COMMERCIAL INCENTIVE
PLANS (COIP)
DESIGNING & IMPLEMENTING GAME CHANGING INCENTIVE PLANS FOR LIFESCIENCES
WWW.THINKEEN.COM WWW.THINKEEN.COM/COIP
page 2
ANALYZING: our first focus
consists in to rapidly understand
and analyze Client’s Corporate &
Commercial Strategy,
Commercial Processes and......
page 11
FRAMING OPTIONS: to ensure
flawless implementation,
companies need well refined
and a workable definition of the
parameters to be measured.
page 17
SELECTING: one specific option
must be selected and defined in
detail considering potential
implementation issues and
regional adaptations.
INDEX
i
Page 2! ! ANALYZING Client’s Strategy & Needs
Page 11!! FRAMING OPTIONS: identifying viable options for
! ! ! the Commercial Incentive Plan.
Page 17!! SELECTING: Identify the best COIP
! ! ! option and craft each detail.
Page 20!! IMPLEMENTING: COIP implementation
Index Commercial Incentive Plan
ThinKeen Global. Miami, Florida USA - thinkeen.com
Understanding Corporate & Commercial Strategy
i.! Understanding Corporate Culture and Strategic Imperatives
ii.! Understanding Long Term Business Plan
iii.! Clarify the Strategic Objectives Client wants to Achieve through COIP
iv. Determine ACCEPTED CRITERIA to evaluate & Prioritize COIP Options
Understanding Commercial Processes
i.! Understanding Products and Respective Value Propositions
ii.! Understanding Demand Generation Process
iii.! Understanding Decision Making & Buying Process
iv. Assumptions Check through Limited Exposure to External Key Stakeholders
Understanding Support Programs
i.! CRM Identification & Utilization
ii.! Territory Configuration
iii.! Quota Management
iv.! Sales Crediting
Understanding Job Position(s) Content
i.! Sales Position Components
ii.! Inventory of Sales Position Types
iii.! Sales Position Levels
Performing Benchmark
i.! Agree on Criteria to Prioritize target Organizations
ii.! Perform Same-Industry Benchmark
iii.! Perform Cross-Industry Benchmark
ANALYZING
2
Our first focus is to rapidly understand and analyze
Client’s Corporate & Commercial Strategy,
Commercial Processes and assess the job position
descriptions and expectations.
STRATEGIC VIEW
It’s important to
understand how
Client organizations
intend to leverage
their core
capabilities to
achieve strategic
goals.
Analyzing Commercial Incentive Plan
CORE CAPABILITIES
It’s important to
understand
organizational
capabilities. COIP must
be aligned to core
capabilities and strategy.
Phase I
ThinKeen Strategy"Planning & Implementation process
stresses the value of a full (and visible) set of strategic al-
ternatives driving profitable growth. In order to ensure that
the COIP will be a coherent component of strategy, we
strive to rapidly understand the strategic choices
made by the Client.
Using the strategy definitions of Benjamin Tregoe
and John Zimmerman, we need to understand
what is "the framework which guides those choices
that determine the nature and direction of an or-
ganization."
In the Lifecience industry, organizations which en-
joy a consolidated international presence are often
suffering because of stagnating international sales
UNDERSTAND CORPORATE
STRATEGY
3
STRATEGY
This is thinkeen’s basic
map for strategy
analysis and
communication. One of
the tools we use to
understand our Clients’
long term vision.
Our first focus is to rapidly understand and
analyze Client’s Corporate & Commercial
Strategy, Commercial Processes and assess
the job position descriptions and
expectations.
Analyzing Commercial Incentive Plan
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growth rates. Often, the complexity of international
product launches delays the expected revenue
growth. Our model strives to understand what is the
Corporate vision, and is it able to accelerate growth
rates balancing the commercialization of established
therapies and new product launches in the different
geographies.
Understanding Corporate Culture and Strategic
Imperatives
What role can incentive plans can play in implement-
ing strategy and reinforcing strategic directions?
Understand Long Term Business Plan
Our approach addressees key questions such as:
- - What are the long range revenue expectations?
- - What are the financial resources allocated to the
incentive plans?
- - Is the commercial organization currently supporting
the strategy revenue plan?
- - What are the products, market segments and geo-
graphies prioritized ?
-
Clarify the Strategic Objectives that the Client
wants to Achieve through COIP
What expectations our Client has from the implemen-
tation of a new COIP ?
What are the key, long term
objectives that the new COIP will achieve?
Are these
objectives focused purely on top line growth or are
they supposed to address other aspects of the com-
mercial focus such as profitability, forecast accu-
racy, specific product launches, behavioral aspects?
Determine ACCEPTED CRITERIA to evaluate &
Prioritize COIP Options
COIP components offer a relatively high number of
options and among them the Client will have to
make a choice: what are the criteria that the Client
will use to prioritize the viable options and thus ulti-
mately select the best option to be implemented?
4
Analyzing Commercial Incentive Plan
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Incentivizing the commercial launch of new therapies im-
plies measuring and rewarding, while considering both
sales and non-sales indicators and identifying precisely
the key measures. During phases of new product
launches, the most critical indicators are those related to
demand generation activities and therapy pene-
tration enablers. Incentivizing higher penetra-
tion of existing therapies in a highly competitive
environment with limited allocation of public
budgets is a completely different game and re-
quires specific indicators relying on revenue
growth and share gain.
A successful Incentive Plan is designed to dy-
namically adapt to the changing mix of objec-
tives and required capabilities. Throughout
product lifecycle, the emphasis on Demand
Generation shifts towards Commercial Excel-
lence.
Understanding Demand Generation Process
In Lifesciences, commercial organizations fo-
cused upon influencing the buying criteria and
decisions, face a complex, interconnected ma-
trix of stakeholders, potentially across diverse
geographies.
UNDERSTAND
COMMERCIAL
PROCESSES
5
MARKET POTENTIAL, KEY
STAKEHOLDERS &
INTERACTIONS
It seems easy to refer to the
number of patients, the number
of therapeutic procedures per
patient, the number of
therapeutic units needed and to
write market penetration rates,
prices, volumes on a PowerPoint
presentation. However, both
shareholders & Investors know
this too. Estimating future
product penetration rates,
acknowledging and considering
existing competition, seems a
sufficiently!solid approach to
forecasting future sales. But, in
Lifesciences, the construction of
!a realistic market assessment
requires additional considerations
and information !addressing the
role and interactions of all the
stakeholders. Providers,
Purchasers, public and private
Insurance companies,!patient
associations and scientific
associations, all these
stakeholders contribute define
the actual size of the business
opportunities.!
Successful Commercial Incentive Plans for
the Lifesciences are designed on the basis of
the field-oriented realities and challenges
that sales and marketing organizations face
everyday.
Analyzing Commercial Incentive Plan
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The Commercial organization will need specific objec-
tives focused on the identification and the engage-
ment rules for each of the stakeholders in order to
build a credible and effective COIP.
Understanding Decision Making &
Buying Process
Company’s Commercial Strategy by segment and by
region plays an essential role in Commercial Capabili-
ties Planning.
Go to Market, Market Mapping, Segmentation Crite-
ria, Segment Prioritization and Buying Process are
essential to determine sought capabilities and incen-
tives focus. The Commercial organization will be re-
warded on the basis of its ability to influence key
stakeholders and their interactions.
Thinkeen has established a comprehensive launch
checklist for quantitative and qualitative indicators
this has been developed with years of experience
and insight from in country field operations and
global planning organizations.
Understanding Products and Respective Value
Propositions
Clearly stated value proposition and health-
economic positions are essential to the COIP as
they represent the fundamental tools available to
sales and marketing organizations and to the de-
sign of the selling process.
Assumptions Check through Limited Exposure
to External Key StakeHolders
Thinkeen also validates Client’s assumptions and
statement about market dynamics through field in-
terviews with small samples of the major stakehold-
ers and key opinion leaders. In this way, we obtain
a fresh picture of the go-to-market and growth pri-
orities and also give feedback to Clients when we
encounter discrepancies between their commercial
assumptions and a structured approach to field-
collected insights.
6
Analyzing Commercial Incentive Plan
CAPABILITY
DEFINITION IS
CRITICAL TO
COIP DESIGN
The clear definition
of the capabilities
required by channel
to successfully
launch and sell
innovative therapies
is essential to the
design of COIP.
ThinKeen Global. Miami, Florida USA - thinkeen.com
For thinkeen it is essential to understand the current Cli-
ent practices before suggesting programs, tools and proc-
esses that can foster visibility of the key COIP metrics.
Territory Configuration
We strive to understand current territory con-
figuration practices and to compare them to
the gold standards. For instance territories
shouldn’t be set before doing some serious re-
search to quantify realistic market potentials,
competition presence and reasonable market
share gains. Sales people should be rewarded
for their efforts, not the area in which they sell.
It’s critical to get competitive data about all ter-
ritories. One way to gain more visibility into the
success of incentive compensation is to auto-
mate the territory management process.
Quota management and Sales Crediting
Everybody knows it can be very challenging to
effectively manage sales quotas: very often,
sales quota setting is a manual, spreadsheet-
based process that consumes precious time
for both sales leaders and administrators. The
process is further complicated by a lack of
data visibility, which impedes sales manage-
ments’ ability to make strategic decisions. Be-
fore suggesting process improvements we fo-
cus in understanding current practices answer-
ing key questions like: “Do current sales lead-
ers hold the the authority to alter sales quotas
after they are set?”
Quota relief and sales crediting can be crucial,
and thoughtfully given quota relief can even
result in greater achievements.
In order to keep sales reps motivated, internal
stakeholders must pay attention to setting fair
and accurate quotas and territories. Doing this
can motivate the commercial teams and help
them meet the goals.
CRM Identification & Utilization
CRM utilization is a very common measure em-
bedded in sales rep evaluation. Our analytic
efforts initially focus on identifying the current
CRM platform and process (if any) and on the
ability of the current CRM utilization measures
to actually foster CRM productivity instead of
becoming (or being perceived as) a useless
and painful additional burden to the sales
force workload and busy agenda.
UNDERSTAND
SUPPORT
PROGRAMS
7
Establishing fair and accurate sales quotas
and territories can make the difference
between retaining or losing reps, reducing or
increasing overhead, and eliminating or
increasing revenue gaps.
Analyzing Commercial Incentive Plan
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Our field-based experience consistently supports the im-
portance of sales job content as a rational and safe start-
ing point for effective sales compensation design. A clear
job description and content definition can best explain the
construct of most sales compensation plans.
Sales Position Components
The core strength of well crafted, effective sales
compensation programs come from a clear assess-
ment, evaluation, and construction of each job po-
sition. Job design errors are the main source of
high-impact sales compensation plan failures. In
general we can say that, in Lifesciences, all com-
mercial processes are maid of a balanced mix of
five key components. Depending on the products,
market, and customers, sales management will de-
fine the sales job within the context of these five
components:
Demand Generation: Stimulating the market to
require access to the newly available therapies.
This includes all the complex relationships with
physicians and scientific associations whose opin-
ion is critical for the access of a new therapy or for
the definition of its indications.
Buying process & stakeholders identification:
Finding the key stakeholders of decision making.
UNDERSTAND
JOB POSITION
CONTENTS
8
Only a clear job description and content
definition can determine and explain the
logic and structure of successful sales
compensation plans.
Analyzing Commercial Incentive Plan
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Understanding who is influencing whom and under-
standing the complex dynamics between scientific,
economic and financial components of decision mak-
ing.
Purchase commitment: Securing the orders at physi-
cian, hospital, hospital group or governmental level.
Order fulfillment: Delivering the products or solu-
tions.
Customer, User, Patient support: Providing ongoing
support after the initial purchase. This component in
Lifescience embraces different technical, clinical and
scientific liaison activities.
Inventory of Sales Position Types
The following Commercial job inventory presents a
comprehensive list of sales job types. In Lifesciences
most jobs fall into one of the following six families:
Direct sales positions: Direct sales positions sell to
end users and act as the primary contact to the cus-
tomer. They might sell to physicians (prescribers in
the case of pharmaceuticals) or to nurses (users in
the case of medical devices). They operate in close
collaboration with sales support colleagues.
Product Pre- and post-sales support positions:
These are technical, product specialized or clinical per-
sonnel such as Medical Scientific Liaison (MSL) who
assist during pre- and/or post-
sales efforts.
Administrative Sales Sup-
port positions: Support sales
work with, and in support of,
the account sales force. They
provide additional administra-
tive, non-technical, non-clinical
help to the sales representa-
tive. For instance, hospital tender managers belong
to this family.
Government Sales positions: these are critical for
centrally reimbursed products and for products that
are purchased centrally from Government, MOH or
Social Security Institutions for all the patients of a
Country.
Business development positions: Business devel-
opment positions promote and develop market ac-
cess focusing on market segments or geographies
currently unknown to the sales force.
Agents Sales positions: External resources, they
define their value as having specialized customer
access and often sell products from multiple non-
competing companies.
Sales Position Levels
Job description levels must reflect the level of im-
pact, experience, and the importance of the job. The
higher the level, the greater the expected quality of
output and the greater the target total cash compen-
sation for a job. Progression from one job level to
the next is a reward for individual performance.
Level titles must have a transparent, well known,
link to the respective experience and responsibility
requirements.
9
Analyzing Commercial Incentive Plan
EXPECTATION-MATCHING
CAPABILITIES
ThinKeen uses a proven process to
match!the commercial capabilities
that maximize both growth and
profitability.
On the left side of this page we
show an example of visualization of
this process. We take into account
demand generation, product
portfolio prioritization!and the
related needs for specific
commercial processes and
approaches.
ThinKeen Global. Miami, Florida USA - thinkeen.com
Through External Benchmarking we compare client's
COIP processes and performance metrics to Lifescience
industry best practices with other companies. Upon Cli-
ent’s requests or when the business model requires it,
we also perform enlightening benchmarking with
non-Lifescience industries.
Agree on Criteria to Prioritize Benchmarking Or-
ganizations
In the process of best practice benchmarking,
Thinkeen identifies with Client the criteria to rank
and prioritize companies to be used as references
(“targets”).
In this way, we learn how well the targets COIP
works, perform and, more importantly, the business
processes that explain why these firms are success-
ful in commercializing new and mature therapies.
This process allows Client organizations to develop
plans on improving or adapting specific COIP as-
pects to best practices with the aim of increasing
performance.
Benchmarking may be a one-off event, but we often
recommend this to become a continuous process in
which we help Client organizations to constantly im-
prove their COIP practices.
PERFORM
EXTERNAL
BENCHAMRKING
10
“A l l s u c c e s s f u l c o m p a n i e s a re c o n s t a n t l y
benchmarking their competition. They have
to know what they have to match up with
day-in and day-out if their company is going
to be successful. ~ James Dunn
Analyzing Commercial Incentive Plan
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Determining Performances Measures
i. Align/Agree on Criteria to Select most Appropriate
Performance Measures
ii. Select Key Measures
!
iii. Assign Key Measure-Mix to Specific Positions
and Specific Levels
iv. Using COIP to reinforce sought behaviors
Determining Viable COIP Options
i. Understanding Sources of Compensation
! Monetary vs. Non-Monetary
ii. Plan Types: Determining Viable Options
! Unit Rate Plans Vs. Target Incentive Plans
! Linear vs. Progressive Vs. Regressive Plan
! Progression and Regression Rates
! Linked Measures
! Plan Capping
! COIP yearly calendar
iii.Incentive Funding Policy: Determining Viable
Options
Global Corporate Results Vs. Regional Results
Regional Results vs. Country Results
Country Results vs. Business Line results
iv. Sales Compensation formulas: Determining
Viable Options
Determining Viable Compensation Formulas
Constructing Sales Representative Formula
v. P&L Implications: Determining Scenarios for
the COIP Options
Determining Pre-Tax Implications of each Plan
Montecarlo & Tornado Analysis of each Plan
Elements of Reward Structure
Monetary: Cash, Stocks, Options
Non-Monetary
Privileges
Elite Prizes
FRAMING
OPTIONS
11
Selecting the measures around which to build
compensation formulas can be tricky. To
ensure solid COIP planning and flawless
implementation, companies need to identify
well refined and a workable definition of the
measurable parameters.
Framing Options Commercial Incentive Plan
COIP GUIDANCE
We guide our Clients
through the construction
of a framework including
viable COIP for decision
making.
Phase II
Sales&Objec+ves&
Linked'to'revenue'drivers.''
01#
Non-Sales&KPIs&
More'difficult'to'measure'
but'more'cri6cal'at'launch.'
02#
Sought&Behaviors&
Incen6ves'should'be'used'also'to'
reward''Sought'behaviors.''
03#
Sales&Budget&&
Year,'Quarter,'Month.''
A#
Pricing&Objec+ves&&
Minimum'Pricing,'Premium'Pricing…….''
B#
Product&Mix&Objec+ves&
Ensuring'weighted'focus'on'the'sought''
Product'MIX.''
C#
Focused&Key&Launch&Sales&
Rewarding'the'speed'of'the'first'invoiced'$'aHer'a'
specific'product'launch.''
D#
Demand&Genera+on&KPIs&
KPIs'related'to'the'ability'to'influence'the'
stakeholders'network'and'prescrip6on'rates.''
A#
Pa+ents&Access&to&Therapy&KPIs&
B#
Market&Share&KPIs&
Pa6ent'share'when'compe66on'exists.''
C#
Launch&Milestones&KPIs&
KPIs'related'to'the'%'of'treated'pa6ents'and'its'
growth.''
D#
Aligning & Agreeing on Criteria to Select most Appro-
priate Performance Measures
Successful Companies select the key performance in
sync with business strategy. Organizations focused on the
sale of well known, mature medical devices segments
might prefer to focus around low double digit predictable
revenue growth and profitability protection:
they are most interested in measuring line and
gross margin performances.
Companies launching new biotechnology prod-
ucts are more focused in the speed of therapy
access thus, in tracking number of patients or
number of treatments sold as a percentage of
the population or as percentage of the target
groups as per epidemiology studies.
A solid COIP planning starts with a clear state-
ment of strategic intents translated in ade-
quate groups of prioritized, KSIs (Key Strate-
gic Indicators) and KPIs (Key Performance In-
dicators).
Selecting key Measures
Selecting the measures to build the compensa-
tion formulas can be tricky. To ensure flawless
implementation, companies need well refined
DETERMINING
PERFORMANCE
MEASURES
12
Successful Companies select the key
performance indicators in sync with
business strategy.
Framing Options Commercial Incentive Plan
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EXAMPLE
of Performance Measure Components
and a workable definition of the parameters to be
measured.
For instance the measure of revenues is a very
common and well understood parameter while the
number of call visits requires a shared understand-
ing of elements:
- in what , precisely, a sales call consists of?
- who is measuring the actual number of proper
calls?
The measure of the frequency and intensity of the
use of CRM systems requires a smart definition of
“CRM usage”. Too many times a superficial defini-
tion of CRM usage gives origins to evening, CRM
logins in a system that never becomes structural
part of the sales process.
In general, identifying measures for demand genera-
tion positions can be difficult because it involves
sets of parameters that are, by definition, not part of
standard financial or accounting measures. Thus,
when we are asked to measure performances of a
product-launch or a go-to-market focused organiza-
tion, we need to define precise, intermediate
steps corresponding to meaningful demand gen-
eration progresses and market access advance-
ments in order to measure commercially relevant
milestones.
Assigning Key Measure-Mix to Specific
Positions and Specific Levels
Once key measures are identified, each position
and level needs to be assigned with a specific
and weighted mix of performance measures.
Using COIP to reinforce sought behaviors
Successful COIP companies put significant ener-
gies in alining sought behaviors with the definition
and choice of incentive measures. For instance,
when not-linked to other parameters, aggressive
individual cash compensation plans alone might
foster a very competitive environment among indi-
viduals that would would not match any parallel
attempt of promoting collaboration and teamwork.
13
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We have learned how important is to consider and use all
dimensions of compensation in order to make sure that
our Client, the employer, addresses all motivation triggers
and is able to facilitate changes of the incentive mix over-
time.
Understanding Sources of Compensation
The Client will be asked to share a number of
information about which monetary elements are
strategically preferable and which ones should
be avoided.
The Client will be also asked to share the Corpo-
rate view over available non-monetary rewards.
It is important to underline that, this document
illustrating the COIP process does not address
the issues related total compensation but fo-
cuses purely on the variable elements of com-
pensation and on their design.
The typical elements of Reward Structure are:
- Monetary: Cash, Stocks, Options
- Non-Monetary
- Privileges
- Elite Prizes
DETERMINING
COIP OPTIONS
14
In practice we discuss and hand-pick a
limited number of variable incentive options
choosing among a mix of methodologies and
algorithms.
Framing Options Commercial Incentive Plan
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Monetary)
Privileges))
Reward)
Non-Monetary)
Elite)Prizes)
Cash)
Stocks)
Stock)
Op>ons)
Plan Types: Determining Viable Options
With the Client, we discuss and hand-pick a limited
number of variable incentive options choosing
among a mix of methodologies and algorithms.
Typical components and choices from which COIP
options are generated are about:
-Unit Rate Plans Vs. Target Incentive Plans
-Linear vs. Progressive Vs. Regressive Plan
-Progression and Regression Rates
-Type and nature of Linked Measures
-Plan Capping criteria
-COIP yearly calendar
Sales Compensation formulas: Determining
Viable Options
For each of the viable COIP options we build the vi-
able Compensation Formulas which include all the
elements of leverage, risk and incentive capping as
visualized in the above charts.
We later construct the Sales Representative Formu-
las in order to have a pre-view of what the field
force will red and see in their plan letter.
Incentive Funding Policy: Determining Viable
Options
It is very important to identify the criteria under
which the funding of all COIPs is decided.
Some companies link their global funding on the
global achievement of revenues and/or PreTax re-
sults. Other companies define the local funding as
a weighted mix of global and regional target
achievement percentages.
Other organizations compensate field commercial
forces based uniquely on their individual perform-
ances independently by the achievement of re-
gional or global financial targets.
The typical funding choices to be made are:
-Global Corporate Results Vs. Regional Results
-Regional Results vs. Country Results
-Country Results vs. Global Business Unit re-
sults
The funding topic is critical when optimizing the
balance between the need of sharing risks and re-
wards in a large organization and the need of in-
centivizing individual accountability.
15
Framing Options Commercial Incentive Plan
VARIABLE VS. TOTAL COMPENSATION
It is important to underline that, this COIP process does not address issues of total compensation but focuses on the variable
elements of compensation and their design (light blue).
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P&L Implications:
Determining Scenarios for the COIP Options
Once the funding policies are defined, it is important to estimate the financial impact of each of the identi-
fied COIP options and the related ROI.
Together with the Client’s CFO we determine the Pre-Tax Implications of each Plan often including Monte-
carlo & Tornado Analysis.
Finally, we quantify the actual financial impact of Non-Monetary rewards, privileges and elite Prizes.
16
Framing Options Commercial Incentive Plan
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% of Target Achievement
% of Payout
Typical Payout Model(s)
Specific Payout Recommendations & Deci-
sions
Develop Support Programs
!
Addressing Commercial Positions more dif-
ficult to Compensate
Testing Designed COIP against the safety
Checklist
Establish Guidelines to Set Effective Goals
& Objectives
Design Global, Regional and Country Incen-
tive Programs
Decide Program Governance & Manage-
ment Accountabilities
Design Communication Plan & Materials,
Specific Payout Recommendations & Deci-
sions
SELECTING
17
After having laid out the viable COIP options
and before starting implementation the final
directional decisions must be made: one specific
option is selected and defined in detail.
Experience
We bring hundreds of
years of corporate
experiences in
developing,
implementing, using and
benefiting COIP in
virtually every corner of
the world.
SELECTING Commercial Incentive Plan
Strategic Direction
The decision of a
commercial incentive
plan is a strategic,
directional decision and
a key reinforcement of
the corporate business
strategy.
Phase III
Specific Payout Recommendations & Decisions
As described in Phase II, after having laid out the
COIP options and before starting implementation,
the final decisions to be made are the following:
Decide Specific Plan Type
! Unit Rate Plans Vs. Target Incentive Plans
! Progression and Regression Plans
P Linear vs. Progression and Regression Rates
! Linked Measures
! Plan Capping
! COIP yearly calendar
Decide Specific Funding Policy
! Global Results Vs. Regional Results
! Regional Results vs. Country Results
Decide Payout Formula per each Job Title
! Determining Viable Compensation Formulas
! Constructing Sales Representative Formula
Assess P&L Implications
! Determining Pre-Tax Implications
! Montecarlo & Tornado Analysis
Develop Support Programs
Often, new COIPs require the design of specific
support programs in order to make possible the
everyday management of COIP at all managerial
levels. Typically, support programs are needed
for:
! CRM Identification & Utilization
! Automation & Data Analytics
! Territory Configuration
! Quota Management Process
! Sales Crediting Criteria
Addressing Commercial Positions more
difficult to Compensate
It is important to dedicated quality time to refine
and validate the COIP in relation to the positions
typically more difficult to compensate such as:
!
! Channel Sales Rep
! Long Sales Cycle and mega orders
! Business Development
! Strategic or National Account Manager
! Medical Liaisons
! Governmental Sales & National Tenders
! Product Managers
18
SELECTING Commercial Incentive Plan
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EXAMPLE
OF COIP
TORNADO
ANALYSIS
EBITDA implications
of under and over-
achievement of sales
targets.
Testing Designed COIP against the safety Check-
list
Before launching COIP we encourage our clients to
test it against our safety check-list which summa-
rizes frequent incentive flaws that we too often ob-
served in corporate life.
We address the following COIP potential issues:
Complicated
An incentive plan that takes more than 10 minutes to
read can be often considered too complicated and
thus forgotten moving attention from the plan to ge-
neric hope of matching the requirements.
Disconnected by Business Strategy
The incentive plan must be tailored on current com-
mercial strategies in order to avoid misalignments
and conflicting inputs to field force .
Disconnected from field reality
Growth percentages that fits CEO tastes but are not
based on actual market potential, actual price setting
processes and actual competition are doom to fail-
ure and de-motivating to Star performers.
Lacking a Real-Time visibility
Incentive plans need to follow the rhythm of actual
result measurement processes such as business re-
views and forecasting milestones: payout must at-
tempt to match their frequency.
Frozen & Unchangeable in time
In changing environments and contexts (such as
product launches) incentive plans must be designed
with embedded dynamics and expected changes.
Based on Untraceable Metrics
Incentive plans which are even partially based on un-
traceable metrics (such as market share of which no-
body knows exactly the size) remain unfollowed.
Ethics and Compliance Unfriendly
The plan needs to protect reps from excessive, un-
conditional emphasis and pressure on revenue
growth: this often becomes a key trigger in non-
compliant business practices.
More a Contract than an Incentive
The incentive plan must feel and be communicated
as an incentive, not as a contractual addendum to
the employment contract, it must be a motivating part
of the job, not a legally regulating part.
Establish Guidelines to Set Effective Goals &
Objectives
It is important to enrich the COIP with implementa-
tion guidelines ensuring that line executives and HR
executives don’t compromise a good design with
poor implementation. The typical (and most danger-
ous) way to dramatically deteriorate the efficacy of a
COIP is to set non-realistic targets or to set too easy
targets. In the first case (the most common) sales
forces tend to abandon the targets soon in the fiscal
year and “try their best to sell as much as possible
and possibly survive the year-end’s performance re-
view”.
Design Global, Regional & Country Incentive
Programs
We guide our Clients through the designed COIP into
the specific COIPs of different geographies and busi-
ness units of interests. This process allows potential
incongruences or regional incompatibilities to
emerge before launching the compensation plan.
Decide Program Governance & Management
Accountabilities
The Corporate governance process must include the
appropriate management processes to ensure conti-
nuity and accountability during the COIP implementa-
tion and improvement phases. Thinkeen walks Cli-
ents hand-in-hand through this effort supporting the
identification of the right accountable positions and
the involvement of the appropriate internal key stake-
holders.
Design Communication Plan & Materials
Thinkeen supports its Clients during the planning and
implementation phases of the COIP communication
strategy. This includes the preparation of communica-
tion material and the direct participation to the launch
phases.
19
SELECTING Commercial Incentive Plan
ThinKeen Global. Miami, Florida USA - thinkeen.com
Incentive Compensation Plan Administration
Communication
Set Effective Goals & Objectives
Tracking Performances against Goals
Monitor Gaps against Best Practices
Managing Major Incentive Compensation Plan Changes
IMPLEMENTING
20
Thinkeen is able to partner hand-in-hand with Clients after
the planning phases, taking responsibility for the quality of
decisions made and for the given recommendations.
Implementing
Commercial Incentive Plan
Hands-on
In our working
philosophy: we are
happy to participate to
COIP launches in order
to ensure flawless
implementation and
assure accountability for
the success of the
incentive policy.
Phase IV
Incentive Compensation Plan Administration
With our Client we verify that all the administrative
components of the plan are actually functioning as
planned. We also evaluate ways to minimize the
administrative burden.
Communication
We not only provide our Client with a coherent set
of communication documents and media but we
are always happy to directly participate in the
launching and communication phases.
Through 1-1 interviews and internal surveying we
verify that the communication of the COIP has
been positively received and we monitor the per-
ception of the quality for the policies and the imple-
mentation.
Set Effective Goals & Objectives
Thinkeen supports the Client organization in the ef-
fort of evaluating the commercial goals and ensur-
ing their effectiveness in fostering motivation and
minimizing frustrations.
Tracking Performances against Goals
Thinkeen has proven processes to evaluate the
ability of our Client’s COIP and to truly incentivize
the commercial organization performance against
goals.
Monitor Gaps against Best Practices
When required by our Client we benchmark the exe-
cution of the COIP against other reference organiza-
tion typically focusing on:
i.! Strategic Alignment
ii.! Employee Motivation
iii.! Best Practice Proximity
iv.! Return on Investment
v.! Actual Conformity to Plan
vi. The “Piece of Mind” Check List
Managing Major Incentive Compensation Plan
Changes
We constantly help the Client to address both design
and implementation GAPs and manage potential
COIP changes.
We support the Client when dealing with environ-
mental or business model changes that require
prompt re-adaptation of the COIP.
21
Implementing Commercial Incentive Plan
ThinKeen Global. Miami, Florida USA - thinkeen.com
International
Offices
Our direct
representation offices
around the world.
International
Partners
Our network of
International
Partners operating
with us under the
same processes,
standards and
business practices.
INTERNATIONAL OFFICES
USA
GRAND BAY PLAZA EXECUTIVE SUITES
2665 SOUTH BAYSHORE DRIVE
MIAMI, FLORIDA!
33133 USA +1 (305) 290 2080
!
USA
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CHICAGO IL 60062! +1 (847)
226-4693
!
PUERTO RICO!
TORRE DEL CARDENAL #1907
SAN JUAN PR !00918 +1 (787)
399-5353
!
PANAMA!!
EL CANGREJO
EDIFICIO MARQUIS 9C
PANAMA CITY - +507 6526 8542
BRAZIL
AV PORTUGAL 400 . 31C!
09040-000 SANTO ANDRÉ - SÃO
PAULO
+ 55 11 2759 5733
+ 55 11 9 9173 9449
VENEZUELA!
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PACAIRICUA MEZANINA OFIC. 2A,
CHACAO, CARACAS
+58 4122342966
+58 4122342957
FRANCE!
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69570 DARDILLY - FRANCE
+33 6 43 21 25 88
UK
25 THE COPSE, LEAZES WOOD!
BURNOPFIELD, NEWCASTLE UPON
TYNE!
DURHAM NE16 6HA UK
!
ITALY
VIA PONTE PAGNANO 11,
31100 ASOLO, TREVISO
+39 3487712083
!
GERMANY
WINTERGASSE 8 – 10 D
86316 FRIEDBERG BAVARIA
+49 172 594 5000
INTERNATIONAL PARTNERS
SPAIN!
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28002 MADRID +34!620 918 165
SPAIN
HEALTHVISORS!
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46003 VALENCIA +34!608 174 818
MEXICO
BIOHELP
AV. PASEO DE LA REFORMA NO. 389
PISO 10,
COL. CUAUHTEMOC, MEXICO CITY
+52 (55) 5212-2298
GRAND BAY PLAZA EXECUTIVE SUITES
2665 SOUTH BAYSHORE DRIVE
MIAMI, FLORIDA!
33133 USA