Vyaderm Pharmaceuticals Case Analysis Essay

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Vyaderm Pharmaceuticals Case Analysis | | | As consultant to Sanders and Myers, I would suggest they rethink the continuation of economic value added (“EVA”) bonus payout process. The proposed EVA bonus payout structure is supposed to be an objective way to gauge and reward employee performance; however, through no fault of their own, the Dermatology group is slated to undergo severe ebbs and flows in their incentive and could potentially wreak havoc on employee morale and retention. For example, in Exhibit E, we see that the dermatology group stands to receive a $251, 451, payout as a result of a strong EVA at $31,361, a net gain of 28,440 vs. the 2009 EVA. We would also expect to see employees bank $131,451 in that same year.…show more content…
I would argue that the unlimited upside and downside of a manager’s bonus potential based on a single business unit’s performance causes great chaos because it may be driven by factors beyond one’s control and not necessarily as the result of “true” strong performance. Yes, the upside is great! In 2000, the Dermatology group stands to pocket 200+% of their target bonus due to a competitive exit. However, Dermatology’s favorable EVA was driven by unsustainable share gains, a fluke in the market. But, as seen with the Diagnostics group, when it’s down, it’s down…and adjustments have to be made to lift a group out of a
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