ZS Associates

Issue

A global pharmaceutical company needed to convert its incentive compensation plan from a force-ranked system to one that better motivated the sales force through stronger pay for performance.

Results

ZS helped the client reduce the number of compensation plan options by a factor of four, which greatly improved field force comprehension and removed the source of much frustration. The simplified plan description consisted of five pages, down from thirty. The new incentive compensation design was entirely goal-based, which dramatically strengthened pay for performance and addressed territory biases present due to varying managed care and market share situations. With the improved design of the plan, the need for sales contests was greatly reduced, thereby saving money and freeing home office personnel to work on other initiatives.

Approach

ZS worked closely with client personnel from sales, marketing, human resources, finance, and operations to develop a compensation plan that balanced all of their needs including motivation, simplicity, and financial responsibility. ZS drew upon its experience in incentive plan design to help guide the decisions and conducted modeling tests to ensure that the plan would provide the desired payout distribution and financial outcomes. ZS also solicited field input to ensure clear and consistent communication and positioning of the new goal-based incentive compensation plan. When the plan was announced at the national sales meeting, the sales force applauded and rated the session as the most valuable one at the event.