1. WWW.EPOWERPOINT.COM Case Studies MERCK & Co. www.ePowerPoint.com

2. MERCK & Co. A PHARMACEUTICAL COMPANY FOUNDER: FRIEDRICH JACOB MERCK COMPANY STARTING DATE HEADQUARTERS: RAHWAY NEW JERSEY U.S.A EMPLOYEES WORLDWIDE 1668 86 000 www.ePowerPoint.com

3. MERCK & Co. Timeline 1668 APOTHECA RY ACQUISITI ON IN GERMANY 1827 30 YEARS AFTER INTER NATIO NAL REPUT ATION 1887 BRANCH OFFICE OPPENED IN NYC 1953 MERGING WITH PHILADELPHIA BASED PHARMA FIRM SHOPS & DOHM 1980 DECLINE ON RETURN ASSETS DUE TO INFLATION AND NEW PRODUCTS DISAPPOINTMEN TS TODAYS MANUFACTURE & MARKET + 80 PRESCRIPTION PHARMACETICAL AND VACCINE NATION’S LARGEST PROVIDER OF PRESCRIPTION SELECTED AMERICA’S MOST ADMIRED CORPORATION « BY FORTUNE » MAGAZINE BETWEEN 1987-1990. FINE MANAGEMENT, ATTRACT, DEVELOPP AND KEEP TALENT PEOPLE 1955 EMPLOYEE RELATION’S REVIEW COMMITEE www.ePowerPoint.com

4. INTERVIEW www.ePowerPoint.com

5. ABSOLUTE RATING VS RELATIVE RATING VS FORCED RANKING ABSOLUTE YOU COULD GET AN A IF YOU CORRECTLY ANSWER 100% OF THE QUESTIONS IN THE EXAM, BUT WOULD GET A B IF YOU ANSWERED ONLY 80%. THE GRADE YOU GET DEPENDS ONLY ON YOUR PERFORMANCE WITH RESPECT TO THE OBJECTIVE CRITERIA RELATIVE YOU WOULD GET AN A IF YOU ARE ONE OF THE TOP 10% OF THE STUDENTS IN CLASS, BUT YOU WOULD GET A B IF YOU ARE BETWEEN 10% AND 20%. YOUR RATING DEPENDS ON HOW YOUR OBJECTIVE PERFORMANCE COMPARES WITH THE REST OF THE STUDENTS’ GRADES IN YOUR CLASS FORCED RANK THE EMPLOYEE DEPENDING ON THEIR INDIVIDUAL PERFORMANCE ACCORDING TO A FIXED DISTRIBUTION DECIDED IN ADVANCE. EX: 20%: EXCELLENT, 10% GOOD, 70% EFFICIENT, 10% BAD. STATISTIC GAUSS www.ePowerPoint.com

6. A NEW PERFORMANCE MANAGEMENT PRINCIPLE STEP I. RELATIVE RANKING 1) EVALUATE EMPLOYEES - EACH COMPANY DEFINES ITS OWN CRITERIAS (GENERALLY DEVIDED BETWEEN PERFORMANCE AND COMPETENCES) 2) DISTRIBUTIONS - DETERMINES THE RESULTS AND THE AVERAGE STEP II. FORCE RANKING 1)DEFINE QUOTAS AND NEW AVERAGE - EXAMPLE: THE AVERAGE OF 7 BECOMES 5 2) IDENTIFY THE TOP EMPLOYEES -” IDENTIFY THE BEST AMONG THE BEST AND THE BAD AMONG THE BEST” Forced Ranking Distribution www.ePowerPoint.com

7. ADVANTAGES : - THE BEST WAY TO REALLY SELECT THE BEST EMPLOYEES - A REAL INCENTIVES FOR EMPLOYEES TO GIVE - MANAGERS CAN SHARE AND AGREE ON CRITERIAS - DIFFERENCIATION AND RELEVANT KEYS TO IMPROVE - HELPS LINING CULTURAL DIFFERENCES (AMERICAN VS GERMAN) CONS: - EMPHASIZE INDIVIDUAL PERFORMANCE AT THE EXPENSE OF TEAM PERFORMANCE. - PROMOTE COMPETITION (AT THE COST OF COOPERATION) - MAYBE DETRIMENTAL TO MORALE (VERY OFTEN THE PART IN THE BOTTOM GET FIRED) Forced Ranking Distribution: PROS AND CONS www.ePowerPoint.com