Sales Management: Pay-for-Performance - Pharmaceutical Executive


Sales Management: Pay-for-Performance
Incentive management helps align sales force strategy with reps' compensation.

Pharmaceutical Executive

The company was managing its incentive compensation plans with four different software tools—Microsoft Excel, Lotus Notes, Oracle, and Business Objects. However, these homegrown systems were labor-intensive and not adaptable to change. After the merger, the sales operation staff struggled just to meet the payroll deadline, and wasn't able to analyze plan performance. It often took six weeks to calculate payments and four weeks to correct errors, so the sales operations department spent 10 weeks out of every quarter paying incentives.

It often was far into the next quarter before Amersham reps gained a clear picture of their performance. The delay in computing payments and the poor reporting meant sales reps didn't understand why they were getting paid and, consequently, what their priorities should be. Feedback from the field showed that confidence in the existing incentive-compensation structure and the morale of the sales force was at an all-time low. Management realized it was time to bring consistency and simplicity to the incentive-compensation plans.

Using an EIM provider, Amersham delivered the first bonus reports to the sales reps in February of 2002. By year- end, there were no more underpayment errors, saving four weeks of headaches for the reps and the sales operations group. (The reduction in errors indicated that overpayments also had been reduced, saving the company money.) Accurate and complete incentive payments were being made within six weeks of the quarter's close, a much more respectable performance than the 10 weeks it used to take.

There also was a 20-percent drop in rep turnover. Although that might not directly correspond to adoption of EIM, the system did enable the company to respond more quickly to market changes and new product launches, and therefore, offer reps more opportunities.

"Amersham's sales compensation system had not kept pace with its increasingly specialized sales force, growing product line, and complex compensation programs," says Dan Eldridge, manager of commercial systems at GE Healthcare Biosciences. "Sales reps had lost confidence in the incentive-compensation and sales-reporting systems. Implementing EIM proved to be a life-saving move."

Today, GE Healthcare Biosciences consistently makes its quarterly incentive payments within four weeks of the quarter close. As a result, surveys of the field force show that GE Healthcare enjoys its highest level of sales rep confidence in sales and incentive-compensation reports in more than five years.

Mark A. Stiffler is president and CEO of Synygy. He can be reached at

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