Global-Talent-Management-at-Novartis-of-Managing-G

9-708-486REV:NOVEMBER14,2008________________________________________________________________________________________________________________ProfessorJordanSiegelpreparedthiscase.HBScasesaredevelopedsolelyasthebasisforclassdiscussion.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Copyright©2008PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.JORDANSIEGELGlobalTalentManagementatNovartisIntroductionNovartisCEODanielVasella,M.D.,wassittinginhisfirst-floorofficein2007inBasel,Switzerland,reflectingtoanoutsideresearcheraboutthepaththathadledtohisbecomingCEO,andtheoriginsofhis(andhiscompany’s)philosophyaroundglobaltalentmanagement.InpresentationsVasellagavetoNovartisemployeesaroundtheworld,hecontinuallyemphasizedthattalentidentification,theuseofsystematictalentdevelopment,andstrongpay-for-performancewerecentraltasksandresponsibilitiesforthecompanyandeverymanager.Withregardtohisandthecompany’sphilosophyonaccountabilityandincentivepay-for-performance,Vasellanoted:“Thebesttimetoformviewsaboutmanagementisbeforeyoucometothetop.Youseehowtherealworldworksandhowbureaucracyworks,andwhatpeoplebelieveandneverdaretochallenge.”VasellahadspentfiveyearsintheU.S.asamanagerforoneofthepredecessorcompaniestoNovartis,andduringthattimehehadlearnedaboutandembracednewmodelsofincentivepay-for-performancethatwerebeingpioneeredatGeneralElectric:IwaslisteningtowhatJackWelchhadtosayin1988/89andIsawthattheyhadafarbetterhumanresourceandincentivesystemthanwedidinmycompany.ItransferredbacktohomebaseinSwitzerlandin1992,justafterwehadintroducedvariableincentivecompensationinmyU.S.operation.ComingbacktoSwitzerland,mypaywascutby40percenttofitwithlocalmarketlevels,andtherewasnovariablecomponent.Ofcoursethiswasnotexactlymotivatingtome.Ifeltunfairlytreated,andIthought,‘Whatdoyouwant?’AtourfirstGroupLeadershipMeetingafterIassumedthepositionofCEO,Iaskedmycolleaguestoshow,byraisingtheirhands,howmanyhadregularperformancereviews.Onlyafractionindicatedthattheydid.Ialsorealizedwedidn’thaveasystematicreviewprocessthatfocusedourmanagementonagreed-uponobjectivesandlinkedcompensationtoperformance.AndthenwhenmycompanymergedandIbecametheCEOofthenewly-formedcompany,oneofthefirstthingsIintroducedwasaglobaltargetsetting,evaluation,andpay-for-performancesystem.1Basedonhisphilosophyofpayingaccordingtocontributionandresults,Vasellawentontointroduceoneofthemostfar-reachingandgloballystandardizedincentivesystemsamongmajormultinationalfirms.Heinstitutedonesystemforratingperformanceandoneforassessinghumanpotential;bothtechniqueswereusedinNovartisofficesaroundtheworld.Now,in2007,Vasellareflectedontheprogresshiscompanyhadmadeincreatingaperformanceculturethatwasembeddedintheorganizationworldwide,onethatalsoincorporatedaclearpurposewithstrategicaspirationsandclearexpectationsregardingadherencetoasetofvalues.HewonderedwhetherPurchasedbyJingZhang([e-mail])onOctober09,2011708-486GlobalTalentManagementatNovartis2additionalchangesorinnovationsneededtobemadetofurtherimprovetheculture.Healsowonderedhowthecompanyshouldbestrespondtonewchallengesinmanagingglobaltalent,particularlygivennewtalentmanagementissuesthatthecompanyfacedinthedynamicmarketsofChina,RussiaandIndia.CompanyHistoryInlate2007Novartiswasthethird-largestpharmaceuticalcompanyintheworldandhadover100,000employeesacross140countries.Formedin1996throughthemergerofCiba-GeigyandSandoz,NovartisunderVasella’sleadershiphaddevelopedintoa100%healthcarecompanybyspinningoffitsspecialtychemicalsbusiness(CibaSC)anditsagrochemicalsbusiness(Syngenta)anditsconsumernutritionbusiness(e.g.,Ovaltine).ThisrefocusingofthecompanyhadbeencompletedbythesaleoftheGerberandmedicalnutritionbusinesstoNestlein2007.InrecentyearsNovartishadsignificantlyexpandeditsinvestmentinvaccines(byacquiringthe51%ofChironthatitdidnotalreadyown),amovethatwentagainstthepopulartideintheindustrytodivestvaccinebusinessesforfearofproductliability,andacommonperceptionthatvaccineswerelow-pricedcommodities.Novartishadalsogoneagainsttheconventionalwisdombybecomingthesecondlargestproducerofgenericdrugs,bolsteringitspositionbyacquiringHexalandothergenericsproducers,believingthathigh-quality,low-costgenericswereanimportanttreatmentmodalityforpatientsandphysiciansinanincreasinglycost-containmentdrivenhealthcaresystem.ThecompanywasalsosomewhatuniqueforitsdiversificationintheOTCconsumerhealthandanimalhealthbusinesses.TogethertheseinvestmentsmadeNovartisoneofthemostdiversifiedhealthcarecompaniesintheworld.Thecompanyspentnearly15percentofsales,or$5.4billion,onresearchanddevelopmentinthelastfiscalyear,anditsmainpharmaceuticalresearchactivitieswerebasedinCambri