1. Driving Operational Change Whilst Maintaining Field Force Motivation Damian Colehan Julian Snape Nick Merryfield

2. 2Company Confidential © 2007 Abbott Agenda The Abbott journey – implementing change and improving productivity Monitoring success – what measures can be used? Measuring motivation and satisfaction Reflective leadership

3. 3Company 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

4. 4Company Confidential © 2007 Abbott Sales force optimisation - 6 main elements Optimisation Resource Optimisation Size, structure, roles and focus of salesforce activity [targeting, frequency & coverage] Segmentation and Targeting Ability of salesforce to get the company message delivered effectively. Coaching and competencies. Ability to monitor salesforce metrics and make tactical decisions Measurement Training and Competencies Customer targets, prescribers and influencers defined by value Salesforce Planning Ability and tools of salesforce to effectively plan at a territory and customer level Incentives Salesforce and management incentive scheme modelling and sales target forecasting Field Force Motivation & Satisfaction

5. 5Company Confidential © 2007 Abbott Refocused linear primary care team Expanded secondary care capability Expanded HCD team Invest in 1 st line manager development Integrated Knoll Ltd 4 primary care teams 1 hospital team Small HCD team Account management Account based targeting Local business planning Personal development planning Performance management The Abbott journey……. 2001200220032004200520062007… - 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

6. 6Company 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

7. 7Company Confidential © 2007 Abbott Refocused linear primary care team Expanded secondary care capability Expanded HCD team Invest in 1 st line manager development Integrated Knoll Ltd 4 primary care teams 1 hospital team Small HCD team Account management Account based targeting Local business planning Personal development planning Performance management The Abbott journey……. 2001200220032004200520062007… - 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

8. 8Company Confidential © 2007 Abbott Design a sales force structure that would deliver the financial target!! Headcount constraints No redundancy policy Future proof Flexible resource if necessary Resource Levels – outcomes from strategic planning process

9. 9Company Confidential © 2007 Abbott 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 Issues Retain Best People Impact of NHS Change Resource Level Too high Minimise Disruption Product portfolio impact of high market pressure and patent expiry Manage motivation, satisfaction & loyalty Product portfolio near term targets challenging Unknown impact of changes to PCOs and emerging local changes

10. 10Company Confidential © 2007 Abbott 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

11. 11Company Confidential © 2007 Abbott Required share of voice, frequency and coverage, disease management, KOL development and complexity of the sales model Product Strategies Customer ValueConstraints Skills and Structure Required Prescribers and influencers, future opportunity value, profitability, sales sensitivity, optimum customer list size Corporate headcount, employee issues, management structure, territory sizes, call capacity, geography 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 Resource Optimisation Model - Drivers

12. 12Company Confidential © 2007 Abbott Required share of voice, frequency and coverage, disease management, KOL development and complexity of the sales model Product Strategies Customer ValueConstraints Skills and Structure Required Prescribers and influencers, future opportunity value, profitability, sales sensitivity, optimum customer list size Corporate headcount, employee issues, management structure, territory sizes, call capacity, geography Suitable skills for different selling environments and customer types, territory size and structure Optimum Salesforce Resource Deployment Number of FTEs - Skills, Customer Groups, Team Structure, Territory Boundaries Resource Optimisation Model Number of FTEs - Skills, Customer Groups, Team Structure, Territory Boundaries Resource Optimisation Model - Drivers

13. 13Company Confidential © 2007 Abbott Business Value Concentration – ground up Business Value Accounts

14. 14Company Confidential © 2007 Abbott 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 Resource Levels - Implementation

15. 15Company Confidential © 2007 Abbott Key Account Management

16. 16Company Confidential © 2007 Abbott Key Account Level Targeting Already recognised as a new area, it now needed immediate attention to push business forward Changing Customer Base Changing Product Adoption Process Address Portfolio Changes NHS Liaison Support Account Strategy

17. 17Company Confidential © 2007 Abbott This encompassed a number of elements: Key Account Based Segmentation and Targeting Segmentation and Targeting How is targeting implementation measured ? What elements describe a target customer or account ? How will buy-in be achieved in the salesforce ? What data sources should be used to value customers/accounts ? What mix of influencers and prescribers ?

18. 18Company Confidential © 2007 Abbott Calculating True Value Each account was valued for the relevant portfolio using 2 elements; Account Value Degree of LIKELIHOOD of increase in future prescribing, influence or referral for the brand PROPENSITYPOTENTIAL Volume of OPPORTUNITY to prescribe or refer brand specific disease treatments

19. 19Company Confidential © 2007 Abbott Customer Value Degree of LIKELIHOOD of increase in future prescribing, influence or referral for the brand PROPENSITYPOTENTIAL Volume of OPPORTUNITY to prescribe or refer brand specific disease treatments 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 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* Value Measurements * Typically Secondary Care measurements

20. 20Company Confidential © 2007 Abbott Saboteur Lodger RavingFan Loyal Loyal Lost Lost Looking Looking Sophisticated Value in Clear Segments 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 POTENTIAL PROPENSITY A B

21. 21Company Confidential © 2007 Abbott Did it Work????

22. 22Company Confidential © 2007 Abbott Results - targeted activity Activity is more focused on the productive targets at the right frequency 20032006 Target coverage up from 73% to 89% Increased size of productive frequency segment from 31% to 58%

23. 23Company Confidential © 2007 Abbott Results – Financial : sales growth, main brand Sales increase of 22% Market Share increase of 7%

24. 24Company Confidential © 2007 Abbott 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%

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

26. 26Company Confidential © 2007 Abbott Session Objectives 1.Demonstrate positive effect of benchmarking motivation through field force change Limitations of relying on internal surveys for climate checking 2.Show six year trends relating to industry motivation & SFE Real life examples of creating the right and wrong environment 3.Abbott initiatives taken to assist in developing motivation 4.Challenge whether your field force is motivated to embrace SFE and continuous improvement initiatives

27. 27Company Confidential © 2007 Abbott 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

28. 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

29. 29Company Confidential © 2007 Abbott 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

30. 30Company Confidential © 2007 Abbott 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

31. 31Company Confidential © 2007 Abbott 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

32. 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.

33. 33Company Confidential © 2007 Abbott Change in Important Work Factors 2002 to 2007 PHARMACEUTICAL INDUSTRY TOP 7 IMPORTANT WORK FACTORS Rank20022007Change 07 to 02 1 Salary = 2 Personal DevelopmentRel with ManagerUp 1 3 Rel with ManagerCompany CultureUp 6 4 Bonus (Down 5 in 07)Belief in ProductsUp 2 5 Success RecognitionJob SecurityUp 2 6 Belief in ProductSuccess RecognitionDown 1 7 Job SecurityPersonal DevelopmentDown 5 Rel with Manager = Relationship with Manager

34. CATEGORY 2: How Satisfied are the Field Force Q. Responders were asked to score their satisfaction with each motivational factor: Very Satisfied+2 Satisfied+1 Average/No Opinion 0 Dissatisfied-1 Very Dissatisfied-2

35. 35Company Confidential © 2007 Abbott Satisfaction SCALE CONVERSION Very Satisfied100 Satisfied50 Average0 Dissatisfied-50 Very Dissatisfied-100

36. 36Company Confidential © 2007 Abbott Change in Satisfaction Very Satisfied100 Satisfied50 Average0 Dissatisfied-50 Very Dissatisfied-100 Change in Average Level of Satisfaction With Top 7 Motivational Factors 02 to 06 20022006% Change 02 to 06 All Responders 3035 14% Highest Sales Reps 3833 -17% In 2007 –All Responders Average Satisfaction Remained at 35 –Highest Sales Performers Increased to Average 37

37. The Power of the Survey Real Life Example Top 10 Pharmaceutical Co. Satisfaction with Top 7 Motivational Factors

38. 38Company Confidential © 2007 Abbott Comp X - Satisfaction With Top 7 Factors Scale: Very Satisfied+2 Satisfied+1 Average/No Opinion 0 Dissatisfied-1 Very Dissatisfied-2

39. 39Company Confidential © 2007 Abbott Satisfaction with Top 7 Factors Scale: Very Satisfied+2 Satisfied+1 Average/No Opinion 0 Dissatisfied-1 Very Dissatisfied-2

40. 40Company Confidential © 2007 Abbott Satisfaction With Top 7 Factors Very Satisfied+2 Satisfied+1 Average/No Opinion 0 Dissatisfied-1 Very Dissatisfied-2

41. 41Company Confidential © 2007 Abbott Satisfaction of Top 7 Factors Averaging all satisfaction scores identifies real problems: Industry employees are twice as satisfied compared to Comp. X Competitor employees are nearly three times more satisfied Very Satisfied+2 Satisfied+1 Average/No Opinion 0 Dissatisfied-1 Very Dissatisfied-2

42. Example of a High Performing Companies Comp A Comp B

43. 43Company Confidential © 2007 Abbott

44. CATEGORY 3 Attrition Do they Want to Stay or Go?

45. 45Company Confidential © 2007 Abbott 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= 23%, <5%

46. CATEGORY 4 Use of Electronic Territory Management Systems Series of Questions to Establish Whether Field Forces Actually Use ETMS

47. 47Company Confidential © 2007 Abbott 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

48. CATEGORY 5 Employer of Choice Is Your Organisation Capable of Attracting the Best Talent?

49. 49Company Confidential © 2007 Abbott Employers of Choice 2002 Went With Company £Turnover CompanyRank 2002 GlaxoSmithKline1 Pfizer2 Merck Sharp & Dohme3 Janssen-Cilag4 Eli Lilly & Company5 Wyeth6 Roche7 Schering Plough8

50. 50Company Confidential © 2007 Abbott Employers of Choice 2007 All Change CompanyRank 2007 Roche1 Boehringer Ingelheim2 Eli Lilly & Company3 Sanofi-Aventis4 Schering Plough5 Janssen-Cilag6 Schering7 Novartis8 Wyeth9 Proctor & Gamble10

51. 51Company Confidential © 2007 Abbott 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

52. The Abbott Story A Tale of Two Halves

53. 53Company Confidential © 2007 Abbott 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.

54. 54Company Confidential © 2007 Abbott 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

55. 55Company Confidential © 2007 Abbott 2003 The Results - Levels of Satisfaction

56. The Abbott Story Second Half ~ 2004 to 2006 and beyond

57. 57Company Confidential © 2007 Abbott 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.

58. 58Company Confidential © 2007 Abbott Top 5 Important Work Factors for Abbott Personnel 1.Salary 2.Job Security 3.Company Culture 4.Relationship with Manager 5.Bonus Of the 16 motivational factors available to choose from, Abbott ranked the following five as the most important

59. 59Company Confidential © 2007 Abbott Satisfaction With Motivational Factors 2006

60. 60Company Confidential © 2007 Abbott Do People Want to Stay or Go in 2006?

61. 61Company Confidential © 2007 Abbott Company Culture 2003 2006 In 2006: 19% greater than industry 20% greater than in Abbott three years ago

62. 62Company Confidential © 2007 Abbott Summary Comparing the 2003 satisfaction results against 2006, for the same 7 factors for the Highest Performers: Abbott Industry 2003 +0.88 +0.38 2006 +1.44+0.33 The industrys average satisfaction had dropped by 17% Abbotts average satisfaction had increased by 63%

63. The Abbott Story And Beyond – Satisfaction Levels this Year ~ 2007

64. 64Company Confidential © 2007 Abbott And Beyond – Satisfaction Levels 2007

65. 65Company Confidential © 2007 Abbott Reflective Leadership

66. 66Company Confidential © 2007 Abbott 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

67. 67Company Confidential © 2007 Abbott THANK YOU Questions?