Case | Pharma Talent | Paying Sales Force Bonuses Within a Fixed Budget

Running head: ECONOMICS FOR BUSINESS
Case - Pharma Talent- Paying sales force bonuses within a fixed budget
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Identification of impact two covert aspects of Iceberg model in Pharma talent:.......................2
Assessing the managerial effectiveness of Holden Garabedian’s using the managerial role
model of Mintzberg:...................................................................................................................6
Recommending the actions for addressing the issues identified above:....................................8
Conclusion:..............................................................................................................................11
References list:.........................................................................................................................12

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Introduction:
The report is prepared to evaluate the approach of Pharma Talent to the management
by discussing the covert aspects of the organization. Such covert aspects have been explained
by the application of organizational Iceberg model. Pharma Talent being a contract sales
company for the pharmaceutical is concerned about the sales team performance and the
dissatisfied employees due to the existing bonus structure. Regional business manager of the
company that is Holden Garabedian intends to fix the bonus structure within the financial
constraints of the company and with the objective of satisfying the sales representatives and
aligning the goals of the Pharma Talent and its client. In this regard, report also outlines the
assessment of managerial effectiveness Holden Garabedian using the Mintzberg’s managerial
roles model. The later section of the report presents the recommendation for the issues that
have been identified relating to the bonus structure and leadership roles.
Discussion:
Identification of impact two covert aspects of Iceberg model in Pharma talent:
Pharma Talent was founded by Camdon Arksey in the year 2006, after realizing the
need for the company that will provide a sales team that will drive business for client. One of
the employees, Arksey had previously worked in many pharmaceuticals company, hence he
had an idea that the companies now are more inclined towards having a sales force in contract
basis rather than having their own in-house sales team, which add up to the cost more
(Altamony and Gharaibeh, 2017). Therefore, it was decided to have a company that will have
sale-force, which will work on contractual basis for the client with their products.
Pharma talent started to grow slowly and they have differentiated themselves from the
other sales force team in many aspects. One aspect was that it provided turnkey sales force

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where the Pharma talent would perform all the functions starting from providing training,
recruiting, data management and tracking of data, call data details and field management.
Details from call and the field data was added benefit to the client, as no other contractual
sales force company doesn’t provide the pictures from the field or the call data. Pharma talent
was dedicated to the clients, therefore, they used to work with just the mandate products of
the same client rather than having many products of different companies (Wang, Senaratne
and Rafiq, 2015)
Pharma talent had their first client “Natural life”, which initially had a sales-force
team but they felt that the representative is not displaying its major product as they were not
solely dedicated to the Natural life , the representatives also has other products to sale.
Natural life, therefore, wanted to have a dedicated team that will concentrate more over its
product, however, at the same time they do not want to bear the expenses of an in-house
team. Natural life has following requirements from the cash representative. One being the
visit to the pharmacy shop and meet pharmacist in each shop , secondly, they want that their
products are always displayed in the pharmacy and doesn’t run out of stock , therefore proper
minimum flow maintained and the order and sale structure are proper (Stanley and Carvalho,
2016).
Therefore, Pharma talent has started working with the natural life and has different
sales team with one business manager and seven representatives. Each representative need to
complete minimum 120 calls per month and meet with 140 stores per month. They had a base
salary of $2450 and has bonus structure that was on performance basis. Though, the bonus
structure does not seemed accurate with either client, company or the representatives. The
representatives and the company found the bonus structure to be unfair. Client seem to have
their goals attached to the attractive bonus plan so that their values and the kind of work and
exposure they want, they get, while the representative wanted a fair chance to earn incentives.

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The company wants a plan where the client requirement is met and they can even provide
bonus that will encourage the representative rather than discouraging and the structure
seeming unfair (Khanna, Guler and Nerkar, 2016). Executives have tried to reform their
bonus structure thrice, however, still seemed something not correct.
Organizational behavior is the behavioral science that deals with three main principles
namely psychology, which focuses on individual, sociology which focuses on social behavior
and anthropology which deals with culture and values. As per the organizational iceberg
model there are two aspects of any organization, just like any iceberg which has two aspects,
one aspect is visible and the other one stays under the water and is invisible to the eyes.
Similarly any organization too, has two aspects, one being the formal aspect which cover
aspect that includes technology ,customers, rules and regulations, financial resources and
more and the other is the covert or behavioural aspects, which includes the attitudes,
communication, personality, political behavior and conflict (Lam, Huang and Chan, 2015).

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Thereby, with respect to the Hellriegel iceberg theory, covert aspect of Pharma talent
has been one is the attitude of loyalty with the customer, they go far and beyond to satisfy
their client. They have not only planned visits and made shelf places in the pharmacy but also
have clicked field work pictures, made the client knew about their every move along with the
proofs, provided assurance of ROI along with proofs and along with that they also share
success stories with their client (Wang, Senaratne and Rafiq, 2015).
Secondly, the other aspect demotivation of the employees with the bonus scheme for
which the company has tries to made amendment, now, when the client is satisfies with the
incentive scheme, since its meeting its needs. Garabedian, Pharma talent employee, knew that
the scheme is demotivating in nature rather than motivating employees along with that it does
not have a fair approach, hence the employees are disappointed (Domingues, Vieira and

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Agnihotri, 2017). Therefore they knew that they need to change the bonus system in such a
way that will motivate employees, give them fair chance to perform and earn and along with
that it fits the client requirement and the financial constraints of the Pharma talent as well.
Therefore, these two covert aspects of Pharma talent has been displayed and which show they
have high ethical values attached to their work and among themselves.
Assessing the managerial effectiveness of Holden Garabedian’s using the managerial
role model of Mintzberg:
This section demonstrates the evaluation of the managerial effectiveness of Holden
Garabedian by the application of Mintzberg managerial role model. Holden Garabedian being
the business manager of Pharma Talent was concerned about the structure of bonus for his
sales representatives. It was identified by Garabedian that the bonus structure did not align
with the requirements of client and also the existing structure did not satisfy the
representatives. He wanted to ensure that the bonus system should be modified so that it
motivates the representatives as well aligns with the goal and objectives of its client. Hence,
the bonus structure seemed to be addressed by the efforts of Garabedian and the impact
created by his managerial effectiveness on the overall objective of business (Bashir et al.,
2015).
The managerial efforts of Garabedian can be explained by Mintzberg managerial role
model. It is proposed by Mintzberg that there are four variables influencing the role of
managers. Such variables comprised of job, environment, situation and person. There are ten
managerial roles identified by Mintzberg that have three distinct areas of informational,
interpersonal and decision making (Waring et al., 2015). Pharma talent is one of the
organizations where managers have got to perform crucial roles. The performance of the
organization is dependent upon the relationship and interaction with the different

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stakeholders such as inventors, clients, employees such as sales representatives and other
external as well as internal factors that place the company in the venter of various claims and
demand. It is therefore necessary as a matter of fact to make an improvement through the
adoption of scientific methods for the fulfillment of the objectives of organization
(Naqshbandi, Kaur and Ma, 2015). The issues facing Pharma talent is the lack of effective
and motivating bonus structure that is leaving sales representatives dissatisfied and also not
aligning the goals of the organization with that of client. It is therefore intended by
Garabedian to introduce an encouraging and fair bonus structure. Moreover, it is quite
evident from the given case study that the modification of the bonus structure has to be done
while meeting the financial constraints of owner of Pharma talent and also being significantly
influenced by the vice president sales. In addition to this, the new bonus structure should be
easily understood, fair and motivate the representatives. In this regard, Garabedian is
expected to perform decisional and interpersonal roles. The relationship between the
employees such as sales representatives and the manager of the organization is defined by the
leader role. The efforts which the manager is willing to take for modifying the bonus
structure to make it fair for the employees satisfaction is influenced by the leadership role
(Howard, 2017).
Manager is expected to make significant use of the information under decisional roles
which comprised of negotiator role, resource allocator role, disturbance handler and
entrepreneur role. It can be very well inferred from the issues identified in the case of Pharma
talent that the organization is facing the issues dissatisfaction amongst its employees due to
the ineffective bonus structure and inability to meet the objectives of Natural’s life. This
might results in creation of dispute between the subordinates and the manager is required to
play the role of disturbance handler (Owoeye and Muathe, 2018). In addition to this, the

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current issues is addressed by Garabedian where he is expected to play the roles of resource
allocator, entrepreneur and negotiator.
The change or the modification in the bonus structure is initiated by Garabedian as he
is concerned about the issues which the Pharma Talent is facing currently. This is explained
by the entrepreneurship role as the new ideas and delegation of the ideas for the modification
of the bonus structure is being done. He introduced the idea of identifying a system where a
certain portion of bonus is based on the performance of individual sales representative. It is
so because it is expected that such modification would results in less hostility and increasing
collaboration between the representatives (Sule and Wahyuningtyas, 2017). Moreover, the
role of resource allocator is also performed by the manager as he is entrusted with the
responsibility of allocating the resources, budget setting priorities and schedule and the
application of efforts. In order to make the bonus structure work for the sales representatives,
it was proposed to depart the new structure from sales and develop a backup for benefitting
the Natural life and Pharm talent. Another proposal that was put forward by the manager was
to set goals for each of the sales representatives and there comes the role of negotiator. It is so
because it was hardest to convince the Pharma Talen to adopt such system. The proposal to
improve the bonus structure effectiveness is negotiated by Garabedian on behalf of
organization (Arthur, 2019). However, the decisions regarding the introduction of new bonus
structure rests with the top level management. Therefore, it is inferred from the application of
Mintzberg model that the managers of Pharma Talent that is Garabedian is performing the
interpersonal and decisional role for the modification of the bonus structure.
Recommending the actions for addressing the issues identified above:
After analyzing the company issue as per the iceberg theory it has been concluded that
the main issue that required immediate attention is to address sales representative

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demotivation. It has been such due to the bonus structure of the organization, which they
have tried to change thrice, however, the company was unable to draw the structure that will
motivate the employees. Since, the structure was made in such a way that does not have a fair
approach and not every employee was getting a proper chance to earn bonus, even after
performing well. The recommendation to address the issues of demotivation and
dissatisfaction amongst employees can be done by using equity theory of motivation (Mas-
Machuca, Berbegal-Mirabent and Alegre, 2016).
Equity theory of motivation demonstrate the idea of equity or balance. Consequently,
with regard to this motivation theory, the individual’s motivation is defined by the correlation
and integration with their interpretations of fairness and justice performed by their
management. Here, the more the person or individual has belief in the justification and
fairness performed by the management, the more they feel motivated and when they have
lesser trust over the justice and equity performed by the management, the more they feel
demotivated since they realize that there are lack of fairness and that even after performing,
they might not get appreciated or benefitted (Bolden, 2016).
The main assumption of the equity theory of management is that the individual is
concerned not just with their own rewards and benefits rather they are also concerned about
what others are getting in comparison to them. It is due to the fact that the employees expect
true and fair return from the contribution they made to their jobs. As per this theory, the
employees are deemed to calculate and decide their equitable share and return after doing the
comparison of inputs and outcomes with those of their colleagues .When the employees think
they are in the inequitable position then they can sort to equity either by distortion of inputs
and the outcomes either psychologically or they will try to change the input and output
directly by taking a step of quitting the organization (Lidstone and MacLennan, 2017).

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Therefore, sales representatives can be motivated as per equity theory by designing a fair
bonus structure that would reward the employees based on their contribution.

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The efforts taken by Garabedian to introduce the new system for motivating the sales
representative along with meeting the financial constraints and meeting the business
requirements of client. The issues regarding the introduction of new system is about
persuading and negotiating the ideas with the top level of management. The particular
leadership style followed by Garabedian to achieve the goal of organization which in the
current scenario is to increase the motivation of sales representatives of Pharma talent can be
explained by path goal leadership theory (Storey, 2016). The adoption of the theory helps in
specifying any specific leadership style that should be adopted by the managers of an
organization that best fits with the work environment and needs of employees so that the goal
of organization is achieved. The objective of this particular theory is to increase the
motivation of dissatisfied employees so that they contribute to the overall productivity of
organization (Elliott et al., 2016).
The behavior, motivation and attitude of an individual subordinate that is sales
representative in Pharma talent can be changed by the adoption of leadership behavior based
on the path goal theory. One of the objectives of adopting this theory is to motivate the sales
representatives by controlling their behavior in the event when the performance standards are
not met and setting standards for them. From the analysis of the given case of Pharma talent,
it can be seen that sales representatives are not motivated and feels that the current or the
existing bonus structure is not clear and is easier to lie about. Representatives were also not
provided with enough credit for their work and is like a lottery as the best performer is not
awarded (Laud, Arevalo and Johnson, 2016).
In the scenario explained above, it would be recommended to adopt the directive and
achievement oriented style of leadership. Under the directive style of leadership, guidelines
are provided by the leaders for enabling the representatives understand the bonus structure.
The needs of subordinates can be understood by adopting the directive tool that would help in

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setting the performance standards for the sales representatives. In the event when it becomes
difficult to meet the performance standard, the leadership style adopted helps in controlling
their behavior. The disciplinary action and rewards are judiciously used and the managers
explain the procedures and goal to motivate the employees. It has been found that many
managers prefer the directive leadership for motivating the dissatisfied employees and
encouraging them to contribute to the business goals (Iya, 2015).
Garabedian can also adopt the achievement leadership style concerning the excellent
achievement and performance of their subordinate. It might be required to use a different tool
of learning leadership when the perceptions of subordinates are taken into account.
Employees are encouraged to give their best performance by setting the challenging goals. It
is also believed by the leaders that the challenging goals can be responsibly achieved by the
employees (Jumaa and Alleyne, 2017). Therefore, it is recommended as per the path goal
theory that the manager of Pharma Talent should adopt the achievement oriented and
directive style of leadership for the motivation of sales representative by the introduction of
new bonus system.
Conclusion:
The report evaluating the covert aspects of the organization has identified the factors
that are relevant to the successful functioning of the organization. It has been ascertained
from the analysis of the Pharma Talent case that the success and development of the company
within the pharmaceutical industry depends upon its relationship with clients, loyalty of
customers and most importantly, the sales representatives who are the ultimate drivers of
sales of the products. The issues with the bonus structure of the company is intended to be
solved by the business manager by the adoption of appropriate leadership styles that has been
discussed using the Path goal theory. Two leadership styles that can be adopted by the

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business manager is achievement oriented and directive style. Therefore, it can be concluded
that the style of leadership plays a significant role in motivating the employees and driving
the business growth.
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