) Pharmaceutical Executive Europe June 2008 Sales Force Incentives 23 reflected in how much bonus is eventually allocated to the pursuit of each brand’s target. ‘Hard’ revenue-based or growth-based brand objectives are not, however, the only element within the typical framework. Companies wanting to develop certain processes, shift culture or foster particular behaviours, may also choose to target qualitative components within the framework. For example, a company wanting to build more of community with doctors may target its reps to organise ‘roundtables’ or strengthen networks with key opinion leaders. As we have seen, specific goals set for an individual may be derived from the disaggregation of the headline strategic brand objective (e.g., grow brand x by 7% by year-end). The process of disaggregation can be complex, involving the establishment of national, regional and territorial sub-objectives before eventually arriving at a set of personal goals for each sales rep. At this stage individual targets also need to be checked to see whether they are reasonable for each individual and that the sum of all the parts still adds to the theoretical achievement of the regional/national goal. As well as setting goals for the individual, goals may also be set for the sales team as a whole. When objectives are set for a particular individual then that person should be in a position to exert influence on the actual outcome by what they do, or how they approach their job. The actions of others, of course, nearly always have some bearing on the outcomes achieved, but when desired outcomes are known to be highly dependent on the performance of others, it would be fairer to set a common goal for the group. In circumstances where an account management sales model operates, or needs to be enabled in the future, the cosetting of objectives, around say relationship building, or the level of client satisfaction, might therefore be appropriate. It’s also worth stressing that any goals set should be perceived as fair and reasonable by the reps. These are key success criteria that rank alongside the need to express goals in a SMART way. In the more participative models of goal setting, what might happen is that the national objective is broken down into regional goals by the corporate centre and then teams within the region negotiate how this is then further split across the territories. The advantage of this mixed top-down, bottom-up system is that the teams begin to take ownership of what happens. Issues do arise, however, if one team has an internal competitive advantage over another and is able to negotiate an easier target. A variation on this negotiated model occurs where reps are given their personal objectives centrally but have the opportunity to negotiate a lower target — if the one put forward is too stretching — or indeed a higher one, if they feel they could achieve more. Alternative participative models include a pure bottom-up approach. Here no national objective is announced, rather individuals or teams determine their own objectives and these are aggregated to create a regional or national target. The problem with this approach is that inevitably there is a mismatch between the aggregated sales force objective and that required by the strategy. Agreeing a final set of objectives can therefore be a time-consuming process. In a survey conducted by IMS last year, 72% of company respondents said they set objectives primarily from the centre. This included 30% of respondents who said they used a hybrid approach. Only around 10% said they set objectives in a decentralised way. Which model is best? Each of the approaches described has attendant benefits and disadvantages. For example, a top-down approach is typically easier to manage, more transparent, and fairer since differences in negotiating skills between individuals or teams are irrelevant in this environment. On the downside, the level of participation or engagement between management and the sales force is not as Figure 1: An interactive process which includes feedback from the sales managers is critical. Options — the goal setting process Goals do not have to be set using a top-down, centralised approach that may start with a headline revenue goal for a brand, for example, and divide it between the reps in some formulaic way. Some companies chose to adopt more of ‘bottom–up’ approach or use some hybrid model that combines the two. Alternatively, but somewhat outside of the goal setting process, companies may not go as far as setting, or even negotiating, specific goals for teams or individuals. Rather these companies, having communicated the headline strategic objective/key results areas for the year ahead, divide the budgeted sum for incentive compensation across the workforce according to the performance ranking of the reps at the end of the year — rewarding the highest performers the most. The available budget can, of course, be shrunk if the overall headline goal is not achieved by the company. Goal allocation method Calculate Evaluate Yes Head office authorisation ? Yes No Meets national objectives & performance criteria ? Yes Territory goals sum up to national goal? No No Delivery Manual adjustment required? Yes Changes to territory level goals done by field managers No
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Europe - June 2008 Pharmaceutical Executive Europe - June 2008 Contents From the Editor News and Analysis Calendar Brussels Report - Tell Us Something We Didn’t Know BioFutures - Friends, Acquaintances and Strangers IT Matters - The High Cost of Swimming Upstream Strategy Fundamentals - Hidden in Books Corporate Strategy - New Dimensions for New Business Models Special Report: Making the Leap Sales Force Incentives - The Goal: Setting Goals Last Word Pharmaceutical Executive Europe - June 2008 Pharmaceutical Executive Europe - June 2008 - Pharmaceutical Executive Europe - June 2008 (Page Cover1) Pharmaceutical Executive Europe - June 2008 - Pharmaceutical Executive Europe - June 2008 (Page Cover2) Pharmaceutical Executive Europe - June 2008 - Contents (Page 3) Pharmaceutical Executive Europe - June 2008 - From the Editor (Page 4) Pharmaceutical Executive Europe - June 2008 - From the Editor (Page 5) Pharmaceutical Executive Europe - June 2008 - News and Analysis (Page 6) Pharmaceutical Executive Europe - June 2008 - News and Analysis (Page 7) Pharmaceutical Executive Europe - June 2008 - Calendar (Page 8) Pharmaceutical Executive Europe - June 2008 - Brussels Report - Tell Us Something We Didn’t Know (Page 9) Pharmaceutical Executive Europe - June 2008 - BioFutures - Friends, Acquaintances and Strangers (Page 10) Pharmaceutical Executive Europe - June 2008 - IT Matters - The High Cost of Swimming Upstream (Page 11) Pharmaceutical Executive Europe - June 2008 - IT Matters - The High Cost of Swimming Upstream (Page 12) Pharmaceutical Executive Europe - June 2008 - Strategy Fundamentals - Hidden in Books (Page 13) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 14) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 15) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 16) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 17) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 18) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 19) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 20) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 21) Pharmaceutical Executive Europe - June 2008 - Sales Force Incentives - The Goal: Setting Goals (Page 22) Pharmaceutical Executive Europe - June 2008 - Sales Force Incentives - The Goal: Setting Goals (Page 23) Pharmaceutical Executive Europe - June 2008 - Sales Force Incentives - The Goal: Setting Goals (Page 24) Pharmaceutical Executive Europe - June 2008 - Last Word (Page 25) Pharmaceutical Executive Europe - June 2008 - Last Word (Page 26) Pharmaceutical Executive Europe - June 2008 - Last Word (Page 27)
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