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Novartis
Invests in China
By
Laurie Sullivan
Burgeoning
commerce in
China
is outpacing its ability to fill high-ranking posts. A
shortage of highly skilled managers among the Chinese
is crippling not only to local firms but also to
multinational corporations operating in the region.
Frank Waltmann, Head of Learning at Novartis,
describes the major challenges in
China
and how Novartis is taking proactive steps to address
them.
Emerging
trends point toward a geographical shift in future
pharmaceutical market growth. While the
United States, Japan, and the top ten European
countries currently boast the biggest market sizes,
Waltmann predicts that Eastern European countries,
Latin America, and especially
China
will have the greatest growth in the future.
China
is already one of the top ten and fastest-growing
pharmaceutical markets. Novartis itself is currently
growing by 30% per year in
China
, highlighting its urgent need to invest in this
market in preparation for expansion in coming years.
“At
Novartis, we believe that human resource
issues--particularly learning and development--have to
be a priority in
China
,” says Waltman, citing the importance of preparing
its employees in
China
for the challenges of the future. Novartis analyzed
the situation in
China
to identify the biggest challenges to operating a
large, global company in the region.
The paradox of shortage among plenty.
China
is experiencing stunning growth in higher education,
yet at the same time its number of mid- to
senior-level managers is insufficient to support the
country’s strong economic growth. In 2005,
China
produced 3.1 million university graduates, compared
with 1.3 million in the
US
. The proportion of 18–22 year-olds attending
China
’s universities has more than doubled over the last
decade, reaching 15% in 2005 compared with 7% in 1995.
Yet belying these statistics, fewer than 10% of
university graduates in
China
have the necessary skills to work for a foreign
company, forecasting a continuing shortage of mid- to
senior-level managers.
Compounding
the problem, in the past, many multinational companies
relied on mid- and high-level expatriate managers to
oversee operations in
China
, but the current trend is toward increased
localization of staff. Add to that the fact that local
Chinese firms are entering the market, resulting in a
“reverse brain drain.” It all stacks up to
ever-increasing levels of competition for mid-level
managers. The numbers speak for themselves: There are
over 6,000 domestic pharmaceutical manufacturers.
Overall, in ten years,
China
will need about 75,000 mid-level managers with
international experience--currently
China
has only 5,000.
The frequent flier syndrome. “Attracting and especially
retaining management talent is becoming more and more
challenging,” says Waltmann, citing the average
tenure of mid- and high-level executives in
China
as 8–12 months. Turnover among skilled managers in
China
is very high--between 30 and 40% as compared with the
global average, which is in the range of 5–10%.
Notably, Waltmann observes that higher salaries
consistently rank lower than interpersonal
relationships as a factor in the decision to stay or
leave.
In
response to these challenges Novartis has put forth
three solutions. “Develop, deploy, and connect,”
Waltmann describes the strategy, noting the
company’s overall goals. “In the short to midterm,
we want to make our Chinese leaders more effective in
China
. Long term, we want to be able to leverage the talent
we have in
China
across the global Novartis organization.”
Develop—cultivate talent through traditional and on-the-job learning.
“There are three pillars of Novartis’ training
response,” Waltmann explains. “The Chinese love
training programs and learning.” This passion has
led Novartis to collaborate with one of the leading
business schools in
China
, called BiMBA, located in
Beijing
. “For senior managers, we developed an 18-month
‘mini-MBA’ program that includes lectures on
corporate finance, marketing, leadership, et
cetera,” says Waltmann. Forty-six of Novartis’
most promising leaders in
China
are currently completing the coursework, which is in
English and includes local case studies. It is
structured four days at a time every 4–8 weeks so
that employees can work and still attend the training.
For
middle and first-line management, Novartis has
localized its centralized corporate programs from
Basel
. “We took courses on subjects such as basic
behavior, finance, and project management and
customized them for Novartis
China
’s needs,” Waltmann notes, adding that some of the
courses have also been translated into Mandarin.
Finally, in response to
China
’s sheer geographical size, Novartis has built a
virtual “e-learning” training center, which is
accessible to everybody in the company.
Deploy—provide new, exciting, and “stretch” assignments and
clearly defined career paths. “The Chinese
like to move up in an organization as they undergo
professional development and become more valued,”
Waltmann explains. As a result, it is mission critical
that each employee in
China
has one or more development discussions during the
year to delineate next steps. Establishing and
executing a clearly defined career path enables
employees to move up very quickly within the
China
organization. “It is very important for the Chinese
to have these types of career discussions,” says
Waltmann, noting some telling results: 99% of Novartis
China
’s staff is Chinese.
China
is one of the most localized of all Novartis’ global
offices, and has lower turnover than other
pharmaceutical companies operating in the region.
Connect—an internal focus is a key contributor to success.
Novartis seeks to connect its employees so that they
can learn from the experiences of their peers and
other professionals. Waltmann explains, “Creating a
sense of belonging is particularly important in
Novartis
China
, because the Chinese like to feel very integrated in
a company.” Toward that end, Novartis
China
briefs its
Beijing
employees on the latest business developments through
monthly luncheons held with representatives from
senior management and staff. These employees are
subsequently responsible for relaying the information
companywide to all regions and offices in
China
. “There is a really well-established communication
process from the top to the bottom in
China
,” says Waltmann. “As a result, everyone in
China
feels involved and informed of the latest developments
in the company. Someone working in Kuming in the
southwestern part of
China
is as well informed as someone working in
Shanghai
or Hong Kong or
Beijing
.”
Longer
business trips are another way to help China-based
employees become integrated into Novartis’ global
corporate culture. Business trips can be leveraged to
better connect Novartis
China
staff with employees outside of
China
. “We have other tactics to help our employees
capitalize on the opportunities of a globally
operating company,” Waltmann adds. For example,
Chinese managers are often invited to centralized
corporate programs held at Harvard, Wharton, Stanford,
and other prominent business schools. Waltmann notes
that expatriates are also sent from
China
to the
US
to become better connected to how things operate in
the
US
and gain global experience.
“The energy and passion to be tapped in
China
is unbelievable,” Waltmann concludes. “The way
they soak in all the support from headquarters, geared
toward nurturing and supporting their growth, makes it
a very rewarding experience.”
URL: http://www.pharmadd.com/exclusivecontent/Novartis
Invests in China.asp
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2007, Cambridge Healthtech Institute. All Rights Reserved
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