GlaxoSmithKline Pharmaceuticals Ltd.: Reinventing Incentives and Performance

In 2015, GlaxoSmithKline (GSK) moved from target-driven sales, to a no-sales target regime. This change involved the sales incentives plan and performance measurement parameters of the front line medical sales force of the company. The executive director of Human Resources knew that challenges lay ahead in managing the company’s employees and reinvigorating the values of the organization. He was hoping to shift the focus of the sales force to ethical behaviour, dissemination of scientific knowledge among doctors, and customer and patient care. Many people were adapting to the new system while a few resisted, and some left the organization. Though management anticipated this turn of events and accepted the employee turnover, the director knew that more work needed to be done to make the new system more acceptable and functional. How should he address the subjectivity of the system, simplify it for his salesforce, and address the concerns of his managers? Would the new system motivate performance? Could he convince his employees of the potential benefits of the process- and competence-based pay system at GSK?

The case can be used in both graduate- and post-graduate-level courses on compensation and benefits, performance management, sales management, and strategic human resource management. In a compensation and benefits course, this case fits in the modules on competence-based pay systems and pay for performance; in a performance management course, it fits in the modules on employee efforts and behaviour, and result-centric performance measurement and appraisal. In a sales or marketing management course, it fits in discussions on sales force management.<br><br>After working through the case and assignment questions, students should be able to<br><ul><li>understand the importance of sales incentives in the pharmaceutical industry;</li><li>assess the impact of introducing a new process- and competence-based performance evaluation system on employee engagement and behaviour;</li><li>analyze alternative measures of the performance and related incentive plan as introduced by GSK;</li><li>discuss the repercussions of the plan and the challenges in its implementation; and</li><li>suggest options for further modifications.</li></ul>

• Incentives, Performance, Ethics, Change