Leadership Development at Novartis

In 2005, the company generated IIS$32. 2 billion sales and a SISSY. 1 billion net income. Currently, Innovator has 2,300 employees in China, which represents a very fast employee expansion. The Chinese pharmaceutical market represents unique challenges. First, China is one of the top ten and fastest-growing pharmacy markets. China’s pharmaceutical market is expected to continue to grow at bubble-digit growth rates to 2010.

It is transitioning from state control, and the healthcare environment is changing dramatically. There is fierce competition with the more than 6,000 domestic pharmaceutical manufacturers. In the Chinese pharmaceutical market, the top ten companies control no more than one-fifth of the overall market, which is up to half of the average situation existing in Western markets. In total, China has some 14,000 pharmaceutical distributors. In addition, probably needless to add, is that China represents a very challenging and heterogeneous regulatory environment, The Innovator

Chinese portfolio addresses unmet needs in areas of essential importance and Innovator makes significant investments in clinical trials in China as illustrated in Figure 1. Innovator has identified four strategic areas for further investment in China: the new Innovator Research Center; expansion of clinical trials; chemical and analytical development; and chemical production, The two last are under the umbrella of the HUH project. In February 2006, Innovator began constructing a US$83 million site for drug production and development in Changing info East China’s Jungian province, to be fully operational by the end of 2007.

The new site, Such Innovator Pharmacy Technology Co Ltd, is Innovator’ sixth investment project in China. It will analyses, develop and produce chemicals for drugs used to treat leukemia, epilepsy, hypertension and other diseases, 75 Leading China’s Future В± Future Chinese Leaders Figure 1 People at Innovator Each year, Innovator hires thousands of new employees for pharmacy, Sandal, consumer health, research and corporate. Out of a total of 11,660 last year, 2,140 of the new employees were in Asia. On average, Innovator receives some 300,000 applications per year, which breaks down into 25,000 re month, or 830 applications per day.

Innovator is considered as one of the best employers in China. For example, in 2005 Beijing Innovator Pharmacy Ltd was awarded the Hewitt Best Employers Award. Innovator also appears tops in the Fortune ’10 Great Companies to Work for in Europe”. We truly believe learning is crucial to Innovator’ success. That is why Innovator has implemented a dynamic and effective learning strategy. Goals include the development of management and leadership skills and providing our associates with opportunities to develop and grow through a continual process of education and learning.

All hose activities support and reinforce the integration of our core values and capabilities. The global Innovator systematic development concept of associates builds on four core principles: 76 Leadership development at Innovator: case example China 1 . Grow leaders from within Innovator. 2. Fill 70 per cent of the positions with internal associates. 3. Each associate has a development plan. 4. Each associate has minimum two career and development discussions per year Identifying and developing talents is one of Innovator’ most important priorities.

We want to build a reputation as an exciting workplace in which our associates can liaise their professional ambitions. The Innovator pipeline of leaders to grow the business can be summarized in a straightforward equation: leadership talent multiplied by job experiences and continuous learning adds up to the successful pipeline. In parallel, Innovator offers a variety of possibilities of career tracks such as the project management track or management track or scientific track. The challenge: the paradox of shortage among plenty First, a few figures to set the scene. China produced 3. 1 million university graduates in 2005 compared to 1. Million in the USA. The proportion of 18-arrear-olds attending Chinese universities last year was 15 per cent compared to 7 per cent in 1995. Stronger economic growth has been outstripped by the growth in higher education. It is generally expected that competition for entry-level white-collar jobs will become much fiercer. Unfortunately, fewer than 10 per cent of graduates in China have the skills to work for a foreign company and there are continuing, not to say growing, shortages of both mid-level and senior-level managers. In the past, many multinationals relied on expatriate managers to oversee their China operations.

The current trends show an increased localization of staff. Forty per cent of foreign companies have trouble filling mid-level and high-level positions in China. Adding to the problem for Macs has been the entrance of local Chinese firms to the market, often referred to as the ‘ ‘ reverse brain drain”. In ten years, China will need 75,000 managers with international experience. Currently, it has only about 5,000 with such talent. The management talent in China is mainly first-generation. The challenge of attracting and especially retaining management lent in China is rising.

The average tenure of mid- and high-level executives in China is eight to 12 months. The turnover-rate among skilled managers in China is in the range of 30 to 40 per cent. This compares to a global average of five to 10 per cent. It is very important to note in this context that higher salaries are consistently ranked lower than interpersonal relations as a factor in the decision to stay or leave. 77 The Innovator response We recognize the importance of having talented leaders at all levels of our organization to succeed in the challenging world of business.

Consequently we commit to providing practical processes and programmed that ensure the identification, development and inspiration of our current and future leaders. We are committed to give our associates the opportunity to grow and realism their full potential through fostering an environment of continuous performance improvement and continuous personal development for all. The Innovator response to the challenges in China is strongly aligned with the concept of increased internal focus, in other words the need to engage internal talent and stretch its horizons and possibilities.

The three fundamentals are: 1 . Develop talent through traditional, but world-class, training and on-theses learning. 2. Deploy talent in new, exciting and stretch” assignments and provide clearly defined career paths. 3. Connecting employees so they can learn from their experienced peers and other professionals. 1. Develop talent through traditional, but world-class, training and on-the-job learning. The Innovator approach is heavily built on the concept of providing training. And surveys show that Chinese managers want to improve practical management skills to master the challenges they face.

The portfolio of the Innovator China Leadership Development Center has two main chapters. The training initiatives provided by the country organization and those provided by Innovator globally. The country organization provides: . Bimbo development programmer; . Localized corporate programmed; and . Virtual training center. The Bimbo development programmer is selected through rigorous assessment of the local Innovator organization. In 2005 for instance, 47 of the company’s most promising Chinese staff had lessons on corporate finance, marketing, leadership and so on in the Bimbo programmer.

Coursework is in English and includes local case studies. The programmer has four-day modular sessions per month or per two months. Bimbo stands for the Beijing International MBA programmer and is a Sino-US educational joint venture at Peking University. Leadership training is offered along two axes. From global to local through Localized corporate programmed and through the global Innovator offering come corporate learning programmed and marketing and sales programmed as illustrated in Figure 2. 78 Figure 2 2. Deploy talent in new, exciting and ‘stretch” assignments and provide clearly defined career paths.

A range of processes and tools are in place to trenched and develop leadership talent. Innovator has a company-wide set of leadership standards, values and behaviors. Functional competency models and executive interview guides are the main tools used to accompany the leadership development process, as well as the Managers’ Toolkit for Assessing and Developing Potential. To maximize the development potential through job experiences, a parallel set of processes are in place. At Innovator we use career maps and performance management systems. Specifically aimed at the management of the talent pipeline, we use Organization and Talent Review.

TORT processes include ‘ ‘Talent Management System” and ‘ ‘Talking Talent”. The five main mechanisms Innovator has in place to enhance continuous learning are: learning programmed, accelerated development programmed, mentoring, 3600 feedback and development planner. 79 Figure 3 80 Specifically looking at Innovator Pharmacy, it is one of the most Localized among the company’s global offices. It has a highly Localized staff and a very low turnover (Figure 3). 3. Connecting employees so they can learn from their experienced peers and other professionals.

Innovator creates a sense of belonging by bringing employees into the loop on the latest business developments through monthly lunches with representatives from senior management and staff. Innovator pays special attention to communicating immediately essential messages of these meetings company-wide into all regions and offices. Chinese hires are supported in undertaking longer-term business trips that help to integrate them into the global corporate culture and to expand their network.