More than half of all mergers fail due to integration issues, according to Booz Allen Hamilton. The most oft-cited reasons
for that failure are people-related: slow execution, culture clashes, low retention rates, and lack of communication.
Mark A. Stiffler
The key to proactively addressing these people-related failures is ensuring that all employees in the merged organization
understand what is important to the combined business, how each person can contribute to its objectives, and what measures
and rewards are used to recognize individual performance.
Nowhere is that more important than in pharma's sales organizations. With all the mergers and acquisitions, a company can
suddenly find its sales force doubled in size, with all reps calling on the same doctors, perhaps even delivering contradictory
messages about the newly merged product line—with each rep rewarded or penalized without regard to reinforcing the right sales
Instead, companies might consider using enterprise incentive management (EIM) to better manage reps' compensation, including
commissions, performance-based bonuses, and other types of variable-pay plans.
EIM solutions clearly align the sales strategy with incentives by eliminating the various and confusing implementation and
management constraints. In doing that, EIM also
» enhances morale and trust by reducing errors and inaccurate payments
» increases productivity by eliminating "shadow accounting" done by individuals because they don't trust the accuracy
of plan results
» improves decision-making by sharpening visibility into plan performance
» increases profitability by reducing administrative and IT costs.
Incentives are an important way for a company to communicate its priorities to its sales force, and to make clear that sales
reps can earn more money by supporting the right behaviors.
Wyeth and Amersham Biosciences are two companies that used EIM to align reps' rewards with sales strategies after undergoing
Case Study: Wyeth
In the early 1990s, Wyeth was using an internally developed, mainframe-based incentive-compensation management system.
Although this system once served Wyeth's needs, it became increasingly difficult to maintain when Wyeth merged with American
Cyanamid in 1994, doubling its sales force.
The two companies had different methods for managing employee performance and administering incentive compensation plans.
After the merger, Wyeth found itself with dozens of incentive plans—with each plan working differently based on the products
reps sold and the part of the organization in which they worked—for several thousand employees. This complexity meant the
field force didn't have a clear understanding of how its performance affected its incentive payments.
Wyeth knew it needed a new system to manage the administration of reps' diverse compensation needs in the newly merged company,
and to provide sales performance reporting. It considered a range of possible EIM solutions, including custom software applications
to be used in-house, third-party software, and complete outsourcing of the incentive-compensation management process. The
company ultimately decided to implement an EIM solution as an outsourced service, relying on the solution provider to administer
the day-to-day details so Wyeth's staff could concentrate on more strategic issues.
The outsourced service solution transformed the company's incentive-compensation management process. Specific budgets for
incentive compensation programs were created and spending was tracked, enabling the company to manage the budget closely and
ensure equality across different groups. That allowed managers to understand whom were the most effective reps, and what were
the most effective behaviors. It also ensured that Wyeth could forecast its sales incentive expenses accurately, and manage
the budget if a particular product proved more popular than predicted. Wyeth also was able to improve on other measures, such
as reducing by a third the time it took to mail bonus reports to reps.
Case Study: Amersham Biosciences
When Amersham International and Pharmacia merged life sciences business in 1997 to create Amersham Biosciences (now a division
of GE Healthcare), Amersham had been acquiring two to three companies per year. This acquisition spree opened a Pandora's
box of diverse sales cultures and approaches to pay-for-performance.