Balancing Incentive Compensation Plans

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