Our managers drive our innovative business model by motivating their teams, as well as by recognizing and leveraging the opportunities offered by the diverse cultures and experience of their employees. They furthermore act as role models, bolstering our Values and feedback culture.

In order to reinforce good leadership qualities, we launched the strategic initiative known as ONE Talent Development, Rewards and Performance Management in 2014 as part of the growth phase of our "Fit for 2018" program. We furthermore initiated the Merck KGaA, Darmstadt, Germany Competence Model, which has replaced the Merck KGaA, Darmstadt, Germany Competency Compass and our leadership guidelines. This new model is based on six core competencies: customer-focused, global, innovative, result-oriented, efficient, and engaged. They describe the type of conduct that we expect of and therefore encourage in our employees and managers in order to drive our strategic alignment and business success. This model constitutes the foundation of learning and development activities at the company. In addition to this new model, during 2013 and 2014 the Diversity Council also developed diversity and inclusion expectation criteria for managers.

We offer our top talent and senior managers programs on the topic of "good leadership". For instance, the Future Leaders program helps employees acquire business and leadership skills in the early phases of their career. The participants take on strategic cross-functional projects and work abroad for two years. During the nine-month International Management Program, young talent have the chance to hone their leadership skills as well as their ability to think globally. In addition to this initiative, the Merck KGaA, Darmstadt, Germany University, launched in 1999, offers a multi-regional, modular one-year program in cooperation with top international universities. To date, 284 senior managers have taken part. The company also cooperates globally with universities to support employees who wish to study for an Executive MBA. We plan on further harmonizing our training programs so that all of our managers live the same concept of good leadership.

Our teams are increasingly composed of employees from various sites and various countries. Our management processes must therefore take a global approach, and our managers must possess cross-cultural leadership qualities that are effective across an Internet connection. In the 2013-2014 period, we further harmonized our manager development activities. Since 2013, we have been offering our employees and managers Group-wide an enhanced development portfolio. Take for instance our Emerging Markets Management Program, which we developed in China in collaboration with the renowned China Europe International Business School. This initiative is targeted to young managers in emerging markets in order to groom them and build loyalty to the company. Over a period of up to two years, the program covers business administration content such as marketing and financial analysis, along with topics specific to the company such as our strategy and corporate culture. The goal is to equip participants to work in any of our businesses in an international setting. We launched the Emerging Markets Management Program in China in 2013 and in the Intercontinental region in 2014. Similar programs are being initiated in Latin America in 2015 and in India in 2016.

We gauge the efficacy of our activities through our Performance and Talent Management Process, as well as by the fluctuation rates of managers and top talent in the company. In addition to this, we conduct an organizational health survey as well as an employee engagement survey to get employee feedback on leadership qualities.

Identifying talent

Continuous performance assessment is critical for both individual employees as well as the success of the company. Clear objectives, differentiated feedback, and individual development plans constitute the foundation of employee development. We utilize the Performance and Talent Management Process to evaluate our employees' performance and identify talent. In doing so, we are bolstering our performance and feedback culture while ensuring that in-house positions are filled more efficiently. This harmonized approach has replaced all previous tools for talent identification, performance evaluation and skill development; it is managed and documented via our HR IT system, known as the HR Suite. Key components of our Performance and Talent Management Process include annual feedback meetings and performance evaluations for employees rated Global Grade 10+ in our position grading system. In 2013, Merck KGaA, Darmstadt, Germany extended the variable bonus model of the Performance and Talent Management Process to include non-exempt employees as well. We are thus encouraging outstanding performance as well as furthering the success of the business and the company.

The Performance and Talent Management Process features three assessment tools that employees can use to systematically advance their development. Line managers, select colleagues, and, as needed, external consultants assess for instance the employee's skills and conduct, thereby helping them better identify their personal strengths and development opportunities. In addition, line managers can utilize the assessment results to create a detailed development plan for their employees.

Around the world, approximately 27,600 employees in 2014 and 31,395 employees in 2014 took part in the Performance and Talent Management Process. In total, we identified 4,200 talented individuals in 2014, which represents around 19% of the participants. These talented employees must work with their line manager to design a development plan. Starting in 2015, we will be expanding the process to include employees rated Global Grade nine or lower.

Six competencies define important leadership skills