Planning to Succeed
Jason Bryant explains how affordable Incentive Compensation Management excellence is now available beyond Big Pharma.
Effective design, implementation and management of incentive programs can have profound consequences for any pharma sales organization, resulting in reduced operating expenses and increased net selling time that in turn boosts top-line revenue. An effective incentive compensation management (ICM) solution helps reduce the number of field disputes by providing clear and transparent progress reporting and, more importantly, creates an environment of trust that boosts salesperson morale and reduces the attrition rate among reps.
That much is true of any good ICM solution, but what are the options for smaller and medium-sized pharma and medical device companies – those that may not have the resources to allocate to a substantial in-house team or the budget to outsource this function to one of the big service providers?
A relative newcomer to the market, Aurochs Software is seeking to break the mold with its sales compensation solution suite specifically designed for the life sciences industry, according to Jason Bryant, EMEA Partner for the company. “Rather than going down the traditional outsourcing route or needing a large team of people managing incentives in-house, we provide the capability in a software platform where you don’t need all that support anymore; you can just get on with it. It’s deliberately designed to throw a bit of a grenade into the market.”
Aurochs is an Indian-based company formed by former ZS Associates consultants with extensive experience in the sector: its platform seeks to provide a “simple, self-managed sales compensation solution ecosystem for the life sciences industry.”
Bryant explains: “It puts control of incentive schemes back in the hands of the client. You get all of the comprehensiveness of a solution without the complexity and the need to retain an outsourced partner with lots of resources and lots of cost. We took the typical outsourced consultancy functionality and built it into a software package that makes it self-service and very clear and very easy for a client to do it for themselves.”
Typically, a company that might be interested in this solution might currently be seeking to manage their incentive programs using homegrown Excel-type approaches where there is a single point of failure and a high dependency on one or two key individuals. “There’s a lack of transparency, no audits; they don’t have any query capability if there are problems,” Bryant suggests.
Instead, the Aurochs solution offers rich functionality end-to-end, from setting up the plan to providing reporting and all of the control, admin, calculation, and audit approval in between, according to Bryant. “We’re giving an end-to-end capability for a very competitive price point. It will work for 95% of situations out of the box.”
Ease to set up and use
How easy is it to set up? “It is very deliberately built for a clear, easy user experience,” Bryant suggests. “The user interface is extremely clear.” To set up a plan from scratch – once the administrator is trained how to use the system (training needs an hour via WebEx) – only takes about 25 minutes, and existing plans can easily be copied for different brands and sales teams.
Is it more than a housekeeping system? “Yes, it can interface with upstream data sources – whether that is IMS data or the local equivalent – automatically. Bryant explains that the platform can run the entire admin piece automatically (job control-type module); it does a lot of analytics on the way (so it’s not just not a sausage-making machine). “There are a lot of balancing and fairness analysis and ‘mathematical sense tests’ applied along the process. You’ve got control at each point really without needing to be a mathematician.” It incorporates over-rides and can also do the target setting.
Meanwhile, the audit trail provides clarity at every step so compensation disputes can easily be resolved. At the same time, reps are able to receive custom illustrations detailing their bonus for a specific cycle and what their potential is for the next phase.
Why is this important? There is a surprising error level when it comes to bonus payments within the typical organization. “I used to reckon that up to 10% of your budget was wasted because of errors. You might be spending $1 million a year on your incentive scheme for a reasonable-sized sales force; there’s a hundred grand there that’s wasted that you don’t really know where it has been wasted. With this package, it is very easy to go back step by step to work out what has happened.”
So what are the components of an effective pharma compensation plan? “Generally, they have to reflect the lifecycle stage of the brand you are measuring. They have to reflect the local data and regulatory environment you are operating in.
“The days of measuring market-share growth are probably limited now because we’re not in the primary-care blockbuster era anymore. There will always be sales versus targets; there will always be new initiations, whether that’s scripts or patients; there is growth; there will always need to be comparisons and benchmarks,” says Bryant. All of these metrics are included in the package. He adds “There will always need to be qualifiers in terms of criteria: when do you qualify, how do you qualify, when do you not qualify to be part of a scheme?
In addition, there will always need to be over-riders and accelerators. “You can include regional manager input so you can incorporate over-ride, adjustment, commentary, messaging back and forth, etc. The maths might tell you one thing but you still need that space for human sense checking and adjustment. This reflects the transition to a sales versus non-sales objectives mix and the flexibility needed between teams, countries and brands.
“If you’re moving away from a numbers-driven, target-driven classic sales force to more of an outcomes-based account management model then this underpins that by being able to measure, calculate, make very clear, and support dialogue around the metrics that matter.
Bryant explains that the system helps business leaders get the balance right when putting together an incentive plan and flags up when something is out of line: is it too easy to achieve or too hard, and is the forecasting right? Accordingly, scenario analysis, what-if analysis and forecasting are built in.
Senior managers will also benefit from a head office-level report at the end of each cycle: what has been paid out, top and bottom performers, distribution of payment, and “how you’re tracking against your full-year budget so you can see if you’re on track or need to make an adjustment or not.”
Fairness, transparency and achievability of an incentive plan are important for all sorts of reasons: from the point of view of morale, and from a budget management perspective, whereby ease of administration and understanding of the financial impact of a scheme are both vital. He concludes: “Understanding how reps are incentivized and giving them clarity will help to drive the business – this solution is very clear, very open, very transparent.”
Since you're here...
... and value our content, you should sign-up to our newsletter. Sign up here