As a global, science-based company, we strive to create a working environment that nurtures innovation and continual improvement. In this approach, our employees take center stage. Their dedication and skills are crucial to our company's success. We therefore aim to foster a culture that broadens the knowledge base of our employees that creates opportunities and motivates them to take a proactive role in our success.

We want our employees to take an active interest in our goals and Values, to engage in shaping processes and ideas. Dedicated, strong managers as well as self-motivated employees both contribute equally to our success. We have built a framework of clearly defined, clearly communicated strategic goals, using this foundation to design measures that promote employee engagement and incorporate it into our processes. Through our idea management programs, we nurture and reward unconventional thinking, while our state-of-the-art internal communication processes encourage interdisciplinary collaboration. Employee surveys allow us to better understand the needs of our employees.

Our global Center of Expertise for Development and Engagement designs and steers our approach to conducting employee engagement surveys. We utilize survey results to devise concrete measures for our businesses, the implementation of which is steered by Group Human Resources.

Idea management

At our Darmstadt site, we utilize an employee suggestion system to leverage our employees' ideas for the benefit of our business. Here, Merck KGaA, Darmstadt, Germany rewards employee suggestions that have been brought to fruition. The amount of money awarded depends on the actual cost savings achieved and/or the idea's contribution to occupational safety, environmental protection, or quality improvement. Our employees submitted a total of 3,460 suggestions for improvement in 2013 and 3,590 in 2014. These led to savings amounting to € 3.4 million in 2013 and € 2.8 million in 2014. In exchange, the company paid out prize money of € 0.96 million in 2013 and € 1.0 million 2014. Around 75% of the suggestions for improvement related to production; approximately 25% comprised suggestions relating to analysis, technology and logistics. The ideas helped significantly in many instances to optimize production processes and occupational safety, as well as to lower waste output and emission levels. For instance, one group of employees modified the standard packaging for liquid crystals in such a way as to cut down on packaging material.

In addition to this, we also reward the outstanding ideas of our employees with Merck KGaA, Darmstadt, Germany Awards. Every year, recognition is given in the categories of Change, Innovation, and Customer Orientation, along with the special prize, the CEO Award.

Through the strategic initiative known as ONE Global Headquarters, the company is striving to transform the Darmstadt site. In line with our approach to employee engagement, we are focusing heavily on meeting the requirements of a changing working world. This initiative aims to create an attractive environment for existing and potential employees that offers scope for creativity and promotes innovation. In September 2014, for instance, we started construction on a modular Innovation Center. This is where teams will have a place to work for the duration of their innovation projects, where interdisciplinary collaboration will flourish amidst a creative atmosphere. We sincerely believe that this will tangibly improve our employees' performance and productivity.

In order to involve employees in helping decide the company's strategic alignment, we provide an internal online forum in which they can engage in a dialogue and discuss new ideas. This forum is one of the many tools of our "Fit for 2018" transformation and growth program. In 2014, we hosted a major employee celebration at our Darmstadt site as thanks for the successes achieved thus far under "Fit for 2018". The event also provided an opportunity for around 5,000 employees to learn about ongoing strategic initiatives as well as to interact with people from other departments and units.

Channels of communication

Internal Communications develops and steers global communications activities within the company, providing tools such as target group-specific media. For instance, communication packets and information are posted on the online "pro Manager" portal in order to improve manager discourse with employees. In the 2013-2014 period, we conducted two employee surveys on internal communications and then used the results to design new media that better satisfy the needs of employees and managers. One example is "pro", our international employee publication that has transformed from a newspaper into a magazine. It has been available in seven languages since September 2014 and is now also available as an online magazine and app. It is thus reaching more than 90% of our approximately 39,000 employees worldwide in their local language. For our employees in Germany, we have also been publishing the "pro vor Ort" newspaper. In addition to this, our businesses and Group functions issue their own newsletters to update their employees on progress and changes. Starting in 2015, we will be launching our new online collaboration platform known as EVA, which will replace our former Intranet. Here, we will be focusing more on video communication to convey information quickly, concisely and directly to the desired target group.

Employee surveys

We are striving to incorporate the ideas and know-how of our employees more heavily into our business operations. Because our company has changed greatly in the course of our "Fit for 2018" transformation and growth program, we developed a new approach to employee surveys in 2014. Through this, the company is aiming to strengthen its corporate culture and help managers create a motivating work environment that will increase its success. The new approach includes a survey that is part of the Organizational Health Index (OHI ), along with another survey that specifically addresses employee engagement. Together, these will be taking the place of the "Pulse" employee survey that we conducted in 2009, 2010 and 2011. Because of the broader-based approach of these surveys, their results cannot be compared against Pulse results. Both surveys are being implemented globally at the business level as well as the Group function level.

The OHI survey results serve to predict our future performance capacity as well as indicate aspects that are particularly important for the success of the company. The OHI survey is based on nine dimensions: direction, accountability, coordination and control, external orientation, leadership, innovation and learning, capabilities, motivation and culture and climate. The OHI Score reveals how well employees think the company is doing in each of the dimensions. In 2014, 4,251 the biopharmaceuticals business employees and 2,600 Performance Materials employees took part in the survey. Results show that employee motivation at the company is above average relative to other companies. In response to the OHI survey, Biopharmaceuticals has introduced initiatives to promote more motivational management styles and to foster talent. Performance Materials utilized the results in planning the integration of AZ Electronic Materials.

Building on the OHI survey, Biopharmaceuticals and Performance Materials will be conducting the second employee engagement survey in 2015. The survey will cover topics such as leadership, performance, reward, and career and development, along with content specific to Merck KGaA, Darmstadt, Germany such as inclusion. By the end of 2015, the life science business, Consumer Health and all Group functions will be starting with the new employee survey approach by taking the OHI survey.

Engaging employees in corporate responsibility

We educate our employees on corporate responsibility through events and communication campaigns. For instance, in September 2013 we hosted an Africa Week at our Darmstadt and Gernsheim facilities in Germany. CR employees manned booths at site cafeterias, spreading information on our CR projects in Africa. In addition to this, the cafeteria menu featured ethnic African dishes.

As part of Earth Month, Energy Month and World Water Week, the life science business hosted environmental awareness campaigns that provided tips on how employees can minimize their impact on the environment at both work and home. During the Earth Month campaign in 2014, employees also took part in numerous volunteer activities. In Temecula, California (USA), for instance, employees worked together to clean the beach, while staff in Cork, Ireland cleaned the river bank; in Quito, the capital of Ecuador, they planted trees, and in Massachusetts (USA) they picked up trash in parks and on roadsides.

The life science business furthermore utilizes volunteer work as part of its global team building activities. For instance, at a gathering of the life science business leadership team, 130 managers built 26 bikes for children at the East Boston YMCA.

In addition to this, Merck KGaA, Darmstadt, Germany fosters its employees' ideas for new businesses through its Innospire program. In 2014, the program centered on the topics of energy conservation, conversion and efficiency, water treatment, water quality analyses, and efficient water consumption, along with patient focus, personalized medicine and digital/mobile health. Our employees were called upon to submit suggestions for new materials and systems, as well as for new business models. During the 2014 Innospire program, 300 ideas were submitted, including some that pertained to the above-mentioned topics.

Employee co-determination

We foster employee participation, co-determination and dialogue in our company. For this reason, we regularly involve local employee representative bodies, relying on them extensively for input. Take Germany for instance, where 11 subsidiaries have employee representative councils. Here, local works councils as well as an overall Group Works Council represent our employees' interests, discussing issues such as compensation, working hours, and realignment. The Senior Executives Committee represents the interests of senior management.

The Merck KGaA, Darmstadt, Germany Euroforum is our employee representative body at the European level and also serves as an information and advisory platform. Topics that are addressed regularly include the economic and financial situation of the company in Europe, the employment situation, and also significant changes within our company, such as acquisitions.

For its work on the "Fit for 2018" program, the Darmstadt Works Council was awarded the German Works Council Prize in 2013.