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Management Development in Ciba-Geigy Ltd. (Novartis)

COURSE TITLE: “Human Resource Management” . COURSE CODE: EM-553. A Case Study On Management Development in Ciba-Geigy Ltd. (Novartis) Submitted To Professor Dr. Shahid U Ahmed Department of Management University of Dhaka Submitted By Md. Muyedul Islam ID # 3-09-16-034 Tahmina Afnan ID # 3-09-17-037 A. K. M. Majharul Huque TalukderID # 3-09-16-021 Md. Farid Uddin ID # 3-09-16-028 Muhammad Abdul MalekID # 3-09-16-019 Hasanuzzaman RahibID # 3-09-17-031 Submission Date:4th April, 2011 LETTER OF TRANSMITTAL 4th April, 2011 Dr. Shahid U Ahmed, Professor, Department of Management Studies, University of Dhaka.

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Subject: Submission of Case study report on Management Development in Ciba-Geigy Ltd. (Novartis) Dear Sir, It’s a great pleasure for us to have the opportunity to submit a case study report on “Management Development in Ciba-Geigy Ltd. (Novartis)”which had been a great experience for us to work with such a big Multinational company. We tried utmost to make & let it look like a professional one. Any shortcomings are expected to have a kind view for us encouragement. Thank you for your sincere & honest try to let us make easy & get familiar with case study to help me make the paper a successful one.

Our efforts will be valued, if this term paper can serve for what it’s been meant for & our assistance will be there for any queries. Sincerely yours, ?Md. Muyedul IslamID # 3-09-16-034 ?Tahmina Afnan ID # 3-09-17-037 ?A. K. M. Majharul Huque TalukderID # 3-09-16-021 ?Md. Farid Uddin ID # 3-09-16-028 ?Muhammad Abdul MalekID # 3-09-16-019 ?Hasanuzzaman RahibID # 3-09-17-031 ACKNOWLEDGEMENT Our work on preparing a case study on “Management Development in Ciba-Geigy Ltd. (Novartis)”is a great experience for us in light of the course “Human Resource Management” ( EM-529). hich has a great significance as an emerging, flourishing and different financial company in the local as well as in the global arena. We strongly believe works like this will surely help us to have a clear concept about the Management Development in Ciba-Geigy Ltd. (Novartis) and the overall strategy of the organization. All the praise belongs to Allah the all knower & best of the helpers to make my report a practical one by providing us the mental & physical toughness in course of preparation of the report. My honest & heartiest gratitude goes to Professor Dr.

Shahid U Ahmed,our honorable course teacher for his sincere and utmost guidance to prepare this report & gather huge practical and realistic knowledge, to make us understand the topics, terms & make us familiar with this course. . EXECUTIVE SUMMARY Mr. Arnold Delage, soon to be the MD of Ciba-Geigie’s French subsidiary had been general manager of the companies French pharma Division . His appointment to MD had opened the position of pharma division manager. Jules Breton, Head of French division’s marketing was promoted to replace him. As a result the position of Marketing Manager in the French pharmaceutical division of Ciba Geigy Ltd.

Became vacant. Delage and Breton presented the candidacy of Pierre Dumont but The HQ’s preference was for Michel Malterre. The case describes the approach to the choice between an expatriate and a local manager for the position of Marketing Manager. Such decisions as the appointment of key executives in subsidiary companies were usually the result of joint agreement by divisional management in the HQ and the local MDs. We will try to discuss the overall management development process of Ciba-Geigy as well as their strategies to recruit a new Marketing Manager. Table of Contents TopicsPage No.

Introduction Origin of the Case Study Objectives of the Case Study Scope Methodologies Limitation of the Case Study06 06 06 06 07 07 Key Issues In the Case Formation of Ciba-Geigy Formation of Novartis Company Profile Organogram of The Company Organizational Structure Management Development Management Training Program Executive Appointments Pharma Division Recruitment & Selection Compensation & Benefit Plan Training & Development Plan French Pharma Division Reasons to Choose Delage as MD Selection of a New Marketing Manager Reasons to Choose Malterre as the New Marketing Manager Candidates Profile Form

Findings & Concluding Remarks08 08 09 09 10 10 13 14 14 14 15 15 16 16 17 18 18 19 20 Introduction Origin of the Case Study The Case Study is a requirement of the course of “Human Resource Management”, Course Code: HRM-529. The topic of our Case Study has been assigned by our course teacher Professor Dr. Shahid U Ahmed . The reason behind assign this topic is to make us able to analyze different application of Human Resource Management practices in Ciba-Geigy Ltd. (Novartis). It focuses on HRM practices of the company and how it overcomes various HR related problems through the HR practices .

This study therefore shows how much These systems affects an organization as well as the business. Objectives of the Case Study ?To study different application of Human Resource Management practices in Ciba-Geigy Ltd. (Novartis). used in their global & local Business. ?To relate the theories in a real-life situation. ?To understand the stratedic management development in a MNC like Ciba-Geigy Ltd. (Novartis). Scopes ?Through this report, we will be able to make ourselves fit for any situation when I got any sort of assignment or task or making any report regarding HRM . It also help me for fulfillment of my knowledge about these issues. ?It also help us to gather a vast knowledge about the relation among corporate management processes, company strategies, recruitment processes, the functions of different units and the international business. of Ciba-Geigy Ltd. (Novartis). Methodologies To prepare this report and collection of information’s both primary and secondary sources are used. To realize the original picture & procedures of the management development in CIBA-GEIGY Ltd. we had to deeply discuss the case.

Some times we had to discuss with the some executives if some MNCs’ in Dhaka. We also use the internet to collect data. 1) Primary Sources: •The case handout given by the course instructor. •Discussion with the group members. •Expert Opinion. 2) Secondary Sources: •Annual Report of Ciba-Geigy Ltd. (Novartis). •Statement of Affairs. •File Study. •Website Ciba-Geigy Ltd. (Novartis). Limitation of the Case Study There are certain limitations which is prevalent in the study. The limitations were as follows: •There were some irrelevant works to be done. •The time constraint was a big factor. There were limited numbers of literature or secondary data available on this study. •Rush hours and business was another reason that acts as an obstacle while gathering data. Confidentiality of data was another important barrier that was faced during the conduct of the study. Key Issues In the Case The case describes the approach to the choice between an expatriate and a local manager for the position of Marketing Manager in the French pharmaceutical division of Ciba Geigy Ltd. (Novartis), the preferences of various managers, and the working of Ciba Geigy ’international career management and succession planning process.

Ciba-Geigy is the largest chemical company in Switzerland. But since the country offers only a limited market and lacks many essential raw materials, Swiss chemical companies have been forced to enter foreign markets; and in order to compete successfully, they have had to lead the world in certain technologies. In A giant pharmaceutical company like Ciba-Geigy there is close relations among the management processes, company strategies, recruitment processes, the functions of different unites and their international business. Formation of Ciba-Geigy Geigy

It is established in 1758 by Johann Rudolf Geigy- Gemuseus (1733-1793) begins trading in “Materials, Chemicals, Dyes and Drugs of all Kinds” in Basel, Switzerland. Ciba It is established in 1859 by Alexander Clavel (1805-1873) takes up the production of fuchsine in his silk dyeing factory in Basel, Switzerland. Geigy merges with Ciba to form Ciba-Geigy Ltd. in 1970 Figure: Formation of Ciba-Geigy. Formation of Novartis Novartis was created in 1996 from the merger of two Swiss based chemical/life sciences giants; Ciba-Geigy and Sandoz Laboratories. Sandoz is established in 1886 by Kern & Sandoz is founded in Basel, Switzerland, by Dr.

Alfred Kern (1850-1893) and Edouard Sandoz (1853-1928). The first dyes produced are alizarin blue and auramine. Figure: Formation of Novartis. Company Profile Novartis International AG Type: Public AG Industry: Pharmaceuticals Founded : 1996 (from merger) Headquarters: Basel, Switzerland Key people: Daniel Vasella (Chairman), JosephJimenez (CEO) Products: Pharmaceuticals, generic drugs, over-the-counter drugs,vaccines, diagnostics, contact lenses, animal health.

Revenue: Increase US $50. 624 billion (2010) Operating income: Increase US $11. 526 billion (2010) Net income: Increase US $9. 969 billion (2010) Total assets: Increase US $123. 32 billion (end 2010) Total equity: Increase US $69. 769 billion (end 2010) Employees: Increase 119,418 (FTE, end 2010) Subsidiaries: Ciba Vision, Sandoz, Alcon Organogram of The Company Figure : Organogram of Ciba Geigy Ltd The organization is comprised of the following units : 1. A division areas covering the seven main product areas. 2. A geographic structure with 80 group companies organized in a loose dministrative way into six main regions: Eastern Europe, Western Europe, North America, Latin America , Asia, Australia and Africa/Middle East. 3. Ten central corporate functions at group HQ in Basel, Switzerland. Organizational Structure Central Function ?Research ?Technology, Switzerland ?Finance ?Technology, group ?Control and management services ?Personnel, Switzerland ?Information and promotion ?Legal services ?Commercial services ?Superannuation fund and property ?Protection of health and environment Executive Committee It is situated in the Company H. Q. In Basel, Switzerland and There are ten Members.

The responsibilities of the E. C are: ? Resource allocation ? Plan ? Budget ? Investment ?Management Guidelines. ?Evaluation of all Units performance. ?Each Member workes for a number of countries and divisions . ?Decision making of a number of divisions , group companies or central functions are delegated by the EC to the regional staffs. Staff Units The Strategic plan done in bottom-up process in all levels. Staff Units are involved in: ?Central Secretariat ?Regional services ? Management Development ? Corporate Planning Group Companies Group Companies are 100 percent- owned.

These are Responsible for all activities in a given country. Administrative functions were centralized locally. Product divisions and the EC coordinated an Integrated the group companies’ activities . Group Companies are situated in Eastern Europe, Western Europe, North America, Latin America , Asia, Australia and Africa/Middle East Divisions Ciba-Geigy has the following product divisions. Each division is engaged in the production of a particular product. The divisions are as follows: ? Pharma ? Self medication ? Ciba vision ? Crop protection ? Animal health ? Seeds ?Textile dyes ? Chemical ? Additive ? Pigments ? Polymers Composites Responsibilities of Divisions ?Research and development, production and marketing of products were specific responsibilities of the divisions . ?The divisional heads within each group company were administratively responsible to the managing director but were also functionally responsible to the corresponding division in Basel. ?Responsible to the EC for the worldwide mgt of their businesses and their overall results . Management Development The unit was to report directly to the Executive Committee. “Executive Development “ whose role was to assure the supply of qualified managers for line management positions.

The idea was to make management development planning an automatic component of yearly divisional and regional plans. They overestimated the possibility of developing precise instruments of measurement and evaluation from which to derive the development potential. The fact came above all that the formal system didn’t work. Objectives of The Management Development Program ?Succession Planning for the whole group on the basis of corporate, divisional and group company MD planning reports. ?Identifying potential executives and plan their next development steps. Monitoring the quality of each unit’s executive and potential executive population. ?Setting up career moves and job rotation for both executive and potential executives totaling about 300 per year. ?Coordination of the moves to obsolete executives into new positions to give them new incentives and added motivation; and ? Educational development of al executives and potential executives through internal (in-house) and external (business school) management courses. It is drawn up every two years by the Head of the group company and every division and function of the parent company.

Each MD plan showed the current executive positions in the organization, indicated future moves and candidates for job rotations, proposed internal successors and offered position for outside candidates, showed potential executives and defined action programs. Upon receipt of an MD plan, the MD staff at the Headquarters would first discuss it with the appropriate unit head and the present it to the chairman of the Executive Committee and to the unit’s patrons. Management Training Program Ciba-Geigy put more emphasis and devoted more resources to management training programs that most companies. The main Ciba Geigy management course was a two week program offered by to all newly promoted executives of Ciba Geigy worldwide. ?Prior to this course many executives had taken a group orientation course and a basic management course each one week long. ?Even each division, function or group had its more specific and more function oriented training program with basic management courses. Executive Appointments Personnel committee is consisted of three (03) members of Board of Directors and three (03) members of the Executive Committee. Appointments to all 1100 executives were decided by the personnel committee.

The personnel committee met every Thursday to recommend top appointments; its decision went next to the full Executive Committee for their approval . For some divisions such as Pharma and for positions below that of group company division head, the preparation of such list was often delegated to the divisional MD manager. Pharma Division Pharma Division is the best of all Divisions They are one of the most rewarding employers in their field. Reason of Success: ? Performance-oriented culture ?Responsible Approach ?Creativity, Innovation & Dedication ?They have Equal of Opportunity and Mutual Respect to each other. They maintain Work Life Balance Recruitment & Selection Employees are the heart the organization. Maintaining even executives and potential executives. For Recruitment Process the follow the following process: ? Job Analysis—– Job Description—-Job Specification ?Recruits young talented each year, mainly MBAs ?Put them in the First Track Development Compensation & Benefit Plan Base compensation Each associate is given a fixed salary based on job characteristics, market competitiveness and the associate’s skills. Salary growth depends on the associate’s individual performance and level compared to the benchmark.

Variable compensation Three variable compensation plans: ? Annual Incentive Plans Most associates participate in annual incentive plans. Under these plans, awards are given each year based on the associate’s individual year-end performance rating as well as on the Groups or business area’s performance. ? Equity Plans Annually, approximately 10 percent of associates worldwide receive equity grants under the Ciba-Geigy Equity Plan “Select”. Participants in this plan can elect to receive their incentive in the form of shares, share options or a combination of both. ? Long-Term Performance Plans

The Ciba-geigy Long-Term Performance Plan rewards key executives who have a significant impact on the long-term success of the Group. ? Benefits: Ciba-Geigy benefits programs are an integral part of the total compensation policy and strategy and are designed to meet the challenges of growing, global competition for talent. Some benefits are ?House Rent ?Medical Facility ?Transportation ?Provident Fund ?Gratuity Training & Development Plan There is Two Fold Training System: ?Employee fill up a Form for their training needs. ( TDP requirement) ? Supervisor suggests training during PMP process Based on this two approach HR department prepare the Training calendar ? Dynamic organization ?Long Term Development Plan ?Succession Plan French Pharma Division It was an autonomous body and Headed by Dr. Henri d’Encausses, a Pharmacist & Mayor of Gaillardon. To protect his autonomy, Henri was supported by the Managing Director, Antonie Roux.. Mr. Roux was able to keep the management of France close to his chest. Due to some internal problems, Roux was replaced by Rene Lamont, a French speaking Swiss national of English origin. After three years Lamont was succeeded by Maitre Guillaume, a 65 years old French lawyer.

He occupied the post for two years and then Delage came. Both Lamont and Guillaume did not have strong feelings for management department. They did not have necessary potential executives to fill new positions and let an enduring weakness develop in their supply managers. They satisfied the mangers only by taking new plans but had little effort to execute them. Reasons to Choose Delage as MD Delage was the only person who had a marketing background and a good knowledge in English. Delage strengthened the French Pharma Division by: 1) Spending much time in the field to improve the quality of the medical representatives force by : ?

Training ? Selection ? Replacement 2) Creating two positions of product line, one for Ciba products and another for Geigy products to provide additional sales & marketing management competence and support. 3) Replacing several of the weaker product managers. 4) He was successful and had good experience of Head Quarter. 5) He was an ideal division manager who understood the Ciba Geigy philosophy well. 6) A French to head the French organization. 7) He was successful, wherever he was. 8) Had good experience of Head Quarter. 9) Several successful assignments abroad. 0) Clear perspective on relationships with Basel. 11) He was an ideal division manager who understood the Ciba Geigy philosophy well. Selection of a New Marketing Manager Among various possible candidates Mr. Malterre Was at last selected as the new marketing manager. His selection process is cleared from the following figure. Reasons to Choose Malterre as the New Marketing Manager ?Some of the possible candidates were unavailable and unsuitable. Figure : Selection process of Mr. Malterre as the New Marketing Manager Reasons to Choose Malterre as the New Marketing Manager Some of the possible candidates were unavailable and unsuitable. ?Some of the candidates were not perfect in French but Malterre’s mother tongue is French. ?Some couldn’t be easily replaceable. ?He was very successful in developing sales in West Africa. ?He had worked in pharma, at corporate level and abroad. ?He knew the French group company very well. Candidates Profile Form For selecting the new marketing manager the HR department uses the following profile form. INDIVIDUALS Professional EducationEDUCATION MBA or Management Seminars Knowledge of English Knowledge of Local Language

Several Years of successful Line Management ExperienceEXPERIENCE Pharma marketing Management Market Research Planning & Control International Management Experience Local Market Experience Analytic SkillsPERSONALITY Creativity Overall Management Skills Leadership Capability Overall Balance Develop Potential Career Development Aspect Availability Findings & Concluding Remarks While analyzing the case we find out that there is close relations among the management processes, company strategies, recruitment processes, the functions of different unites and their international business.

We tried to discuss the overall management development process of Ciba-Geigy as well as their strategies to recruit a new Marketing Manager. From the case analysis we also found that such decisions as the appointment of key executives in subsidiary companies were usually the result of joint agreement by divisional management in the HQ and the local MDs. And were often debated at the highest levels within the company. A long standing corporate commitment to human resource and management development ensured that such choices received considerable attention and that all relevant aspects were carefully weighed before a decision was reached.

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