Other Incentives: Completing the Package
The percentage of companies offering stock options as a long-term incentive did not change significantly between 2006 and
2007 for any of the sales and marketing jobs. Forty-four percent of responding companies offer those options to sales reps,
and nearly all offer them to sales and marketing executives. Far fewer companies are now offering incentive stock options
(i.e., where the number of options is determined by an individual's performance)—the percentage of which dropped dramatically
between 2006 and 2007 from 20 percent of companies to 13 percent.
Reversing a trend, there has been an increase in the offering of various equipment, tools, and perquisites to PCP reps, especially
regarding the provision of an Internet connection (up from 36 percent in 2006 to 63 percent in 2007) and PDAs. As the need
for connectivity becomes ever-more pervasive, it is less often viewed as a perk and more often as a standard part of doing
business. Nearly three-quarters of survey participants offer other special perks, such as single rooms at meetings, upgrades
to their cars, added stock options, and increases to base pay or incentive compensation to "executive reps"—a designation
many companies confer on their highest earners.
While contests and non-cash incentives often have a greater directional impact on performance than cash compensation, such
awards and recognition programs make up only about 7 percent, on average, of the incentive-compensation budget. This is not
to suggest that the percentage should change. Indeed, companies are wise not to let contests and other incentives overshadow
the annual incentive plan and diminish its impact.
Managed Care: Where It's At
Standing in sharp contrast to the PCP role, the role of account management continues to grow in importance as pharma organizations
recognize the increasing control payers have over patients' access to drugs.
Most organizations report that their managed care/corporate accounts function has either recently changed its organizational
strategy or is expected to make a significant change within the next couple of years. Survey participants also report that
they are adding staff to their managed care organizations. The median level of reported staffing increase is 25 percent.
Unlike field reps, who typically have hundreds of doctors in their territories, account managers are much more focused and
targeted. On average, a typical regional account manager manages 14 accounts, and a national account manager, 12 accounts.
With greater accountability, increased responsibility, and higher-level skill requirements—account managers have pay levels
significantly higher than sales reps. Total cash for regional account managers averaged $149,000 last year, while for national
account managers, the average total cash was $163,000. Interestingly, the pay mix between base pay and incentive compensation
was fairly close to that of field reps: 74 to 26.
Although accountability for results (in terms of revenue contribution) is significantly higher than that for a pharmaceutical
field rep, the difficulty in measuring direct impact precludes putting more pay at risk. For that reason, nearly 30 percent
of incentive pay is determined by qualitative vs. quantitative performance.
The evidence indicates that this pay strategy is working. Turnover rates among account-management personnel averaged about
1 percent last year. Yet despite this enviably low turnover, about one-third of organizations remain concerned about account-manager
turnover because it is so difficult to replace qualified incumbents. (Sales reps do not necessarily have the right skill set
to be effective in an account management role.) To mitigate this concern, companies are making pay adjustments and offering
more career opportunities while trying to engage account-management personnel and foster a positive company culture.
On a Role: Think Again
Companies have been experimenting for the past couple of years with different sales models to increase the productivity of
their salespeople. Yet none appear to have gone so far as to ask the toughest question: Should the role of a PCP rep as it
is currently practiced really be designed as a traditional sales job?
We know, for instance, that less than one out of every four sales calls results in actual face time with a doctor. And that
80 percent of drug utilization in the United States is controlled by public payers and not by physicians, according to data
from the Centers for Medicare and Medicaid Services. In the harsh light of reality then, shouldn't we design the PCP position
more like a merchandizing role than a sales role?