Strategies to adjust incentive compensation plan and parameters for new hires
The life sciences industry is undergoing an evolution where several new pharmaceuticals/biotechnology startups are trying to commercialize products in the speciality space. This phenomenon has increased the demand for highly skilled salespeople due to which sales attrition has further increased. To navigate the waters in such turbulent times, it is extremely important to have a good sales rep onboarding strategy in place to attract top talent. These salespeople are generally hired with a pay mix with relatively higher variable components due to the aggressive nature of the startups business model.
In such an environment, it is paramount that the incentive compensation plan provides them with some relief during the initial ramp-up months to ensure that they have time to adjust to their new role, learn the market and the organizational culture. Some popular incentive plan mechanisms that are employed for new hire reps are:
- Reduced Goals
- Management by Objectives (MBO)
- Fixed Incentive (Target Payout)
- Fixed Guarantee with some upside (Target or Better Payout)
Aurochs Software provides you with the flexibility to implement each of these options in a simple, intuitive, parameterized manner using different input files.
- Reduced Goals – Simply update the goals / quotas value for the corresponding geography in the goals file
- Management by Objectives (MBO) – Load MBO score using MBO file and configure an MBO component. Both portfolio and product level MBOs can be configured.
- Fixed Incentive – To pay fixed target, you can set the new hire’s “special handling flag” in the HR database (The input that defines employee-geography assignments and monthly eligibility). Aurochs Solutions also provides you with an option to apply the special treatment for a period shorter than the plan measurement period. For example, If your measurement period is a quarter and you wish to guarantee target pay for a new hire for just one month in the quarter, that can be configured using the special handling flag and the special handling period fields.
- Fixed Guarantee with upside – This is usually referred to as "Target or Better Payout", where there is fixed target payout guarantee during the initial few months. However in case the salesperson beats quota they are eligible for the actual above target payout. This can also be handled in a similar fashion as mentioned above.
Aurochs software is designed to account for pharma industry specific exceptions and allows the company to employ the right strategies without worrying about implementation and change management challenges. We believe that software should match the requirement of the business. The business should not have to compromise because of software incapability.
Here at Aurochs Software, we are committed to make IC plan implementation and administration a positive experience.