Sales force compensation and incentive schemes: Practices in the South African pharmaceutical industry

Russell Abratt,Manfred Klein

doi:10.4102/sajbm.v30i3.756

Russell Abratt, Manfred Klein

Open Access

https://doi.org/10.4102/sajbm.v30i3.756

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Abstract

Compensation plans that incorporate incentive schemes act as a sales force motivator. This study deals with sales force compensation plans from a management perspective, in the South African pharmaceutical industry. A literature review of incentive schemes is provided. Results are reported about the compensation plans and incentive schemes of 38 organisations. The design, implementation, and evaluation of sales force compensation and incentive schemes are discussed. Guidelines for the development of sales force incentive schemes are provided.

Highlights

The cost of a sales force is rising and is by far the largest element in a company's marketing expenditure
The purpose of this study was to investigate compensation plans and incentive schemes of pharmaceutical companies operating in South Africa
The results show that managers believe that the major driving force for use in incentive schemes is to motivate the sales force (Table 4)

Summary

Introduction

The cost of a sales force is rising and is by far the largest element in a company's marketing expenditure. A survey of the South African pharmaceutical industry in 1978 found that the sales force cost between 40 and 75% of the company's marketing budget (Flint, 1991 ). Companies try to improve the productivity of their sales force through better selection, training, motivation and compensation. Compensation and incentive schemes play an important role in motivating sales people to perform better. Richardson, Swan & Mcinnis-Bower (1994) and Bush & Grant ( 1994) analysed the content of four leading marketing and sales journals for a 17- and 13-year period respectively. 2.6% of the articles were on the topic of compensation and 9.7% of the articles dealt with the pharmaceutical industry (Richardson, Swan & Mcinnis-Bower, 1994). The size of the industry warrants research of this nature

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