ZS was engaged by the employer group business of a national health plan that offers a diversified portfolio of health insurance products such as medical, dental and vision. Driven to simplify its existing compensation plan, following a reorganization, and meet aggressive growth targets across ancillary products, the health plan partnered with ZS to transform its incentive plans to align with its growth objectives.

The challenge

The health plan’s legacy incentive plans were perceived as highly complex and not fully understood by the sales leaders and frontline associates. Existing plans did not seem to drive the organization’s sales culture and the metrics used to evaluate performance did not align with industry standards. The client engaged ZS to design an incentive program that uses simple measures, rewards performance and promotes sales of ancillary products.

The solution

  • Assess current and future business objectives: Through interviews with sales leaders, ZS identified multiyear business strategies across different products and employer group segments. ZS then defined key guiding principles for incentive plans—reduce complexity, improve pay for performance, emphasize selling ancillary products and ensure alignment with the sales cycle.
  • Design future compensation plans: ZS partnered with the client’s sales, executive leadership and human resources compensation teams and recommended a simplified plan design that would enable sales associates to clearly and easily calculate compensation for each sale. The enhanced transparency and refreshed plan encourages associates to drive success on both medical and ancillary products.
  • Determine the financial impact and seek approval: ZS modeled the expected incentive payout of the proposed plans and calculated the projected financial impact. This ensured that the changes were financially responsible and supported the agreed-upon plan design objectives. The payout modeling indicated the productivity expectation from sales associates across markets, helping secure buy-in from all stakeholders across the organization.
  • Communicate and launch new plan: After gaining approvals, ZS worked closely with the client to facilitate cascading communication that provided strategic rationale of plan changes to first-line managers and associates. Plan roll-out was supported with clear communication materials, like plan documents, payout examples, FAQs and payout estimators, to ensure smooth change management across the organization. ZS also supported the client in the quick turnaround of sales goals, releasing them well ahead of the historical precedence.

The impact

  • Improved plan simplicity: Simplifying the existing plan by using clear measures that were easily understood by associates and aligned with industry standards resulted in excitement amongst the sales teams.
  • Improved pay for performance: Innovative plan design helped the organization transition from pay for parity to pay for performance by shifting pay to associates with higher production. As a result of this change, payout for top producers is expected to increase by approximately 25% and the budget spent on underperformers is expected to decrease by an estimated 5%.
  • Enhanced focus on selling ancillary products: The new incentive plan positions the organization to meet its aggressive ancillary growth expectations by tying compensation equally to both medical and ancillary sales performance, taking into account the existing market situation.  
  • Streamlined future plan design: ZS set the foundation for creating next-generation plan iterations through cross-functional collaboration with the client’s sales, compensation and operations team.