Annual Report 2014 Annual Report 2014
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Employees

Employees are crucial to the success of Merck. We are therefore focusing on recruiting the right employees with the right capabilities at the right time and retaining this talent. Within the context of our Group strategy we also place particular emphasis on talent development, compensation and performance management. In addition, we want to foster employee diversity in order to be optimally positioned to meet future challenges together with our workforce.

As of December 31, 2014, Merck had 39,639 employees worldwide (2013: 38,154.) The slight increase in the number of employees is largely attributable to the integration of AZ Electronic Materials. In 2014, Merck was represented by a total of 146 companies in 65 countries.

Distribution of employees → by region in %

Strategic initiative: “ONE Talent Development, Rewards and Performance Management”

Within the framework of the “Fit for 2018” program, Merck launched the capability initiative “ONE Talent Development, Rewards and Performance Management” as part of its Group strategy. The aim is to attract highly qualified graduates from around the world to Merck and to retain them.

Performance management

Merck considers it important to identify employee potential early on and foster it on an individual basis. We want to offer our talent attractive career opportunities, continual personal and professional development as well as prospects within the company. Our processes are also meant to help strengthen the performance culture at Merck and to ensure that internal positions are filled in an even more efficient manner. In 2014, we rolled out the talent and performance management process at Merck globally. The evaluations of all participating employees are now carried out on the same basis and are recorded in a uniform IT system.

In this context we systematically combine talent recognition with the Performance Management Process, which allows us to objectively assess the performance of each individual employee. Clear objectives, differentiated and open feedback, and individual development plans are important prerequisites for personal development, as well as for the success of the company. As of 2015, Merck will be linking the variable bonus more closely with performance. In this way we will create greater incentives for employees to achieve top performance, while at the same time allowing them to participate to a greater extent in the success of the company.

Internal talent development and external recruiting

Through the aforementioned approach, Merck aims to bolster its performance culture and develop talent in a more targeted manner. We succeeded with this again in 2014, expanding our workforce pool to internally fill management positions when they become vacant. In 2014, the vast majority of management position vacancies were also filled by internal candidates. In addition, Merck recruited external executives in order to add new outside perspectives to our long-standing in-house expertise.

Merck is using the motto “Make great things happen” to position itself in the global job market, which conveys to potential applicants a sense of what makes Merck unique: an inspiring, motivating work environment in which innovations thrive; an environment in which everyone has the opportunity to apply their ideas and engagement to benefit customers and the company, while at the same time growing as employees.

Focus areas: Internationality, demographics, gender ratio

In our global markets, we want to hire the right people and retain them. It is also our goal to anchor knowledge about our growth markets within the company. Therefore, as part of our diversity and inclusion strategy, we are focusing on topics such as internationality, demographics and gender balance.

People from a total of 122 different nations work at Merck. Only 27 % of Merck employees are German citizens and 72 % work outside Germany.

In Germany, several other EU countries, the United States, and Japan we must prepare ourselves for demographic change. In these countries, the average age of our employees exceeds 40 – and we assume that this figure will continue to rise in the coming years. In Europe, we are addressing these demographic challenges through various programs. These include adapting workplaces to the needs of older employees and establishing a health management program to maintain their ability to do their jobs. In addition, Merck created the preconditions in 2014 in order to attract the interest of even more young specialists to Merck and to retain them.

Women currently make up 41 % of the workforce. Since the ratio of women to men varies widely across the different regions, divisions and functions, Merck has set itself the goal of increasing the percentage of female employees wherever they are underrepresented. Here we take into account the situation that is typical for the industry as well as regional differences.

A diverse management team

We believe that balanced diversity among management enhances career advancement opportunities for talented employees while also helping to provide a broad experience base within the company. In addition, it allows for differentiated decision-making, thereby making a significant contribution to the success of the company.

As a global company, Merck considers it highly important to have an international management team. Currently, 60 % of our managers – meaning positions rated Global Grade 14 and above in our Global Grading System – have a nationality other than German. Altogether, 67 different nationalities are represented in such positions.

The percentage of management positions held by women (Global Grade 14 and above) is currently 26 % Group-wide. In the subsidiaries outside Germany, this percentage is higher than at global headquarters in Darmstadt. Likewise, more women work in managerial positions in our Pharmaceuticals business than in our Chemicals business. Certain Group functions such as IT have a lower percentage of women in management positions. However, the figures are clearly increasing across Merck as a whole. Merck has reached its strategic goal of raising the percentage of management positions held by women from 25 % to 30 % and intends to further increase this percentage by 2016. In order to achieve this ambition, Merck is implementing numerous measures at local level. In 2014, we filled two of four divisional leadership positions with employees who are not from Germany. In addition, Belén Garijo, a native of Spain, joined the Executive Board and took over leadership of the Healthcare business sector at the beginning of 2015.

Workforce diversity

To us, diversity means much more than having a certain gender ratio and is not only important to us on a managerial level, but also throughout the entire workforce. Together with a culture of inclusion, diversity promotes innovation and improves team performance. In addition to the Chief Diversity Officer, who is responsible for strategically managing diversity within the company, Merck also established the Diversity Council in 2013. This aims to build further buy-in for diversity and inclusion within the company. The council consists of high-ranking managers from all parts of the company. In 2014, the Diversity Council developed the Diversity Framework, which bundles the diversity and inclusion strategies. It focuses on the following topics: recruiting the right people to work for the company, developing and retaining them, promoting efficient collaboration, driving innovations and improvements, and serving customers with diverse needs.

In addition, Merck supports specific employee networks in order to foster exchange among like-minded individuals. In 2014, we launched a project to develop the individual members of the networks in a targeted manner and to utilize the potential of the networks to an even greater extent for Merck’s business activities. The results were presented to the Diversity Council and will be implemented in 2015.

Industrial safety

As a responsible employer, it is especially important to us to do everything in our power to prevent workplace-related illnesses and accidents. We apply the lost time injury rate (LTIR) as an indicator to determine the success of measures aimed at accident prevention as well as occupational health and safety. This internationally recognized key performance indicator describes the number of workplace accidents resulting in lost time of more than one day per one million working hours. Merck set itself the goal of reducing the LTIR to 2.5 by 2015. In 2014, we again outperformed this goal, achieving an LTIR of 1.8. This continuous rate of improvement can be particularly attributed to the “BeSafe!” program, which was launched in 2010. “BeSafe!” is a global initiative with harmonized standards and local modules for the specific requirements at individual sites. This program focuses on engaging managers in the safety culture and empowering our employees to take responsibility for their own safety. In 2014, we continued to sensitize our employees to workplace hazards through numerous activities and awareness campaigns.

Since 2010, Merck has been presenting the Safety Excellence Award annually in order to underscore the importance of safety. It is granted to all production sites with no workplace accidents on record for the year. In 2014, 42 out of production 69 sites were recognized. Merck also issued a Group Health Policy in 2014. The aim is to maintain and systematically strengthen the health and performance capability of employees.

Despite our efforts to prevent accidents, there were two workplace accidents resulting in fatalities in 2014. In Venezuela, an employee died in a car accident. In Pakistan, an employee was killed while performing maintenance work on a scissor lift.

Vocational and advanced training

Merck continues to place a great deal of importance on the vocational and advanced training of its employees. In 2014, we therefore also maintained a constant vocational training rate at Darmstadt, Merck’s largest site. In 2014, 498 young people were enrolled in vocational training programs at this site, in a total of 24 different occupations. Since 2014, Merck has been giving unlimited employment contracts to all apprentices working in occupations for which Merck has sustainable demand. The hiring rate – taking into account voluntary terminations – has been around 90 % for several years now. We also continue to offer vocational training to a large number of young people at other sites.

As part of the “MobiPro-EU” program of the Federal German Ministry of Labour and Social Affairs, for the first time five young people from Spain started an apprenticeship at Merck in Darmstadt in 2014. “Start in die Ausbildung”, a German program to prepare young people for an apprenticeship, was continued with 20 interns, the same number as in 2013.

Our global advanced training program ensures that our employees and managers around the world develop the relevant skills that we need in order to implement our company strategy and to continue to succeed in the future. In 2014, we launched special management programs in China and the Middle East, among other things. So far, a total of 160 managers have participated. An example is the “Emerging Markets Management” program for young, local managers, which focuses on business management topics, tailored to Merck.

Work-life balance

Merck wishes to help its employees achieve a good balance between their professional and personal objectives. This maintains and strengthens their motivation and performance potential, enabling them to better schedule their lives to suit their own needs.

In Germany and the United States, Merck offers various flexible working models. In 2013, Merck implemented mywork@Merck at the Darmstadt, Gernsheim and Grafing sites for all exempt employees. The flexible working model aims to strengthen a culture of performance and trust within the company. Employees can choose their working hours and work location freely. In October 2014, this was also extended to non-exempt employees whose positions are suitable for the working model. At the end of 2014, a total of around 3,500 employees benefited from mywork@Merck.

Globally, 5 % of our employees worked part-time in 2014. 11 % of our part-time employees are men. In addition, Merck offers its employees throughout Germany comprehensive advice and assistance with regard to finding childcare and nursing care, as well as home and garden services. At various sites, employees benefit from childcare options that Merck subsidizes. A daycare center with capacity for 150 children has been operating at the Darmstadt site for more than 40 years, financially supported by the Merck family.

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