Pharmaceutical Executive Europe - June 2008 - (Page 24) 24 Sales Force Incentives June 2008 Pharmaceutical Executive Europe great as it would be if the sales team was to set the objectives itself or negotiate them. This lack of participation may impact on the level of genuine buy-in or commitment that can be stimulated by a purely top-down approach. Ultimately, of course, companies will opt for a model that not only delivers the strategic goals but one that also fits their managerial culture and structures. managers with those reps who are off-course and lessons to be taken from those performing well above the average. Summary This series of articles has offered insights into best practice incentive compensation plan diagnosis, design and goal setting for the sales force. Significant rewards are available to those who deploy well designed and administered plans including: ● strategic alignment which means that compensation plans reflect and promote and focus on market strategies; ● a set of balanced objectives that appropriately motivate and reward key soft behaviours, for example relationship building and team selling that focus on customer needs; ● clarity and fairness, which means the sales force fully understands and accepts its incentive compensation programme and can easily track progress and performance during the year; ● improved retention rates among high performing team members that save on recruitment and training costs; ● financial efficiencies from eliminating overpayments to the sales force; and ● improved levels of morale from a reduction in the number of disputes caused by underpayments. A range of factors highlighted in these articles mean that incentive compensation is becoming a hot topic — don’t be left out in the cold. Testing of options The really fundamental question is whether a new goal setting process can improve on the efficacy of the one it replaces. Coming out the initial diagnostic phase, for example, will be a comparison of the objectives set versus those realised — were the outcomes at least in line with expectation or below? Did the high achievers receive higher rewards compared to the low achievers? Once the new goal setting process has been built, or when options are being considered, it is possible to look back into the past and simulate how the new model would have worked had it been in operation at that time. Implementation Implementation requires a series of regular, periodic reviews that track and report on progress made by the sales reps towards their goals. This can be done on a quarterly or even monthly basis but inevitably entails a considerable amount of administration and report generation. In January 2008, IMS entered into a partnership agreement with Callidus Software — a leading supplier of specialist sales performance management software — to help clients track and handle all the data and reporting associated with this. From this data forecasts can be made about whether reps are likely to hit their targets by the year end. Such forecasts provide a powerful early warning system that enables timely interventions to be made by About the Author Frank Wartenburg is vice president, EMEA Sales Force Effectiveness at IMS Health. Figure 2: The approach for goal setting projects follows a similar logic to plan design, but is less complex. 1. Situation analysis and definition of requirements 2. Understand territory level historic relationships 3. Develop goal Setting options 4. Testing of options 5. Decision on methodology and Implementation • Structure of the current goal setting methodology • Objectives and strategies for the products • Data gathering (national, territory, brick and customer) • Goals, constraints and requirements for the new plan • Review of territory • Development and • Modeling and setting of performance to pre-selection of goal goals based on classify as high, setting methodologies methods selected medium and low based on client • Comparison of performers requirements, drivers of performance metrics • Analysis of historical territory performance to attainments to data to understand and benchmarks measure correlation territory market • Agreement on max. two with objectives potential and trends further to be analysed • Evaluation of the goal • Determination of goal setting setting and assessment drivers of territory methodologies by of geography levels to performance by using product show the impact of regression analysis various approaches • Final decision on goal setting methodologies to be used by product • Documentation of goal setting methods and application of goals • Definition of roll-out of goals and whether managers are allowed to change goals and what are the conditions to be fulfilled when changing
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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