GSK Rethinks Rep Compensation

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Bonuses for reps at GlaxoSmithKline will soon be based on customer feedback and adherence to company policy, not sales targets. The move promises to transform sales & marketing, but the company offered few details about how the plan will be implemented.

GlaxoSmithKline has committed to a radical change to its compensation plan for its U.S.-based sales force that will no longer incentivize sales reps to push drug sales. Beginning in 2011, bonuses for most members of its sales force will no longer be based on targeted sales numbers. Instead, GSK reps will be evaluated “by customer feedback, and by a sales professional's adherence to the company values of transparency, integrity, respect and patient-focus,” the company explained in a statement.

The company offered few details about how the program will be implemented, but insisted that it was not an effort to cut marketing costs. “We don’t expect the change to have an impact on the overall earnings potential,” Kevin Colgan, a GSK spokesperson told Pharmaceutical Executive. “We are working with all levels of the organization to develop new tools to evaluate how our sales professional are doing. We will continue to hold them accountable with our values, transparency and respect for what’s best for the patients.”

Perhaps the most unusual aspect of the change was the public announcement—compensation plans seldom merit a press release. “It’s interesting that it was announced in such a public way,” commented Stephen Redden, managing principal incentive compensation practice area for ZS Associates. “This is a way to signal to customers that they heard them and they are implementing changes as a result.”

The larger question, however, is how the change will impact the sales force. The move appeared to be in line with the company’s effort to pare down its sales force so that most physicians only see a single GSK representative. Last month the company cut 700 sales and marketing positions, according to the Wall St. Journal Health Blog.

How much reps embrace the new plan and whether more companies follow suit will depend on how successful GSK is at implementing the changes. It typically will take four months to institute a new incentive compensation plan—and this plan is likely to include new measures.

The change may also have a significant impact on the company’s sales force. “Whenever you make a dramatic change in the plan, the profile of the people will change,” Redden said.

GSK though sees the changes as part a broader transformation. “We’re moving from a transactional product-focused model to a dialogue focused model,” explained Colgan. “Our professionals take great pride in serving customers, most of them will see these changes as positive and embrace them.”