In Sales We Trust - Pharmaceutical Executive

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In Sales We Trust
The survey reveals a shift toward sales volume—and away from training and competencies—as performance metrics.


Pharmaceutical Executive


It is fitting that sales organizations eat, drink, and breathe sales results. But is it appropriate to measure sales force performance on volume alone, with little consideration for the efficiency and effectiveness of the process? At what point can the end no longer support the means?

These are questions US pharmaceutical companies might want to mull over as the number of sales reps calling on a finite number of physicians continues to climb while sales productivity lags. The situation is reminiscent of the old college challenge of packing as many people as possible into a Volkswagen. Eventually, there is a limit.


Compensation Climbs
Given the investment companies have made in their people assets, they need to ensure that they are getting the best possible return. Most companies are eager to increase the productivity of individual representatives and realize better returns without perpetuating the "arms race" for more and more reps. In such an environment, it is all too easy for managers to focus exclusively on how well sales reps "deliver the numbers" when they make decisions about employees' readiness for promotion or the amount of their merit increases. After all, making sales count for everything pays off in the short term. But sales managers would be wise to continue giving some secondary consideration to the behaviors that have been identified as contributing to long-term success:
  • demonstration of specific competencies
  • attainment of various skills
  • completion of required training
  • achievement of multiple performance goals.

Taken together with a rep's performance against sales goals, these criteria can guide management decisions that will help companies attain maximum sales performance in the long run. That is just one of many insights drawn from the Hay Group's annual Sales Force Effectiveness Survey of US pharmaceutical companies. (See "About the Survey," ) This article will highlight the study's findings, covering general staffing trends, salary practices, and incentive compensation programs.

Still Expanding, But Slower Even though pharma companies are under pressure to cut costs and improve productivity, that business imperative does not yet translate into a need to trim sales force size or even reconcile the return from their investment in sales compensation. Both the number of reps and their paychecks continue to grow. (See "Compensation Climbs.") Market forces have not quite convinced sales organizations to relinquish their belief that "more is better," despite the fact that the number of study participants who report launching new products within the past year dropped from 77 to 55 percent.


Ranking Reps on the Rise
Still, there are some signs that sales force expansion is moderating. Only 14 percent of Big Pharma companies planned to add any reps in the near future. The number of national account managers and regional account managers, however, continues to grow in proportion to the rest of the sales force (about one percent). This demonstrates that companies recognize the importance of both roles in the opportunity for sales success.

The use of contract sales organizations (CSOs) is on the rise, suggesting that companies see temporary staffing as a practical solution to meeting current sales needs without the overhead and commitment associated with bringing employees on board. About one quarter of participating companies use CSOs—up from 15 percent in 2003. The trend toward using CSOs will likely continue: 17 percent of respondents reported that they expect to increase their use in the coming year.


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