Time to Get Personal
Are sales force incentives linked to drug sales volumes the best way to motivate individual sales reps?
With the performance of the sales force directly linked to the bottom line, ensuring representatives are well-motivated and incentivized is a critical ingredient in any company’s financial health. Yet, with the huge amount of change reshaping the pharma landscape – from digital to patient-centricity and the pressing focus on value – pressure on sales reps has never been greater.
In response, there is a growing concern that the way sales reps are incentivized has the potential to lead to unethical selling practices, as has been seen in several high-profile scandals over recent years. Many companies are looking at new ways to motivate their sales force to deliver high-performance and avoid the risk of endangering their reputation.
The most notable example is GlaxoSmithKline, which has gone so far as to decouple rep performance from commercial targets as part of a wider change in its commercial model, a development discussed in-depth in a recent eyeforpharma whitepaper, GSK’s new ‘ethical’ customer approach: Is it delivering?
As debate rages about the various merits and challenges of the two models – ‘ethical’ (incentives based on relationships) on the one hand and ‘unethical’ (incentives based on sales) on the other – are the voices of individual reps being drowned out?
Keep it flexible
Many pharma companies remain unclear about the exact purposes and goals of their motivational processes and so rely entirely on annual ‘ratcheting’ of sales targets based on the previous year’s targets, or on establishing incremental bonuses. However, reducing sales rep motivation to a variable salary is not ideal, says Celine Genty, VP Customer Excellence EMEA at Janssen. This practice places the sales rep function at arm’s length and reflects neither the complexity nor the diversity of the role or the individuals themselves, she says,
A one-size-fits-all approach to incentive plans cannot deliver the complexity needed to cater to different achievement levels – top, mid, and bottom performers – or motivation levels. Rewards and incentives must be tailored to the individual.
“The incentive plan must be tailored to the brand objectives; the rules should be very simple and mostly equal for every sales rep,” says Gonzalo Rodriguez Arnaiz, Region Europe Sales Excellence Head at Novartis. “Nothing is less motivating than an unclear plan together with a tailored one that could be perceived as biased. It is more motivating to be paid less based on a clear set of common rules than to be paid more without really understanding the plan and doubting its fairness.”
Motivation is composed of two parts – internal (personal fulfillment) and external (rewards such as compensation and recognition) – and the mix of the two is unique to individuals based on their drive for skills, finances or achievement. Reps respond differently to the challenges of selling and they prioritize different aspects of the job. Where some value having control and the ability to choose (and so enjoy taking on challenging assignments and leadership opportunities), others may prioritize the safety and security of a routine (and so work hard to maintain long-term relationships with customers). Some individuals place a high value on the approval and attention of management/colleagues and are fueled by public recognition.
Diversity in the healthcare market is another compelling reason for an individualized and flexible incentive plan. Different customer segments require sales reps to perform different actions; for instance, in specialty drug markets, prescribers and patients need more education and conversation. Sales rep motivation can be used as a strategic tool to navigate the unique aspects of each market, says Genty. “Depending on the products – generics, branded, medical innovations – and the ‘interaction model’ of the organization – only medical reps, only sales reps, mix of both – incentive schemes and the motivation plan should be unique,” she says. For this reason, incentivization should be planned at the local level to adapt to the market.
Companies also need to evaluate the scalability of a flexible incentive model. While personalization of incentives can be accomplished in specific markets, in larger markets it is not really feasible, even if we try to keep a certain level of freedom in qualitative assessment within the incentive schemes to allow for personalization.
Motivating individual behaviors
The behavior of sales reps reflects how well they understand the values and goals of the organization, as well as what they are accountable for. To motivate sales reps individually, each needs to understand what behavior is expected of them and to clearly see the link between their behavior and the success of the company, financial or otherwise.
Incentives can give sales reps the opportunity to see how their work contributes to the company’s mission and vision, says Paul Frater, Operations Director at Ashfield (part of UDG Healthcare plc). “Incentivization needs to drive the behaviors that the company would like its employees to demonstrate in line with the company’s vision, values and objectives.”
However, what form should incentivization take to be meaningful to sales reps? For Frater, bonuses can offer extra impetus to behave in line with the overarching goals of the organization, but fully motivating an individual requires a holistic approach to employee engagement.
Sales rep motivation has three key components, says Novartis’ Rodriguez – an exciting and inclusive environment, an achievable and understandable incentive plan, and recognition. Recognition, in particular, can be powerful at driving and maintaining certain behaviors among sales force members, he says.
Sales reps are sensitive to top management messages during seminars and to the attention we bring to facilitate their day-to-day work, knowing that they are the ones bringing in the business.
Recognizing and rewarding employees for discretionary effort or for going the extra mile, can generate advantageous behaviors and drive commitment. “The unexpected nature of small gestures such as this can contribute to intrinsic, long-term motivation,” explains Frater.
The personalization of incentives needs investment and frameworks to ensure fairness and transparency and ascertain that people do not feel that the system is unjust, adds James Winterman, Senior Vice President, Marketing, Astellas Pharma Europe.
For Genty: “Customer-facing people will engage their energy if they feel that the system is fair,” re-emphasizing the need for equity in the evaluation process.
There’s no ‘I’ in ‘team’
The common interests and goals of the entire sales force must not be neglected in favor of personalization. “The overall scheme of incentives should be the same for all sales reps and based on common approaches, but the HR system should allow for rewards based on specific actions done by the reps, such as those involving special initiatives or projects,” says Genty.
Winterman agrees that both individual and collective rewards must be present. “This allows for conversations on how to behave differently,” he says, adding that it helps the sales force reach agreed-upon parameters for flexible or subjective rewards. Additionally, having a balance of both elements, as well as the opportunity to discuss it, can help achieve more effective team working.
As leaders, sales managers have a significant role to play in delivering personalized motivation among sales reps, he says. “The attitude and energy of first-line sales manager towards understanding and coaching each member of their team are vital elements in making personalized incentivization work.The idea that the sales manager cares, wants to help them and is willing to work together can deliver better results.”
The needs of some reps may need to be prioritized to better understand any individual difficulties they are experiencing with tasks. There is no magic bullet other than ensuring that we truly integrate what reps need to stay motivated.
Talking about the benefits of medicines can be very motivating, says Rodriguez. “We need to ensure there is the sense of mission around patient benefits and adding value to our customers – the rep’s job is evolving in this direction.”
Given this, the two bases for incentives – sales targets (often associated with being unethical) and relationship-building factors (associated with being ethical) – are not mutually exclusive. Sales reps can continue their primary function of selling, tailor their individual behaviors to ensure that their actions and values remain ethical, and ensure their careers move in a direction that is personally meaningful to them.
To learn more about sales force motivation and incentivizing the right behavior, see GSK’s new ‘ethical’ customer approach: Is it delivering?