Driving Operational Change Whilst Maintaining Field Force Motivation

Damian Colehan Julian Snape Nick Merryfield

Agenda
The Abbott journey implementing change and improving productivity

Monitoring success what measures can be used?

Measuring motivation and satisfaction

Reflective leadership

Company Confidential 2007 Abbott

Environment & Objectives

The industrys sales forces are facing unprecedented change: - Key account management - Reduction in size - New roles - Fragmentation of NHS decision making - Evolution from primary care to secondary care focus Describe journey of sales force optimisation & effectiveness in Abbott from 2001 2007 Share examples of methods to achieve the maintenance & improvement of morale during change Create discussion and key learnings through Q&A

Company Confidential 2007 Abbott

Sales force optimisation - 6 main elements

Resource Optimisation Measurement
Ability to monitor salesforce metrics and make tactical decisions Size, structure, roles and focus of salesforce activity [targeting, frequency & coverage]

Segmentation and Targeting

Customer targets, prescribers and influencers defined by value

Salesforce Planning

Field Force Optimisation Motivation & Satisfaction

Training and Competencies
Ability of salesforce to get the company message delivered effectively. Coaching and competencies.
Company Confidential 2007 Abbott 4

Incentives
Salesforce and management incentive scheme modelling and sales target forecasting

Ability and tools of salesforce to effectively plan at a territory and customer level

The Abbott journey.

Integrated Knoll Ltd 4 primary care teams 1 hospital team Small HCD team Refocused linear primary care team Expanded secondary care capability Expanded HCD team Invest in 1st line manager development Account management Account based targeting Local business planning Personal development planning Performance management

2001

2002

2003

2004

2005

2006

2007

- Teams operating in clusters of isolation - Low accountability - Focus on integration

- Introduction of individual performance management metrics and performance rankings

- Portfolio changes - Acceleration of specialist products

- 65 Primary care representatives - 100 secondary care and NHS liaison specialists

Company Confidential 2007 Abbott

Abbott Case Study - Review Optimisation Elements

Abbott recognised the need to benchmark sales force productivity in order to run a continual improvement programme

This project commenced with a benchmarking project of the productivity elements through internal interviews and salesforce metric analysis

An ongoing development programme was developed commencing with resource deployment

Company Confidential 2007 Abbott

The Abbott journey.

Integrated Knoll Ltd 4 primary care teams 1 hospital team Small HCD team Refocused linear primary care team Expanded secondary care capability Expanded HCD team Invest in 1st line manager development Account management Account based targeting Local business planning Personal development planning Performance management

2001

2002

2003

2004

2005

2006

2007

- Teams operating in clusters of isolation - Low accountability - Focus on integration

- Introduction of individual performance management metrics and performance rankings

- Portfolio changes - Acceleration of specialist products

- 65 Primary care representatives - 100 secondary care and NHS liaison specialists

Company Confidential 2007 Abbott

Resource Levels outcomes from strategic planning process

Design a sales force structure that would deliver the financial target!! Headcount constraints No redundancy policy Future proof Flexible resource if necessary
Company Confidential 2007 Abbott 8

Resource Levels Analysis

There was an existing salesforce consisting of 2 mirrored teams, these were believed to be over resourced for product portfolio expectations Project used a mixture of key personnel meetings, analysis and resource modelling.

Resource Level Too high

Product portfolio impact of high market pressure and patent expiry

Impact of NHS Change

Resource Issues

Unknown impact of changes to PCOs and emerging local changes

Retain Best People

Manage motivation, satisfaction & loyalty
Company Confidential 2007 Abbott 9

Minimise Disruption
Product portfolio near term targets challenging

What is the right deployment of resource?

Key methods of sales force configuration

Maintaining customer relationships Motivation Retaining quality Delivering the numbers Implementing brand strategy

Company Confidential 2007 Abbott

10

Resource Optimisation Model - Drivers

Product Strategies Required share of voice, frequency and coverage, disease management, KOL development and complexity of the sales model Customer Value Required Prescribers and influencers, future opportunity value, profitability, sales sensitivity, optimum customer list size Constraints Corporate headcount, employee issues, management structure, territory sizes, call capacity, geography Skills and Structure

Suitable skills for different selling environments and customer types, territory size and structure

Resource Optimisation Model

Number of FTEs - Skills, Customer Groups, Team Structure, Territory Boundaries

Model created scenarios including FTE workload index, then analysed disruption
Company Confidential 2007 Abbott 11

Resource Optimisation Model - Drivers

Product Strategies Required share of voice, frequency and coverage, disease management, KOL development and complexity of the sales model Customer Value Required Prescribers and influencers, future opportunity value, profitability, sales sensitivity, optimum customer list size Constraints Corporate headcount, employee issues, management structure, territory sizes, call capacity, geography Skills and Structure

Suitable skills for different selling environments and customer types, territory size and structure

Resource Optimisation Model

Number of FTEs - Skills, Number of FTEs - Skills,Customer Groups, Team Structure, Territory Boundaries Customer Groups, Team Structure, Territory Boundaries

Optimum Salesforce Resource Deployment

Company Confidential 2007 Abbott 12

Business Value Concentration ground up

Business Value Index Concentration
00 0% 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0

Business Value

0% 0 0% 0 0% 0 0 % 0 % 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 00 0%

Accounts
Company Confidential 2007 Abbott 13

Resource Levels - Implementation

Recommendation was to move to a single team structure with a FTE reduction of nearly 30%

Most customer relationships maintained -customer disruption of 29%

Clear customer focused sales force structure able to deliver new strategies

- account management - local business planning

This would require the development of new KPIs centred around target customers target nurses with activity targets that were within the capacity
Company Confidential 2007 Abbott 14

Key Account Management

Company Confidential 2007 Abbott

15

Key Account Level Targeting

Already recognised as a new area, it now needed immediate attention to push business forward

NHS Liaison Support

Address Portfolio Changes

Account Strategy

Changing Product Adoption Process

Changing Customer Base

Company Confidential 2007 Abbott 16

Key Account Based Segmentation and Targeting

This encompassed a number of elements:
How is targeting implementation measured ? What elements describe a target customer or account ?

What mix of influencers and prescribers ?

Segmentation and Targeting

How will buy-in be achieved in the salesforce ?

What data sources should be used to value customers/accounts ?

Company Confidential 2007 Abbott 17

Calculating True Value

Each account was valued for the relevant portfolio using 2 elements;

POTENTIAL
Volume of OPPORTUNITY to prescribe or refer brand specific disease treatments

Account Value

PROPENSITY
Degree of LIKELIHOOD of increase in future prescribing, influence or referral for the brand

Company Confidential 2007 Abbott

18

Value Measurements
POTENTIAL
Customer Value

PROPENSITY
Degree of LIKELIHOOD of increase in future prescribing, influence or referral for the brand

Volume of OPPORTUNITY to prescribe or refer brand specific disease treatments

Market sales Volume of patients by disease profile e.g age, ethnicity, socio economic etc Practice size number of GPs, nurses, list size Disease prevalence QOF data Disease management clinics/mechanisms for generating patients Number of beds/treatment capability by disease* Patient treatments/admissions by disease* Hospital spend on disease area* PCT funding/financial data Size of catchment / referral areas*
Company Confidential * Typically Secondary Care measurements 2007 Abbott 19

Own product sales growth/volume/market share Specific competitor usage profile Attitudinal data adoption, attitude to treatment of disease PCT influence formularies, protocols, guideline PBC status and influence Customer typology (qualification, special interest etc) Disease management structure Hospital formularies and protocols Funding KOL Sophistication of structure to treat

Sophisticated Value in Clear Segments

Looking PROPENSITY

Loyal

Raving Fan

The accounts were grouped into suitable segments relative to the brand strategy and communication channel to be used. They were combined to determine a portfolio value. The salesforce targets were crossed with accessibility to ensure a successful salesforce implementation

Lost

Lodger

Loyal

Saboteur

Lost

Looking

POTENTIAL
Company Confidential 2007 Abbott 20

Did it Work????

Company Confidential 2007 Abbott

21

Results - targeted activity

Activity is more focused on the productive targets at the right frequency
GP Target Frequency
00 0% 0% 0
0% 0

0% 0 0% 0 0% 0 0% 0 0% 0
1% 1 0% 0 0% 0

Target Freq x 0 +

Target coverage up from

Target Freq x 0

73% to 89%
Increased size of productive frequency segment from

1% 1

Target Freq x 0
1% 1 0% 0 0% 0

0% 0 0% 0 0% 0 0 %
0% 0

Target Freq x 0

31% to 58%

Target Freq x 0
0% 0

N ov 00 A T M

2003

N ov 11 AT M

2006

Company Confidential 2007 Abbott

22

brand

Sales increase of 22%

Market Share increase of 7%

0000 000

0000 000

0000 000

000 000

000 000

000 000

000 000

Company Confidential 2007 Abbott

23

What else changed?

Change in behaviour account based targeting Local business planning Change in measurement clearly defined personal KPIs Change in incentives and rewards Introduction of finely managed coaching system Introduction of personal development plans Increased days on road 165 rose to 180 per rep RM coaching days increased by 30% Sickness reduced by 18% Turnover reduced from 13% to 4%

Company Confidential 2007 Abbott

24

How Satisfied and Motivated Is Your Salesforce and How Do You Measure It?
Damian Colehan Nick Merryfield

Session Objectives
1. Demonstrate positive effect of benchmarking motivation through field force change
Limitations of relying on internal surveys for climate checking

1. Show six year trends relating to industry motivation & SFE

Real life examples of creating the right and wrong environment

1. Abbott initiatives taken to assist in developing motivation

2. Challenge whether your field force is motivated to embrace SFE and continuous improvement initiatives
Company Confidential 2007 Abbott 26

Questions
Do you:
Know the level of motivation in your salesforce compared to the industry? Know what motivational factors are important to them? REALLY consider their motivation through change Impact on:
Sales Activity Customer perception of the company

Abbott very keen to know during period of change ~ 2004-07

Company Confidential 2007 Abbott 27

Measuring Your Field Forces Fitness to Take On Sales Force Effectiveness?

The Pf Company Perception, Motivation and Satisfaction Survey
1. Survey Background 2. 6 Year Industry Trends 3. Real life examples of good & bad environments

The Pf Company Perception, Motivation and Satisfaction Survey - Background

Pharmaceutical Field Magazine:
2001 to 2007 12,000 responses 2,300 in 2007 Over 75 companies Mix of primary, secondary, hospital, HDM, RBM, NSM responses

Expert Partner
Royal Statistical Society at the Nottingham Trent University

Company Confidential 2007 Abbott

29

The Pf Company Perception, Motivation and Satisfaction Survey - 6 Survey Aims

In relation to the field force: 1. What MOTIVATES them 2. How SATISFIED are they with motivational factors 3. RETENTION & RECRUITMENT 4. Who are EMPLOYERS of CHOICE 5. How do they use ETMS 6. Actual REMUNERATION packages

Company Confidential 2007 Abbott

30

Survey Method
Different from internal company surveys by: Benchmarking against: The Industry Competitors (minimum of 4)

Sub analyse by infinite parameters via an interrogation tool: Job Role Length of time in role & industry & # of companies worked for Sales performance Geography Full time / part time Contract / head count
Company Confidential 2007 Abbott 31

CATEGORY 1: Motivating Factors of the Field Force

Q. Responders were asked to rank their Top 7 most important work factors from a list of 16 options.

Change in Important Work Factors 2002 to 2007

PHARMACEUTICAL INDUSTRY TOP 7 IMPORTANT WORK FACTORS

Rank
1Salary 2Personal 3Rel

2002 Salary Development

2007

Change 07 to 02 = Up 1 Up 6 Up 2 Up 2 Down 1 Down 5

Rel with Manager Company Culture Belief in Products Job Security Success Recognition Personal Development

with Manager (Down 5 in 07) Recognition

4Bonus

5Success 6Belief 7Job

in Product

Security

Rel with Manager = Relationship with Manager

Company Confidential 2007 Abbott

33

CATEGORY 2: How Satisfied are the Field Force

Q. Responders were asked to score their satisfaction with each motivational factor:
Very Satisfied Satisfied Average/No Opinion Dissatisfied Very Dissatisfied +2 +1 0 -1 -2

Satisfaction
SCALE CONVERSION Very Satisfied Satisfied Average Dissatisfied Very Dissatisfied 100 50 0 -50 -100

Company Confidential 2007 Abbott

35

Change in Satisfaction
Very Satisfied Satisfied Average Dissatisfied Very Dissatisfied

100

50

-50

-100

Change in Average Level of Satisfaction With Top 7 Motivational Factors 02 to 06

2002 All Responders Highest Sales Reps

2006

% Change 02 to 06

30 38

35 33

14% -17%

In 2007 All Responders Average Satisfaction Remained at 35 Highest Sales Performers Increased to Average 37
Company Confidential 2007 Abbott 36

The Power of the Survey

Real Life Example Top 10 Pharmaceutical Co. Satisfaction with Top 7 Motivational Factors

Comp X - Satisfaction With Top 7 Factors

00 .
Scale: Very Satisfied Satisfied Average/No Opinion Dissatisfied Very Dissatisfied +2 +1 0 -1 -2

Satisfaction

00 .

C om p X

0
la Sa ry l Re ith W M a an r ge li Be ef in uc od Pr ts c Su b Jo pa m Co lt u Cu ny re r Pe n so ss ce c Re ti ni og on c Se ity ur v De al el nt me op

-00 .

Company Confidential 2007 Abbott

38

Satisfaction with Top 7 Factors

00 .
Scale: Very Satisfied Satisfied Average/No Opinion Dissatisfied Very Dissatisfied +2 +1 0 -1 -2

Satisfaction

00 .

Comp X Industry

-00 .

Company Confidential 2007 Abbott

39

Satisfaction With Top 7 FactorsVery Satisfied

00 .
Satisfied Average/No Opinion Dissatisfied Very Dissatisfied

+2 +1 0 -1 -2

Satisfaction

00 .

C omp X Industry C ompetitors

0
n fi lie Be ny pa m Co c Su b Jo ry la Sa ith lW Re M er ag an en pm lo ve De al on rs Pe ss ce y rit cu Se

ts uc od Pr

o iti gn co Re

re ltu Cu

-00 .

Company Confidential 2007 Abbott

40

Satisfaction of Top 7 Factors

00 .

Very Satisfied Satisfied Average/No Opinion Dissatisfied Very Dissatisfied

+2 +1 0 -1 -2

Satisfaction

00 .

C omp X Industry C ompetitors

0
n fi lie Be ny pa m Co c Su b Jo

Averaging all satisfaction scores identifies real problems:

ss ce y rit cu Se ts uc od Pr o iti gn co Re M re ltu Cu er ag an

Industry employees are twice as satisfied compared to Comp. X

-00 .

Competitor employees are nearly three times more satisfied

Company Confidential 2007 Abbott 41

ry la Sa

ith lW Re

en pm lo ve De al on rs Pe

Example of a High Performing Companies

Comp A Comp B

Comp A

Comp B

Industry

Pe cu Se R ec n og o it i n y rit

a on rs

lD

e ev

en pm lo

Jo es s

cc Su n pa C om

re tu ul s ct n fi B ie el u od Pr

ith W el

Sa

ry la

00 .

11 .

Company Confidential 2007 Abbott

ag an

er

43

Satisfaction

CATEGORY 3 Attrition
Do they Want to Stay or Go?

Attrition
Q. Do you intend to move from your present employer in the next 12 months?

2007

14% said YES

2002

24% said YES

Change in 6 years

-35%

Comp X, A&B

=
Company Confidential 2007 Abbott

23%, <5%
45

CATEGORY 4 Use of Electronic Territory Management Systems

Series of Questions to Establish Whether Field Forces Actually Use ETMS

Summary of ETMS Use

Only 50% will take a system with them most days Only 30% will definitely set a pre call objective every call 40% may not bother with a post call report 20% of 1:1 calls may be dishonestly recorded 40% of meeting calls may be dishonest And 50% of key messages may be made up Conclusion:
Choose your ETMS provider carefully home grown maybe best! Interpret your post marketing research with caution Engage your field force to get a quick win over the competition
Company Confidential 2007 Abbott 47

CATEGORY 5 Employer of Choice

Is Your Organisation Capable of Attracting the Best Talent?

Employers of Choice 2002

Went With Company Turnover
Company
GlaxoSmithKline Pfizer Merck Sharp & Dohme Janssen-Cilag Eli Lilly & Company Wyeth Roche Schering Plough

Rank 2002
1 2 3 4 5 6 7 8

Company Confidential 2007 Abbott

49

Employers of Choice 2007

All Change
Company
Roche Boehringer Ingelheim Eli Lilly & Company Sanofi-Aventis Schering Plough Janssen-Cilag Schering Novartis Wyeth Proctor & Gamble

Rank 2007
1 2 3 4 5 6 7 8 9 10

Company Confidential 2007 Abbott

50

Summary
The survey will answer:
1. What Motivates the different groups of reps 2. How Satisfied these groups are 3. Whether they want leave you 4. Do they use your ETMS 5. Can you attract the best talent 6. Are you paying competitive remuneration packages

Back to Damian Colehan

Company Confidential 2007 Abbott

51

The Abbott Story

A Tale of Two Halves

The Abbott Story

First Half 2001 2003
Knoll integration 2001. Small Pharma business to midsize in six months. Merging of two cultures and systems. Focus on cultural integration. ETMS launch.
Company Confidential 2007 Abbott 53

2001 - 2003
2001 2003 cont.
Realignment of salesforce evaluation of larger Secondary Care business. Salesforce re-alignment. Development of five year strategic plan. Introduction of European SFE programme. Market share based incentives (limited bonus). Investment in Regional Manager training.
Performance management

Little consideration on field force motivation

Company Confidential 2007 Abbott 54

2003 The Results - Levels of Satisfaction

Average work factor satisfaction score ( profile scenario 0)

0 .0

0 .0

-0 .0

t r e y s s e s y y re ry ic en in es m ge ss ct em t ie rit la nu t ltu li e a u e ol m om el al c d n p h P s cu bi ip ys Sa Bo cu an lo ro si to uc sc se y ls or ar m tp e s p n u f n a b C o r A re y ev ct uc is nt pa Jo sp ou i lit ha ra ld ire od se m S p re a d e fy ab pr Co al pr ap on at e .o ith n g t. rs in on w ur iti ou ut uc co Pe ip ef c r d F li h Company Confidential 55 St Re Ac Ad2007 Abbott l's Be e

-0

The Abbott Story

Second Half ~ 2004 to 2006 and beyond

2004 / 2006
More change expected BUT High consideration of FF motivation:
Sales management restructure. Embed strategic plan new sense of purpose and direction. Open honest communication. Second restructure of Primary Care (no redundancies). Focus on local SFE priorities. New company car scheme. Sales incentives volume growth based. Salary benchmarking. Re-introduction of overseas conference. Greater FF involvement in customer targeting.
Evolution to key account management

Company Confidential 2007 Abbott

57

Top 5 Important Work Factors for Abbott Personnel

Of the 16 motivational factors available to choose from, Abbott ranked the following five as the most important
1. 2. 3. 4. 5. Salary Job Security Company Culture Relationship with Manager Bonus

Company Confidential 2007 Abbott

58

R el 's hi

-0 .0 0 .0 0 0 0 .0 0

Satisfaction With Motivational Factors 2006

Company Confidential 2007 Abbott 59

Average satisfaction scores for all work factors

p Pe w ns ith io A d n cc ou ire sch ct e n P er tab ma me so na il na ity ge l d f or r A dd ev sa iti el l o n Sh op es a l ar m e re e s sp ch nt o e C om n s me i pa bili R t ie ny e s B co g c el . o A ultu ie f u f re S in p you ton tru r o r ct es su my en c .A pp t p ces s ra ro du is al c sy t s Jo st em b se cu Fu C tu ar rity re po pr lic od y uc Sa t p la ip ry el in e B on us

Profile

Abbott Laboratories

Company Selection

Do People Want to Stay or Go in 2006?

Career progression in the next 00 months
Abbott Laboratories
Move comp Move pos

Profile

Remain Other

Selected Companies

0 %

0% 0

0% 0

0% 0

0% 0

00 0%

Company Confidential 2007 Abbott

60

Company Culture
Satisfied with company culture

In 2006:
dissatisfied

2003

Abbott Laboratories

Profile

no opinion satisfied

19% greater than industry 20% greater than in Abbott three years ago

Selection ( 00 )

0 %

0% 0

0% 0

0% 0

0% 0

00 0%

Satisfied with company culture

Abbott Laboratories
Dissatisfied

2006

Profile

No Opinion Satisfied

Selected Companies

0 %

0% 0

0% 0

0% 0

0% 0
61

00 0%

Company Confidential 2007 Abbott

Summary
Comparing the 2003 satisfaction results against 2006, for the same 7 factors for the Highest Performers:

Abbott
2003 2006 +0.88 +1.44

Industry
+0.38 +0.33

The industrys average satisfaction had dropped by 17% Abbotts average satisfaction had increased by 63%

Company Confidential 2007 Abbott

62

The Abbott Story

And Beyond Satisfaction Levels this Year ~ 2007

R el 's hi p wi th

-00 . 00 . 00 . 11 . 11 . 00 .

-11 .

00 .

00 .

And Beyond Satisfaction Levels 2007

Company Confidential 2007 Abbott 64

di re Pe ct ns ma Be lie C ion nag f i om s e n c r pr pa he es ny me e n cu t p ltu ro re Ac d Au uc co ts Pe unt Jo tono Ad rs ab b s m di on ility ec y tio al f o u ri R nal dev r s ty ec re e al St og. spo lopm es ru o n ct f y sib en .A o i t pp ur s lit ie ra u c s is c Sh al es ar sys s e sc t em h C em ar e Fu po tu lic re Sa y pr la od uc Bo ry t p nu ip s el in e

Average satisfaction scores for all work factors

Profile

Abbott Laboratories

Company Selection

Reflective Leadership

Company Confidential 2007 Abbott

65

Reflective Leadership
Engage all the stakeholders MD/CEO, Board, Sales & Marketing etc Have clear focus with end results explicitly defined Have detailed planning with contingencies Make the difficult decisions at the right time do not delay Have constant communication Ensure the sales force is trained to operate in the new environment Monitor performance through pro-active use of KPIs and external benchmarking data Find the right supplier build trust and understanding & brief them clearly Listen and be open to feedback Operate a continuous improvement culture review regularly

Company Confidential 2007 Abbott

66

THANK YOU Questions?

Company Confidential 2007 Abbott

67