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Ignore the Science of Motivation at your Peril
Incentives boost performance, right? “Not so!” says senior pharma executive.
Perhaps surprisingly for an award-winning sales leader who has enjoyed considerable success in the industry, one pharma executive we interviewed recently warns against using financial and other extrinsic rewards to boost results. Indeed, this executive – now a sales excellence expert with a top-five global pharma organization – is dismissive of the amount of effort and resources devoted to such incentives.
“For an industry that’s so data-driven, it just seems amazing that we should still be discussing incentive schemes and what they should look like,” says the executive, who wishes to remain anonymous. “It’s possible that incentive programs drive behavior, but I don’t think it is always good behavior.”
The data is overwhelming that, once you have an extrinsic reward for a job that requires some force, then the performance decreases with that role. Where incentives do tend to work is with really simplistic things like screwing together something on an assembly line, but the moment you move from that really simple task then you decrease motivation and performance in doing that role.
He contrasts the scientific rigor of the industry’s research program with the commercial approach of many companies. “There’s incredible global rigor around how we get a molecule to market and then it gets handed over to the commercial side of the business and we just stick a finger in the air and guess what we should be doing to promote the drug.”
He essentially sees incentive programs as a lazy “quick fix” with an unwarranted reputation for driving performance not rooted in good science. Moreover, the evidence that incentives are the wrong approach dates back to the 1950s. “There was data published in 1950 by Harry Harlow looking at chimps and showing that, once you introduce a reward for getting them to do a task, they lose interest in that task. And that has then been replicated in multiple studies.”
He also cites combined studies published in the late 1990s: “The data is overwhelming that, once you have an extrinsic reward for a job that requires some force, then the performance decreases with that role. Where incentives do tend to work is with really simplistic things like screwing together something on an assembly line, but the moment you move from that really simple task then you decrease motivation and performance in doing that role.”
I built a sales team that won the award for the best sales team four years in a row. It was a sales team where we basically we didn’t have incentives at all. On call-quality measures, measures from the doctors themselves, sales performance – all sorts of metrics – we were outperforming by far anyone else in the industry with that team.
This is a view that has been popularized by business commentators such as Dan Pink, but our pharma exec’s conclusions are also based on personal experience. As a former rep and also a sales and marketing leader who has been involved in crafting incentive schemes in the past, he decries the “massive administrative load” that goes into them, saying: “It’s not just the hard-and-fast dollars that we pour into them; it’s the loss of performance by the sales team by doing that.”
His own approach has been validated through one of the leading pharmaceutical and life sciences awards schemes, designed to recognize excellence within the industry. “I built a sales team that won the award for the best sales team four years in a row. It was a sales team where we basically we didn’t have incentives at all.
“On call-quality measures, measures from the doctors themselves, sales performance – all sorts of metrics – we were outperforming by far anyone else in the industry with that team.”
We’ve got such a great opportunity within the pharmaceutical industry to focus on that purpose piece, and the mastery piece. Reps in the field have enormous autonomy. Do they need carrots with financial incentives? I don’t really think they do?
Autonomy, mastery, purpose
So what is it that actually does influence behavior? Looking at the data over 50 or more years as popularized by Pink, people actually want autonomy, mastery and purpose, our interviewee suggests. “We’ve got such a great opportunity within the pharmaceutical industry to focus on that purpose piece, and the mastery piece. Reps in the field have enormous autonomy. Do they need carrots with financial incentives? I don’t really think they do?”
What kinds of things should we be doing instead to help boost team performance? Experience suggests “it’s pretty much everything else”. He explains: “In some ways, there’s quite a lot to do and in other ways it is quite simple. What I mean by this is that there’s not one thing – everything that gets talked about is important like the systems and processes that you have around the team; the hiring, the management, the coaching – all that stuff plays into it. One piece that I don’t think that the industry gets right still is the focus on culture.”
Importance of culture
He adds: “I think we probably get a bit lazy and don’t work to drive through a positive culture because it’s more work to do that; it’s not a black-and-white thing where you can look at a metric and say ‘we’re tracking well or ‘we’re tracking behind culturally’. Because it’s a little more difficult, people don’t tend to focus on it.”
Indeed, our sales thought-leader suggests that incentives are often the result of a knee-jerk reaction – sales performance is looking a little bit low; let’s boost the sales incentive. “And that’s really abdicating leadership or that cultural piece to uncover what’s actually going on there.”
His view of the importance of culture – even more than strategy – is supported by thought-leaders such as Jim Collins in his seminal work Good to Great: “To decide where to drive the bus before you have the right people on the bus, and the wrong people off the bus, is absolutely the wrong approach.” The key is to get the right people on the bus first, and in the right seats.
“If you have a bad culture, the follow-on effects with your team are just crazy. You’re dealing with HR issues rather than driving-performance issues,” he tells eyeforpharma. “I find it surprising that more and more senior leaders aren’t focused on why that culture piece is important and how do you drive that positive culture, rather than just give it some lip service.”
In addition, the granular level of activity is significant, according to our interviewee.
What does a positive interaction look like? How do you hire for a positive cultural fit? What does an effective email look like that’s positive… or destructive? “It’s those little details I think are critical, and I don’t think companies have got that piece nailed.”
Empowerment and autonomy
How important is it to empower the people close to the customer and give them some autonomy to do the right thing, rather than constraining them with process? “It’s critically important. “If we don’t empower frontline staff and trust them, it’s got to have a flow-on effect.”
He also stresses the importance of customer centricity throughout the supply chain. “I think it’s essential all the way across. Everybody in the organization should know what it is the company is selling. I believe it is absolutely critical.”
The exec recalls working for a medical device company. “There within your first week, no matter what role you were in, you had to spend a day on the production line and it was just the most powerful onboarding experience to make everyone aware that this company produced these feedback machines and that your role, no matter what you did, was about making sure that production line was producing high-quality machines for sale.”
Trends reshaping the industry
Looking ahead, he picks out two key trends that are potentially shaping the industry. The first is a switch in emphasis from commercial to medical, with more of a focus on medical liaisons in the field and a move toward more scientific discussion. “I can see a bit of a power shift there from commercial to medical and that could be very interesting.”
Secondly, he highlights the rise of the blended representative or virtual rep. Although that’s something the industry has talked about and experimented with for the past 15 years, we’re at a stage now where the technology has caught up with the concept and the medical fraternity has moved further along that digital journey.
“The medics are there; the technology is there; so, there’s a real opportunity right now to actually do something that shakes up the industry. I don’t know what that looks like exactly but I think we’ll be looking back and saying: “Wow, those first-mover companies got a huge advantage there,” the sales leader concludes.
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