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Of Careers and Containers – the paradox of flexibility and standardization

Just as the containers provided a standard, removing barriers for goods to move flexibly across the globe, people management systems need to provide standards, to reduce barriers for personalized development opportunities. 

Merck, a leading German science and technology company, is preparing for rapid growth and innovation of its business sectors: Healthcare, Life Science, and Performance Materials. With a solid but flexible people infrastructure, Merck provides greater freedom and accountability to its employees to both grow and be ready for the new challenges ahead. Contributor René Gessenich, Director, Global Head of Talent & Recruitment Strategy bei Merck Gruppe.

For Merck, founded in 1668, it always has been key to deliver cutting-edge innovation – which requires the company to attract, retain and develop the best talent in the market. This means that Merck has to enable its employees to work in an agile organizational set-up that allows the company to successfully adapt to fast changing market demands. To support this business strategy, Merck created a holistic talent approach that not only focuses on developing their employees, but also on a deep transformation of the entire people management structure. The introduction of an entirely new Role Architecture, providing a globally consistent system of job classifications for +50.000 employees is at the heart of this approach. Additionally, the new approach empowers leaders with more freedom to reward their people individually and to support different development scenarios – which may not always mean climbing the hierarchical ladder. 

Why is solely looking at traditional talent solutions not enough?
Through assessment tools and traditional training methods development can be triggered and supported. However, often actual development happens by gaining new and challenging experiences that build a broad and sustainable portfolio of capabilities. Having a workforce with a broader set of capabilities, enables organizations to effectively respond and strive in the modern VUCA world. But often companies still tend to solely focus on assessing and developing their talent with a short-sighted focus, rather than investing in building broad capabilities that address the needs of the organization in the long run. 

Careers and Containers – how standardization enables individual solutions
Paradoxically the answer to flexibility and personalization is standardization. To explain this, let’s draw on one powerful metaphor.

The most overlooked innovation that enabled the world economy as we know it today, is a dull and rather unexciting 20 or sometimes 40 foot steel box, known as the shipping container. A single change in the global adoption of a standard size box, dramatically cut cost, time and increased reliability of just-in- time arrival of goods. This change enabled a seamless supply chain of goods from Shanghai to Rotterdam to Berlin via ships, trains and trucks without ever having to manually load or unload the products. Containerization did not happen overnight. It was rather a steady process, consuming massive investments to adjust ports, trucks and all impacted touch points along the value chain. 

Of Roles and Career types – what the new framework looks like
Just as the containers provided a standard, removing barriers for goods to move flexibly across the globe, people management systems need to provide standards, to reduce barriers for personalized development opportunities. 

To support this mobility of talent and the opening up of new personalized development scenarios, Merck focused exactly on this standard, which is now serving as a corner stone for all rewards, talent development and organizational effectiveness programs. This newly created Global Role Framework describes responsibilities, requirements and the typical organizational setup for the roles for our +50.000 employees. To drive different career types, managerial as well as expert and project manager roles were defined. Through this, Merck is breaking the barrier of having to become a manager, to lead people, to access the topmost layers of the organization. Apart from the different career types, another important focus was on the number of organizational layers needed. The prior Global Grading infrastructure split the organization into 23 layers, often hindering lateral movements significantly as it often meant numerous inconsistencies in titles, salary structures, bonus percentages, benefits and lastly perceived status. Further, employees were reluctant to take on a role at a lower level, as their reward package could often only be maintained through grandfathering and special solutions outside of the existing frame. The new Global Role Framework is tearing down these barriers by only having eleven role layers to structure the entire organization.  

Flexibilizing rewards – breaking down barriers to grow
Moving across levels and career types was perceived as very cumbersome and not supported by the existing people infrastructure. This was mainly due to hard-wired reward packages linked to each level. Merck tackled this challenge by empowering leaders to support different development scenarios. This entailed four major interventions to the total rewards strategy. 

First, providing wider salary ranges at all role levels for 66 countries with a globally consistent spread of the salary ranges being able to range plus/minus 30, 40 or 50 percent. 

Second, while there was previously only one bonus percentage per level possible, the new infrastructure allows managers to select from mostly three bonus options, depending on the local market benchmarks. As these options are partly overlapping for the different layers, moving across levels does not necessarily require a change in bonus percentage. Thirdly, title options were made more flexible with the same rationale, to be able to keep titles when moving across levels. 

Lastly, the procedure for the annual compensation review was changed. Formerly it had been largely based on the position of the employee within the salary range, as well as the performance rating providing a proposal range for the compensation increase per employee. From now on, it will be largely based on performance ratings and market benchmarks, providing a wider range of options for managers to compensate their employees.”

Providing Navigation – balancing individual aspirations and business needs
Being able to seamlessly transport a container from Shanghai to Berlin, still does not make it happen by itself. It needs human intelligence to coordinate huge amounts of goods being moved around. Coordination and planning can only happen on an individual layer by involving all the agents and not solely through one central governing body. The same is true for the development of talent in a modern work environment. Autonomy and empowerment in planning potential next steps, rather than having pre-defined career paths, lies with each individual employee. To shape an individual development vision, employees need a clear understanding of what is expected of them in their current role and what could be potential roles they could grow into. Balancing employee aspirations with actual business needs is a central building block of high quality development discussions between the employee and manager. To make such high-quality discussions possible, Merck introduced a number of changes and new tools. 

New tools for employees to explore career options
First, the existing capability framework was aligned with the Global Role Framework. This means that each employee can understand expected behaviors based on their main contribution as an Expert, Project Manager or Manager and their respective role seniority. In addition, a new tool was introduced that supports employees to conduct a self-assessment based on required capabilities for their current role or for future roles. These self-assessments can be confidentially shared with colleagues to get their feedback. Subsequently, the results of this evaluation can serve as a basis for a career development discussion with the manager. If the manager shares the employee’s vision, concrete development actions can then be initiated to make the vision a reality. 

Secondly, all existing appraisal tools use the Global Role Framework to structure the identification of development needs. For example, the 360° feedback instrument, asks to evaluate the specific capabilities associated with the employee’s role.  Thirdly, existing learning offerings were organized into smaller modules and aligned with the Global Role Framework. This allows employees to more easily find appropriate training for both their current and targeted future roles.

Spreading the word and changing the mindset. Dietmar Eidens [CHRO]: “Fundamentally this initiative enables us now to look ahead to identify and build the capabilities across our workforce that will allow us to remain at the forefront of science and technology in the future.”

Enabling greater talent mobility and empowering employees to find their own career path at Merck  is only the foundation to achieve a mindset shift. It is paramount that employees actually live and strive for different kinds of development scenarios and that managers actively use their freedom to incentivize them accordingly. The technical changes were accompanied by a global communication campaign heavily branded under the slogan “Expanding Horizons, Building tomorrow´s talent today”. This communication included games, videos, interactive infographics, 360° virtual reality experiences, face to face and online trainings. However, containerization of world trade took time and did not directly generate the vast free flow of goods. This also applies to this initiative which is only at the starting point in a long journey of the company to enable employees and managers to thrive in an ever-changing environment. 

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