I. The description of the performance management system at Novartis. 1. Overview of the PM system at Novartis
An international employee PM system is a designed, implemented, and evaluated intervention of an MNE for the purpose of managing the performance of its global workforce so that performance at all levels contributes to the attainment of strategic global objectives and results in overall MNE desired performance (GHRM Performance Management & Novartis Part II, PPT, Schuler, 2013). In 1998, Novartis established a performance management system that evaluated employees and matched their compensation to both business results and certain values and behaviors (Jordan Siegel, 2008). Before 2002, most divisions at Novartis used …show more content…

Novartis adopted a compensation system that mixed market-level base pay with incentive pay which is highly related to the performance of employees. This system is aligned with company’s business performance objectives that are key to its sustained success while being transparent, coherent and consistent with its pay-for-performance principle (Novartis Annual Report 2012). The annual incentive payout given around March of each year was decided by multiplying the employee’s incentive target by his performance rating by the company payout factor for business performance (Jordan Siegel, 2008). That means the performance assessment had a large impact on the employee’s compensation and rewards. As a result, this performance management system and pay-for-performance principle have spurred a culture of meritocracy at Novartis, in which employees are constantly motivated to work hard for gaining more in compensation and rewards. (Novartis Annual Report 2012) 6. The OTR at Novartis
The Organization and Talent Review (OTR) is another critical component of the PM system at Novartis. It helps maximize the company’s associates’ potential and fuel the company’s business. Each year, a group of front-line managers and high-potential individual contributors are chosen to be assigned potential rating and discuss both the talent rating as well as each person’s interim progress toward his annual plan (Jordan Siegel, 2008).