Last summer, GlaxoSmithKline announced plans to upend the pay structure for its US-based sales reps by removing incentives based on hard sales figures, or how many pills are sold. Instead of rewarding reps for the amount of product sold, GSK would begin rewarding reps for the quality of relationship they engender, the company said.
Today, GSK announced phase two of the program, which includes incentive components that sound a lot like sales-based goals. Phase two, which began on July 1, consists of three criteria for sales rep compensation: selling competencies, customer evaluation, and the overall performance of the rep’s business unit, according to a statement.
If sales targets aren’t part of the new incentive structure, what exactly are selling competencies? “We’re not giving details on assessing things like sales competency and customer evaluations, because we really consider the methodology and process that we’ve developed and put in place to be proprietary,” says Kevin Colgan, a GSK spokesperson. The methodology “uses information from multiple data streams,” and will “provide a good way to differentiate the performance of the sales professionals,” says Colgan.
The third criterion – overall performance of the business unit – is a measure used to evaluate other employees in the organization, not just sales reps, according to Colgan. Asked about reactions to the new incentive structure (first implemented in January 2011) from the rank and file, Colgan says, “I think the sales force is pleased with the rigor of the new approach, and that it will do a good job in determining the success of the sales force and how they’re performing relative to their peers.” GSK’s first quarter sales in the US were down 4%, to $2.27 billion, but that was thanks to “higher discounts required as a result of US Healthcare reform, generic competition to Hycamtin…and the impact of the divestment of Zovirax,” sold to Valeant during the first quarter, the company said.