Press Release
TGaS® Advisors’ Wojcik Analyzes Incentive Compensation Issues at Pharma Sales Force Performance Conference
EAST NORRITON, PENN., April 21, 2008 — Pharmaceutical sales force incentives are undergoing radical changes as the industry landscape grows more complex, according to Jeff Wojcik, Vice President and Management Advisor at TGaS® Advisors, a leader in collaborative peer-set benchmarking of pharmaceutical commercial operations. Wojcik spoke at the Synygy Sales Performance Conference, April 14-16 in Orlando, on the topic “The Annual State of Sales Operations in Pharma/Life Sciences: Sales Force Incentives.”
Wojcik spoke about the changing model of incentive compensation, from simple ranking to a more sophisticated goal attainment system based on the availability of far more data. “The value of this new system is that it is based on individual achievement, enabling everyone to win. The sales force can compete against other companies, not their colleagues,” said Wojcik. “On the other hand, the complexity and sheer volume of data are exponentially greater, driving costs and inefficiencies,” he said. This has become a problem for companies, judging by the number of TGaS Advisors clients who are asking about how their peers are handling this issue. TGaS Advisors benchmarks commercial operations for the majority of the top 50 pharmaceutical companies, providing fact-based answers to the question: “How do other pharmaceutical companies do ‘it’?®”
Wojcik reviewed data from TGaS Advisors’ Annual State of Sales Operations (SOPs) collaborative benchmark to show how large, mid-tier and specialty companies are allocating resources, including increases devoted to incentive compensation. Data from a recent SOPs benchmark show that top-tier pharma and specialty companies prioritize this area differently. Specialty companies allocate twice the resources to incentive compensation as top-tier — 6% compared to 3%. All companies showed a projected increase in spending for incentive compensation.
Wojcik discussed why average incentive compensation payout days have lengthened from 76 a few years ago to 82, according to SOPs benchmark data. (Incentive Compensation Payout) He also cited a TGaS Advisors spend analysis on incentive compensation between 2005 and 2007, showing increases of 35% for specialty and mid-tier and 40% for large-tier companies in the benchmark. (Incentive Compensation: Spend Analysis)
Looking ahead, Wojcik outlined trends that will impact incentive compensation, including telesales, video detailing, e-Detailing and other forms of non-personal selling, flex-time representatives, managed care and state-by-state data blackouts. According to a recent benchmark, 35% of TGaS Advisors large-tier clients are seriously changing or piloting new sales models. “These trends add multiple layers to an already complex system,” said Wojcik. “Clients are beginning to ask whether the complexity outweighs the value. This is exactly the kind of question we can benchmark, giving participants insight into how other pharmaceutical companies do it.”
About TGaS® Advisors LLC
TGaS Advisors is a management advisory firm that provides unique benchmarking services to pharmaceutical and biopharmaceutical companies. The TGaS Advisors roster includes the majority of the top 50 pharmaceutical companies with operations in the U.S. market. The firm’s benchmarking solutions (PHARMASTANCE®) provide clients with a way to measure where they stand with respect to their operations and answer the question, “How do other pharmaceutical companies do ‘it’?®” ® TGaS Advisors is based in East Norriton, Pennsylvania. To learn more, visit http://www.tgas.com
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