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Balancing Incentive Compensation Plans


Posted by mddiadmin on November 1, 2001

Originally Published MX November/December
2001



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Balancing Incentive
Compensation Plans

For medtech
companies, a good incentive plan can mean higher sales and a more motivated
sales force—but only if it allows for effective territory alignment.

Marshall Solem
and Songjun Luo

Many
executives of medical technology companies count on incentive compensation plans
to align their sales representatives’ goals with the goals of the company,
but this oftentimes isn’t the result. Some very common types of incentive
plans, when coupled with poorly balanced sales territories, can actually hinder
a medtech company’s ability to maximize sales. Faced with today’s
consolidating healthcare marketplace as well as a proliferation of competitive
products, medical technology executives cannot afford to have their sales incentive
plans work against them.

This article explores
how incentive compensation plans can backfire, and explains how medical technology
executives can determine whether such a phenomenon is at work at their company
(see sidebar). The article


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