It is no secret that for decades, the prevailing management wisdom in many organizations has been that in order to motivate employees and get improved performance, you have to reward them. This philosophy has been ingrained in the very fabric of many companies, which led to the building of sales incentive programs, compensation plans, etc.

The same goes for Life Sciences or Pharmaceutical industries. Sales in these industries have been complex yet consistent business. Given the current situation, it is of utmost importance for Life Sciences, Medical Devices or Pharmaceutical industries to focus on retaining their key salespeople. They need to consider ways to leverage sales incentive programs as a strategic tool for maximizing their ROI.

Rome was not built in a day, and Hiroshima & Nagasaki were destroyed in a day

The above quote is an apt representation of how strategies may end up. There is no one other than the leaders running these organizations who may strongly agree with it. Historically it has been observed that key ingredients needed to design a successful plan have been derived based on the failures of previous plans. However, it is important to understand that the difference between designing and actually implementing a plan is the key driver between success and failure. Just like Rome was not built in a day, similarly, incentive plans need to be designed with proper planning and keeping in mind the organizational objectives.

According to a survey conducted by us for the life sciences sector, we found that more than half of the workforce believe that their companies’ incentive programs are not effective.

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If your sales incentive plans and benefits aren’t working, too, read on.

Here are our thoughts on the most common reasons incentive programs fail and how to make your incentive programs work for your business.

Problem #1: Not having Clear Objectives

While designing your plan, you need to keep in mind that incentives and benefits are not a one-size-fits-all solution. The best way to do this is to incentivize sales reps is based on their individual capabilities. It is crucial to take into account all the key objectives that will make the incentive plan successful for each individual. If you haven’t identified individual objectives, you may end up designing the wrong plan.

Problem #2: Overly Complex Plans

The success or failure of any incentive scheme depends on the employees’ abilities to understand how their actions impact end outcomes. As these sales compensation plans are often triggered by individual performance, it is imperative that they are well-understood by the sales reps. Even the best-designed plans fail if they are overly complex.

Problem #3: Fosters Short-term Thinking

Rewards often have the tendency to limit long-term thinking. They motivate employees to increase productivity by focusing on immediate results that will grant incentives, at the expense of long-term opportunities. Thus, incentive programs should be balanced between rewarding short and long-term results.

Problem #4: No Strategic Plan

The biggest failures of compensation programs are that they often do not take into account the company’s strategic plan, marketing efforts, financial goals, etc. In an effort to please employees, too much emphasis is placed on rewarding individual performance by sometimes detaching from basic company performance requirements. Without a strategic plan, incentive plans are destined to fail. To avoid this, the incentive scheme should be aligned with the broader business goals and designed according to the sales strategy.

Problem #5: Either Too Quantitative or Too Discretionary

The tyranny of extremes is where most sales compensation plans find themselves. A plan that is either overly discretionary or overly quantitative ends up failing miserably. Incentive plans that are tied to performance need to be very transparent, simple, relevant and achievable to be effective.

That being said, an article from the Harvard Business Review suggests that stagnant methods of sales rep compensation in the pharmaceutical industry may be the root cause of bigger public health issues. Hence, companies need to thoroughly approach the development of impactful incentive programs in order to drive their continuous growth and avoid more consequential problems.

Next Steps


Incentive strategies are not instant fixes. The key step to making incentive programs work is identifying the cause of a failing program, finding out what sales reps need, and completely removing the guesswork.

It’s normal to experience a few hiccups along the way. However, managers should consider each of the above six reasons for the failure of these programs and engage in reparative action or take proactive steps to increase the effectiveness of their plan.
Interested to know how Aurochs can help you build a data-driven incentive program and ensure your firm is on track for success? Request us a demo 

Also, where do you think Life sciences and pharmaceutical sales incentive plans are headed? Feel free to share your thoughts in the comments section below!

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