Incentive Compensation plan facilitates the alignment of salespeople behavior with broader business objectives. There are guiding principles that need to be followed while designing an incentive plan.
Incentive Compensation is inherently a complex business process. The complexity is generally accentuated due to several reasons such as: 1.Geographically diverse business environments. 2.Dynamic market conditions
Do you still rely on Excel spreadsheets to manage sales incentive calculations for your pharma salesforce? Here are 7 signs you should start thinking about implementing an IC solution instead of spreadsheets for incentive management.
Management by Objectives is a management strategy which helps in alignment of broader corporate objectives by cascading down higher strategic goals to individual level goals depending on their function and expectations from their role. This approach was most prevalent for higher level roles and in industries with poor quality sales data or in cases where higher volatility in sales is observed. In the pharmaceutical industry until recently, this incentive plan type was primarily seen for managed markets roles and a few managerial roles. With the evolution of sales roles for specialty therapeutic areas, higher collaboration requirements with other teams and stringent compliance regulations, several companies are moving towards a combination of qualitative and quantitative sales performance measures to calculate incentives of their salesforce to account for changing business dynamics.
Why sales organizations around the world use sales quota achievement as a primary performance metric? It is because sales quotas can help provide visibility to the salesforce on the target that needs to be hit and align the sales force to broader business objectives. In addition, quota achievement plans are easy to administer by HQ and easy to understand by the salesforce which results in increased motivation and engagement of the salesforce.
The life sciences industry is evolving quite a bit with more and more companies focussing on the research and commercialization of specialty drugs. These new product launches at times are in relatively newer areas and always brings in too many uncertainties with them. Despite of thorough market research using epidemiology techniques and availability of sophisticated forecasting tools/methodologies, it is often difficult to predict how a newer product is going to do in any particular market.
“What-if” calculators help clarify the relationship between sales performance, corresponding performance measures, other plan parameters and final plan earnings.
A comprehensive assessment of IC plan administration based on four critical aspects - Outcomes, Processes, People and Systems. Our Incentive Plan administration health check tool helps you to identify the level of effectiveness of your IC plan administration based on the above aspects.
For any incentive compensation (IC) program to be successful, a skilled team is required with right mix of technology, process and business expertise. It is very important for this team to understand the importance of quality and build a strategy to incorporate appropriate quality framework into broader operational paradigm.
Many small and medium sized pharmaceutical companies still rely on excel spreadsheets or home-grown script based solutions to manage sales incentive calculations for their salesforce. There are many limitations with these solutions which Aurochs solution suite can help with without breaking the bank. Here is an infographic explaining differences between Aurochs Software and Excel Spreadsheets using various parameters around outcomes, people, process and technology. This is largely applicable for other home grown script based solutions as well.
Several factors needs consideration when justifying investment into an incentive compensation solution as they may have impact on the selling time, motivation etc. Aurochs has created a standard model for calculating cost of using an ineffective incentive compensation management system which you can tweak to your business situation. Use it to estimate the cost impact of using an inefficient IC system and build your business case for implementing an industry standard solution around it.