Attracting and retaining talent

To ensure our ongoing success, we are focusing on the future by creating meaningful impacts and building needed capabilities. At the same time, we must respond to changing demographics and adapt to the behaviors and expectations of the highly competitive talent market. Therefore, in 2023, we continued to enhance our talent acquisition strategy with a more personal, employee-focused approach. Our talent sourcing approach aims to build inclusive pipelines and effectively recruit diverse talent with the needed competencies and capabilities to our organization. In addition, our talent retention approach is inclusive in targeting various employee groups. In 2023, we intensified our efforts to support internal mobility. For example, we launched a dedicated project to improve organizational agility, up-skilling and re-skilling, retention, and engagement. Specific modules went live in 2023, and we will roll out the complete platform with all functionalities during the course of 2024.

We have designed our compensation structure to provide valuable benefits to our employees and their families. Our benefits offerings recognize the diversity and uniqueness of our employees while providing flexibility wherever possible. Additionally, our international employee mobility programs create an environment suited to the needs of a rapidly evolving workforce.

In 2023, the average length of service for employees Group-wide was 9.7 years (2022: 9.2 years), with 15.2 years (2022: 15.4 years) for employees of Merck KGaA, Darmstadt, Germany.

Roles and responsibilities

Group Human Resources (HR) supports and advises all business sectors and Group functions within our organization regarding our human capital, especially topics related to recruiting, vocational training and advanced training. Across all our sites, HR employees work with leaders from various functions and business sectors to employ strategies that engage our people in line with Group-wide HR guidelines and requirements, including attractive compensation models and benefits. In accordance with the audit plan, we conduct internal audits every two to three years to ensure that we implement our guidelines effectively.

The Chair of the Executive Board and CEO is responsible for Group Human Resources. Our Chief HR Officer, who leads the HR function and oversees all our HR activities, reports directly to the Chair of the Executive Board and CEO. Our Business Services unit oversees the operational tasks of HR work, such as drafting contracts and payroll accounting. The Chief Financial Officer is responsible for this unit.

Our commitment: Group-wide policies and guidelines

As set down in our Social and Labor Standards Policy, we will respect our employees’ legal rights to form and join worker organizations of their own choosing, including labor organizations and trade unions, and will not discriminate based on an employee’s decision to join or not join a labor organization.

Our High-Impact Culture is founded on six behaviors: obsessed with customers and patients; act as the owner; be curious and innovate boldly; simplify and act with urgency; raise the bar; disagree openly, decide and deliver. We regularly inform managers and employees about these behaviors through global campaigns.

Our People Development and Learning Policy provides a Group-wide framework that guides employees in managing their professional growth. It defines requirements for our development opportunities, roles and responsibilities.

A competitive compensation structure

We reward the performance of our employees in order to maintain a competitive edge in attracting and retaining the best talent. Within our Group, we base compensation on the requirements of each position and each employee’s respective performance. We make no distinctions based on gender or any other diversity criteria. To ensure we maintain a competitive compensation structure, we regularly review our compensation policy based on data analyses and industry benchmarks. This enables us to compare internal factors and market requirements in equal measure. Before making changes to our compensation structure, we consult with key stakeholders such as employee representatives, as applicable.

In addition to individual performance, our annual incentive plan also measures company performance based on financial and non-financial key indicators in our scorecard. The non-financial key indicators focus on the company’s priorities and are designed to support our High-Impact Culture as well as our sustainability strategy and progress in terms of diversity, equality and inclusion. Furthermore, since 2022, we have included a sustainability factor in our Long-Term Incentive Plan (LTIP). More information on the LTIP can be found in the “Notes” of our Annual Report.

Strengthening our sustainability culture

Since 2021, e-Learnings on our sustainability strategy are a mandatory training component for existing and new employees. While this was the first step of our upskilling journey, we have extended our offer with function- and hierarchy-specific educational activities. Furthermore, from 2023 on, we use the sustainability questions from our annual employee engagement survey to measure the impact of our activities. The survey results are only used internally. They help us to understand the maturity of a sustainability mindset in the company and to detect and address functional, regional or hierarchical differences. The corresponding key indicator “Result of the employee engagement survey on sustainability culture” replaces the previous year’s achieved key indicator “Percentage of employees trained on sustainability”.