Recognize Reward Retain: The Three Rs of Performance Management

May 1, 2005
Jennifer Juergens

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-05-01-2005, Volume 0, Issue 0

Employees are most attracted to products they might feel guilty about buying for themselves, but when they have points to redeem, they feel fine about splurging.

"Today's employees desperately want to be acknowledged," says Sandy Amorde, president of Amorde Incentive Marketing in San Juan Capistrano, California. And she's right—research suggests and experts agree that acknowledgment is high on most employees' wish lists. "Besides acknowledgment of their contributions, employees want to feel appreciated and recognized for making a difference and contributing, not just to their company, but to the world," she says. "What really drives people is not money."

Don Durrett, design director for the pharmaceutical/healthcare team at BI, a Minneapolis-based performance improvement company that serves most of the top 25 pharma companies, agrees: "The common belief is that cash is going to work better. But studies consistently show that throwing more cash at people will not change behaviors."

Online Management: Flexibility and Ease

"Tangible rewards provide lasting trophy value and ongoing goodwill toward the company program," says Paula Godar, director of marketing communications for Maritz Incentives in St. Louis, recalling a reward recipient who admits he thinks fondly of his company each time he drives the lawnmower he redeemed for reward points. That case illustrates how a quality merchandise reward is a constant reminder of a job well-done from a company that cares.

Despite the apparent need for employee recognition and the fact that US organizations spend over $100 billion annually on incentive programs, many companies still question their effectiveness. But, a recent study affirms that incentive programs can boost performance up to 44 percent if conducted in ways that address all issues related to performance and human motivation.

Conducted by the SITE (Society for Incentive & Travel Executives) Foundation in New York, the study discovered that most organizations lack the knowledge or will to create properly constructed programs that yield desired results. And although travel incentives remain a mainstay in employee motivation and recognition programs, merchandise incentive programs offer competitive pharma companies high-impact versatility.

"While many programs focus on improving general sales results, merchandise rewards go farther," explains Godar. Specifically, these incentives can be used to drive sales of existing products at different stages of the sales cycle, for peer-to-peer recognition, and as motivational tools for training and expanding product knowledge.

Flexibility and Ease Continued

"Merchandise reward programs can also provide sales reps with the tools they need to provide effective and up-to-date product information to physicians," she says.

Corporate incentive and reward programs have never been easier to set up or administer, due in large part to the growing cadre of full-service incentive companies that perform every step in the process, from the custom design of Web sites to program administration and communications and award redemption. Web-based monitoring and administration capabilities make the process an interactive one for both managers and participating reps. (See "Flexibility and Ease.")

The trick for companies is to know what goals they want to accomplish with a reward program, structure one that measures and rewards the right kinds of behavior, and get employees to buy in. In pharma, the trends these days are toward highly specific goals, flexible programs, and interaction.

Rewards for Learning

For pharma companies with new products entering the market that are looking to capture share as quickly as possible, rewards are vital for keeping sales reps' knowledge up to date. "Today's organizations are in a perpetual high-stakes marketplace," says Janet North, vice president of business development at MotivAction, a Minneapolis-based marketing and performance improvement company. "Sales forces need to be ready—and fast."

"There is so much evidence that incentives are effective tools in encouraging people to make time for online training," explains Karen Renk, executive director of the Incentive Marketing Association based in Naperville, Illinois.

She explains that research has demonstrated a correlation between training and increased sales, pointing to an example from the technology industry: "Microsoft put together an online training program for their dealers and distributors," she says. "They found that those who participated sold up to one hundred and thirteen percent more than those who didn't."

Merchandise Must-Haves

One Program, Many Goals

Al Luzi, business development manager for the Des Moines-based ITA Group, says goal-setting is a vital step before program design and implementation. "Management needs to focus on specific goals, such as increased sales and market share, to drive the behaviors that support physicians," he says. The end result is "better service to end users."

Companies often overlook the fact that a single reward program can be used to motivate different behaviors at various levels of the company. For example, GlaxoSmithKline in Research Triangle Park, North Carolina, developed its "3*2*1 Challenge" employee-recognition program to keep its sales force focused on patients, product benefits, and territory success. The program zeroed in on talented, newly hired, relatively inexperienced sales reps, tantalizing them with 800 merchandise and travel awards such as high-end electronics, sports and outdoor products, jewelry, and travel gift certificates. Employees could earn points three ways: awards for an entire division when monthly goals were met, manager-endorsed points for recognition of positive changes in the sales process, and points earned every month when they passed product quizzes within ten days of the product's availability. Winners received a congratulatory e-mail detailing the number of points in their web-based account. The results were impressive: With 100 percent of eligible reps participating in the program, not only were goals achieved, but 97 percent passed the knowledge assessment test and successfully adopted new sales techniques.

offerings: What Motivates Reps the Most?

Employees Rewarding Employees

Another approach to the same challenge is the use of "discretionary points" systems to motivate and drive a range of sales techniques, according to Durrett, and they are not just the purview of management. Luzi agrees: "Peer-to-peer recognition and rewards are critical as part of an overall program. If you have an umbrella program, you want to maximize participation by offering different ways to earn points. The right peer-to-peer program will devise a system to reward and recognize the contributions made by fellow employees." He says companies are increasingly emphasizing the value of mentoring in their organizations, and peers can and often do reward their mentors with point rewards and recognition.

Luzi says peer-to-peer has gained greater popularity and acceptance because of Web-based measuring and communication platforms. This technology not only provides more effective ways to distribute rewards but also measures the changes in activity. Luzi believes reward recipients should have their achievements announced to everyone in order to broadcast their accomplishments. "It all comes down to reward, measurement, and better communications," he says. (See "What Motivates Reps the Most?")

Something For (and From) Everybody

To help keep companies' most valuable commodity—a valuable employee—an emotionally engaging merchandise reward program must offer a wide variety of sophisticated and luxurious reward options, catering to the whims and desires of all employees, regardless of demographics. "The great thing we offer reps is the ability to redeem points for a lot of different choices, such as lifestyle and electronics rewards. Because the pharma sales reps are largely a late 20s-30s demographic, they particularly like concert tickets and sporting goods," Durrett says.

"It's important to offer a wide variety of choices because you want to ensure they don't get bored," says BI's Sherra Buckley, the company's pharmaceutical/healthcare design director.

MotivAction's SuperStore can expand and contract based on the demographics of the audience—to the tune of more than three million items. "In 2004, over 20,000 unique items were ordered collectively by our incentive program participants," says North. SuperStore can offer both traditional and non-traditional incentive awards, including books, music, movies, and other lower price point items, which North says are popular and motivational with many audiences.

Amorde has seen how merchandise motivation tools can become a family affair when recipients take home a catalog and enlist the support and feedback of family members. "If the kids want an iPod and the wife wants jewelry," she says, "employees are even more motivated to rack up those reward points."

Historically, catalog programs only included merchandise; today, many also offer individual travel rewards and gift cards and certificates from many of today's most popular retailers. Marriott offers travel certificates. Utix offers cards for ski, golf, and spa treatments. And, retailers such as Target, Macy's, and Blockbuster offer their own gift cards. "People want choice and this is an easy way for an on-the-spot award," explains Steve Apesos, executive vice president of new business development for Utix in Burlington, Massachusetts.

Companies need to stay on top of trends to keep their reps excited about incentives. According to Louise Anderson, president and CEO of the Hastings, Minnesota-based Anderson Performance Group, thin gadgets are in. "With electronics, the thinner the better," she says. Besides electronics, her company's hot list for pharma sales reps includes quality jewelry and gourmet kitchen items. "Travel, which fell off in 2000 and 2001, is back," she says, "and has, in fact, doubled." (See "Merchandise Must-Haves.")

"Everyone is motivated by different things and they like a variety of options to choose from," explains Godar. Offering one pharma client a catalog with up to 2,000 "must-have" items is one way to do this. Godar says today's most popular pharma rewards are anything digital, especially iPods, digital cameras and camcorders. Luxury spa kits and premium meats are also in demand. He says: "It seems people are most attracted to products they might feel guilty buying themselves, yet when they have points to redeem, they feel just fine about splurging."

Beyond Sales Results

Maritz's Godar used a merchandise reward program for a global pharma company for several years. "Before this program, management wasn't certain if they were addressing and motivating all their employees," she says, "or only their top performers." So the company conducted internal research to identify best practices of its top performers, which were communicated to management. That formed the basis for a reward program for which everyone was eligible. "The entire sales force competed against each other," he explains, "so each individual could improve his or her own performance and be rewarded [accordingly]."

That company's sales managers saw an overall increase in sales—not just among the top performers. "This program resulted in such measurable improvement in a greater percentage of sales people that the company opted to continue with the program," says Godar. According to Luzi, the most important factor in driving behavior is ensuring participants are focused. "The goal for maximum benefit is to have participants so engaged that when you launch your integrated performance marketing program, they immediately start goal-setting and determining what they want to earn," he advises.

Merchandise incentive programs offer versatility and flexibility, Amorde says. "If you set aside sales objectives, these programs are excellent tools for behavior modification," she says. "While [they may be] more difficult to measure, safety, wellness, attendance, and quality control are only a few of the possibilities." All it takes, she adds, is a little forethought and planning by management. She cites an example of one company's desire to acknowledge and reward the efforts of a research and development team that had gone beyond the call of duty in achieving a particular goal. "In this case," she says, "the ten people on the team received a flat-level award, or gift certificate, commensurate with the effort expended."

"Merchandise is also used for retention," says Durrett. "Companies now realize they must offer a more comprehensive benefits mix." Fontana agrees: "Sales reps in the pharma industry tend to be young. Companies will spend six to eight months training them and then competitors try to lure them away. Companies now offer signing bonuses or incentives after one or two years. They may say, 'You'll get a trip to Hawaii or a flat screen TV if you're here for a year.' Some companies may think that's expensive but think of what you're saving in training a new employee."

Luzi agrees. "You need to reward your team players for outstanding performance," he says, "however that is defined. Otherwise, you could lose them to the competition."

A Tool in Turbulent Times

Merchandise incentives are also a smart tool to help companies through the inevitable ups-and-downs the industry faces. "We're seeing pharma companies using merchandise incentives when they're ramping up for a competitive threat, such as when another company has better clinical trials," says Durrett. "It's almost like a re-launch to protect their market share."

"With any company going through a merger, the most important thing to remember is to serve your customers,"Anderson says. "When reps have the greatest amount of distraction, you want to get them focused on their customers."

Anderson advises reps to ask themselves, "what does my doctor need to know?" and to constantly refresh their knowledge. She reinforces the value of linking rewards with educational testing, as GSK does with its 3*2*1 Challenge. Quizzes offer reps the chance to redeem points if they score a 90 or higher. Some pharma companies approach selling as a team, notes Anderson: "It's a different way to go to market. They not only need to know their product, but also keep strong and positive customer relations if another rep is going to call on a doctor the next time. Reps should be rewarded for these behaviors."

Jennifer Juergens (jenjuergens@cs.com), former editor of IncentiveMagazine, is a freelance writer in New York City.

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