Mobility Global Talent Management A Presentation to the

Mobility & Global Talent Management A Presentation to the Best Practice Institute April 9, 2013 Dr. Robert Hoffman, Global Head, Talent Acquisition & Development Novartis Vaccines & Diagnostics

One of the challenges of developing global talent. . VS The Rock of Gibraltar • Never moves • Steady & solid • Will erode over time 2 Iceberg • Moves all the time • Changes & evolves • Deal with them carefully

Today’s Discussion § Background: Novartis § Mobility and It’s Impact on Talent Management • Personal-level issues & concerns • Position-level requirements • Organizational-level issues § Some Solutions § Results 3

Novartis is a world-leading healthcare company § Leading market position § One of 35 largest companies by market capitalization § Among most respected companies globally Sales by region – 2012 Key figures 2012 Net sales: Canada/ Latin America 9% USD billion 56. 7 Net income: 9. 6 R&D investment: 9. 1 Europe Asia/Africa/ Australasia 23% 33% US 4 35%

We believe our portfolio best meets the varied and often complex needs of patients and societies Environment Patient needs Novartis portfolio Pharmaceuticals Innovative medicines Alcon (Eye care) Eye care Prevention Affordable options Full range of healthcare options Sandoz (Generics) Consumer Health (OTC and Animal Health) Self care Vaccines and Diagnostics 5

Our broad portfolio spans high-growth segments of healthcare 2012 net sales by segment Innovative patent-protected medicines Alcon Global leader in eye care with surgical, ophthalmology and vision care V&D Consumer Health 7% Sandoz Pharmaceuticals 3% 15% 57% Sandoz Affordable, high-quality generic medicines and biosimilars 18% Alcon Pharmaceuticals Strong, trustworthy brands for knowledgeable Consumer Health consumers: OTC (Over-the. Counter), Animal Health Vaccines and Diagnostics 6 Vaccines and diagnostic tools to protect against lifethreatening diseases

Fortune – World’s Most Admired Companies 2013 Novartis is #1 in the healthcare sector for the third year straight Most admired pharmaceutical companies 2013 2012 2011 1 Novartis 6. 43 2 4 2 Merck 6. 41 3 2 4 Abbott 4 5 3 J&J 5 6 7 Roche 6 7 6 GSK 7 8 5 Amgen 6. 27 6. 21 6. 14 6. 00 5. 94 Methodology: As per evaluation of more than 60 senior pharmaceutical industry executives and financial analysts on a scale from 0 (poor) to 10 (excellent) on nine criteria (community/environment, financial soundness, globalness, long-term investment, innovation, management quality, people management, products/service quality and use of assets). 7

Mobility: A Personal Concern That Induces Stress “The Four F Club” § Family • “Will my spouse be happy”? • “Will my children be happy”? § Focus • “Am I clear about my long-term career aspirations”? • “When, where, and how will I reenter my home country”? § Finances • “Will we be financially better-off”? § Fear • Do I have the resilience to absorb this change • ‘The certainty of misery is better than the misery of uncertainty’! 8

We use an organizational system (Talent Management System) to track individual mobility

Position requirements and the interface w/mobility The case of the Novartis Country General Manager Nomination requirements - endorsed by Executive Leadership Committees as minimum standards Experience Nominee Name Leadership Sponsor Name 2 years budget responsibility 2 years customer facing experience (MA, KAM, Sales) 2 years direct people responsibility: manager of managers (GJFA levels 1 -3) 1 Product launch experience (pre/at/post launch) 2 Multiple functions experience 3 International exposure (excl. home) Performance & Mobility Strong performance over past 3 -5 years (2. 2, 2. 3, 3. 2, 3. 3) Current High Potential or Promotable Mobility (Global, regional, limited, no) Fluent English (oral, written, comprehension) Initial nomination decision (Y/N) 5 1 Product Launch Responsible for a brand/product 6 -8 months prior to go-to-market date during regulatory authorization process, pricing and reimbursement negotiations and continuing in a position up to 6 -9 months after go-to-market date 2 Multiple Functions Direct (worked in) or indirect (managed) experience in more than one organizational function, e. g. Sales (Specialty, Primary), Marketing, Market Access, Finance, Medical, Public Affairs, etc. 3 International exposure Lived and worked in another country

Requirement based on rigorous analysis of the GM role Multi-country experience seen as a differentiating development experience 11

Other companies have learned the hard way Where intercultural sensitivity would have helped 12

At the organizational level, mobility is a key factor in our Organizational Talent Review (OTR) process § Overall talent strategy § Succession planning § International Assignments (IA’s) § Career development § Assessment of future leadership potential § Early talent development § Retention risk assessments 13

We use a simple talent strategy for critical positions to determine the best way forward Buy • Acquire new talent by recruiting individuals from outside or from other departments or divisions within the organization Build • Develop talent through training, education, formal job training, job rotation, special assignments, and action learning Borrow • Partner with consultants, vendors, customers, and suppliers outside the organization in arrangements that transfer skill and knowledge Bind • Retain employees with high growth potential and valued talent Bounce • Remove low-performing or underperforming individuals 14

International Assignments (IA’s) are one of the best – and most expensive – development tools § According to the Harvard Business Review, companies that manage their expatriates successfully follow 3 practices that make the assignments work from beginning to end; they: • focus on creating knowledge and developing global leadership skills • make sure that the candidates have cross-cultural skills to match their technical abilities • prepare people to make the transition back to their home offices” (Harvard Business Review) § Average cost: 800 k (est. ) 15

International Long-Term Assignment Initiation/Extension Request Name: Position: Criteria Additional Comments Rationale for new assignment What is the benefit to the candidate? What is the benefit to the Company? Other candidates / scenarios considered Include information regarding local talent pool and whether a local offer may or may not have been considered as alternative to the assignment. Performance and Potential Ratings Performance Potential LA 20 xx Succession/development plan (including actions to date or in process related to securing targeted next position) Particularly in extension request situations, it is very important to include the current actions being taken to manage the associate through the assignment end date, and who is involved in supporting those activities (i. e. home or host HR or managers). Identified positions in succession charts / OTR discussions Please provide specific recent information and indicate positions in the RN, 1 -2 and 3 -5 categories where this associate has been identified. Cost projection Focus should be on incremental assignment cost, as this is more representative of the cost to the organization. If IA is based on regional or policy or has reduced allowance levels, please indicate here as well.

Some tools, programs, and processes we’ve tried or implemented to account for mobility concerns or mitigate mobility limitations Career Development Month Commuter Models A series of local and global events to advertise, communicate, and highlight career development tools and options Within or between-country commuting vs. full family relocation; “live one place, work in another” Early Talent Development Programs Development programs that nurture “early-in-their-career” individuals and capitalize on their potential mobility IA Governance Process A process map laying out the overall approach including roles and responsibilities of stakeholders Talent Exchange Programs Between-division talent discussions between HR leaders and/or functional leaders to exchange local talent Virtual/Open Networking Tool On-line tool to stimulate coaching and mentoring opportunities for people across the globe 17

Some tools, programs, and processes we’ve tried or implemented to account for mobility concerns or mitigate mobility limitations Career Development Month Significant increase in the number of career development discussions with managers and improvement in accuracy of TMS profiles Commuter Models More people taking advantage of new roles; decreased cost (approx. 20% reduction vs. full relocation) Early Talent Development Programs Increased retention of early talent; capitalize on “mobility window” for early talent (e. g. fewer family concerns/needs); expansion of program(s) IA Governance Process Improved usage of IA for appropriate development rationale; cost savings; improved accountability for process Talent Exchange Programs Increased movement of talent across divisions, opening up new possibilities for people with restricted mobility Virtual/Open Networking Tool Within one unit of approx. 5, 000 employees, over 700 enrolled participants in less than one month and over 1, 200 in less than 6 months 18

. . . and, most importantly, a significant improvement in selected* retention rates! Objective Target 2010/2011/2012 Turnover in Critical Positions* (Voluntary) < 7. 5% 11% 0% Retention of High Potentials in Critical Positions* >95% (<5% Turnover) 33% 0% Retention of Hi – Performers in Critical Positions* >93% (<7%Turnover) 18% 0% * Analysis of Critical Commercial positions, 2012 OTR process 19

And, so, Dorothy was right. . . . wherever that might be! 20