Insider

Drug Maker Finesses Leadership Development China

By George Miller

July 21, 2006—If you think leadership and workforce development is tough in the United States and Europe, as a recent Accenture report indicates, try it in China.

That’s exactly what pharmaceutical giant Novartis has been doing, with careful attention to cultural dynamics.

Workforce development in China offers unique but related challenges. First, despite the country’s 1.3-billion population and 3.1 million university graduates in 2005, there is a shortage of mid- to senior-level management talent appropriate for large international companies. And the management talent that can be found is largely first generation.

Second, the management turnover rate is high: 30% to 40%, compared to roughly 10% in other world regions. “Turnover at Novartis is 24%,” said Frank Waltmann, head of global learning, in an interview. “Skilled managers have many opportunities in China, especially at the mid- to senior levels.”

Third, a big reason for the high turnover rate is interpersonal rather than financial. Employees lack a sense of belonging and that lack—rather than salary—is a chief reason for departures, according to Waltmann.

Novartis, with 91,000 employees spread over 140 countries, entered China because of its pharmaceutical market dynamics—it’s currently one of the top 10, and the fastest growing. The company has experienced 30% average growth per year since 2000 and has 2,300 employees located there.

“Chinese like to be embedded in an organization,” said Waltmann. Novartis has taken steps to make that happen.

First, management talent is recruited locally: 99% are Chinese. Novartis also believes in growing its leaders from within. Its goal is to fill 70% of positions using internal associates, each of whom has a development plan and a minimum two discussions per year concerning career and development.

In addition to these discussions is an organizational talent review—a formal assessment that yields a rating, which in turn is used to initiate a development discussion.

Second, the company brings dispersed managers to the country headquarters in Beijing, to be briefed on major developments. These managers return to their local Chinese offices and communicate the information down into the organization. “The people responsible for carrying these messages are senior management types, and they cascade it down into the organization,” said Waltmann.

In addition to in-country travel, managers are routinely brought the company’s Basel, Switzerland, headquarters, as well as other locations, and encouraged to spend time there.

Third is management training. Novartis has a centralized management training function but decentralized education. Company strategy drives training, said Waltmann; he reports to the head of HR, who is also a member of the Novartis executive committee.

Novartis has instituted its China Leadership Development Centre, which comprises two elements: the centralized global corporate learning and marketing/sales programs, and the training elements developed in-country: an 18-month Novartis-oriented management education program called BiMBA, localized corporate programs, and a virtual training center.

BiMBA is offered to a very selective group, said Waltmann. It launched in 2005 with 47 mid- to senior-level management participants. More than 50 are participating this year. Coursework is in English and includes local case studies; classes are held four days at a time every month or two.

Localized corporate programs cover such topics as external focus (e.g., marketing), innovation, people, and performance, offered at the first, middle and senior levels.

“We also rely on very skilled local learning and HR professionals. Without them we wouldn't be able to deliver. This has been one of the key success factors,” said Waltmann.

Training programs are assessed in three phases. First is an internal assessment conducted with participants after a training event. Second, six to nine months later, a select group of the participants are contacted again and asked if the training has changed their behavior concerning the subject matter, and whether it has improved their leadership skills. In the third phase, participants’ supervisors are asked if participants’ behavior has changed.

Every other year, Novartis evaluates its training efforts with the European Foundation for Management Development, an accreditation body of quality in management education, and undertakes a formal assessment of training quality with EFMD’s European Quality Improvement System (EQUIS), for quality assessment, improvement and accreditation of higher education institutions in management and business administration.

George Miller
Site Editor
gmiller@questex.com