Mastering Workforce Dynamics: Merck KGaA Germany’s Cutting-Edge Approach

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The Evolutionary Path to Skills Management 

Merck KGaA Germany's initial launch into strategic workforce planning involved traditional headcount planning, but as Saussinan candidly admitted, "that didn't get us very far." Recognizing the importance of skills, the company shifted focus to combine workforce capacity, skills, and cost planning.

Today, Merck KGaA Germany has elevated its thinking to embrace multiple business and workforce scenario planning, leveraging AI and simulations to align strategic workforce planning with business strategies, financial planning, and risk management. Using this approach, the company focuses on "must-win" priorities for strategic impact. 

Let’s take a look at how AI makes this possible. 

Leveraging AI and Data for Multiple Scenario Planning 

Dedicated to finding solutions that allowed for more strategic workforce planning, Merck KGaA Germany made a decision to migrate all skills-based capabilities to Phenom to ensure consistency across the organization’s value chain. 

This harmonization allows for a single source of truth when reviewing data, enhancing transparency and reliability. The integration of AI and data throughout the process aids in running multiple scenario planning effectively. But where do you start? 

“The best starting point is assuming that if we do nothing or the same as before, then what happens?” stated Saussinan. Assessing the potential future of status-quo or if no action is taken creates a tangible foundation for decision-making when assessing the viability of a generated scenario. 

Merck KGaA Germany specifically runs strategic workforce planning scenarios in an integrated way via both shorter-term planning and mid-term planning. This pronged approach allows for a more holistic view of strategic workforce planning, but it doesn’t stop there. For actionable planning, scenarios should be configured using:

• Fully-loaded personnel costs, including forecasted inflation by country and demand for key roles/skills 

• Skills to value mapping, including current and future critical or core skills

• Retirement, attraction, and efficiency forecasting, plus flight risk simulation for critical positions

“When you’re able to have strategic yet concrete discussions focused on business ROI and workforce opportunities, suddenly people are listening,” said Saussinan. “It’s a true game changer to be able to turn your strategic assumptions into concrete action, or at least no-regret moves, way faster than we used to.” 

Related: Watch our real-life use cases from Phenom Skills Day

Identifying Critical Role Gaps 

Merck KGaA Germany's approach involves diving deep into each scenario, analyzing roles and skills with precision. This is where Phenom AI and intelligent skills taxonomy development become vital tools to have in a workforce planning toolkit. 

“We believe that skills taxonomy is not the business we operate in…we choose to use Phenom to manage, maintain, and evolve the skills taxonomy and ontology in-line with the market evolution,” commented Saussinan. Phenom Skills Ontology serves as a robust database of skill-to-skill relationships, skill-to-role relationships, and role-to-role relationships that are then validated and tweaked to cater to each individual business. For Merck KGaA Germany, they adjusted the last “3-4% [of skills data] for niche or company-specific roles.” 

Related: Demystifying Skill Ontologies: Your Roadmap to Clarity

Leveraging Phenom AI to identify skills adjacencies allows their teams to “understand the distance between skills and how skills can be combined to create jobs…[this] is a critical component of our choice for a technology partner — which is not just to be able to put a list of skills [together] that we tap on, but to really treat this as a living organism that will continue to live as we go forward.”

The Importance of Investing in the Existing Workforce 

When following up on critical conversations surrounding where the business is headed, it’s important to recognize the value and potential that already exists within your workforce. 

“As a family business, massive hire-and-fire approach is not an option. To make the most of our existing workforce, it’s important to look at opportunities for upskilling and reskilling potential,” commented Saussinan.  

Through AI-driven tools within the Phenom platform, Merck KGaA Germany is able to view the creation, deployment, and potential outcomes of upskilling or reskilling initiatives to inform long-term employee development efforts over time. 

To do that effectively, HR teams need to sit down with business leaders to look at current roles and assess skill adjacencies. Teams should focus on answering questions like, what are the available career options, what are the steps each employee needs to take to evolve into their next role, and how long will that development take. 

All of these data-driven conversations help illuminate the best-case scenario for strategic workforce planning that can be transformed into an initiative that’s rolled out seamlessly across the organization. 

Since nothing is as certain as change, updating scenarios with additional context or new information regularly is critical. AI allows these updates to occur seamlessly across all data sets within the organization to update that single source of truth, ensuring everyone is working from the same data sets to support initiatives as they pivot in response to any market changes. 

By streamlining business goals and connecting employees with development plans that align with those goals, organizations create unique opportunities where both the business and the individual can flourish over time. 

Data Integration is Not a One Time Task

The life force that makes strategic workforce planning scenarios possible for a business of any size is real-time data. For Merck KGaA Germany, their journey started with integrating the information they had in SAP SuccessFactors, like organization names. That baseline data serves as a foundation for additional data entry. 

Once input into the system, core data gets augmented by the users themselves, Saussinan added. Any new information that’s added, whether the user wants to pull in skills from their LinkedIn profile or their CV — validated or invalidated — can occur at any time. These additional data entries are accounted for and applied to personalized career development resources, offering an up-to-date view for employees looking to take charge of their career journey. 

New data inputs also mean that the system is constantly evolving. “Today, the whole goal is to be as fluid as possible,” replied Saussinan, and having an AI-powered platform makes achieving that goal much easier. 

Ethics, Privacy, and AI

Embracing AI to achieve better business outcomes is a fantastic upside to the technology. But when it comes to ethical AI and privacy, “they are not just nice to have,” Saussinan pointed out. 

Merck KGaA Germany takes a team-oriented approach to building solid foundations for the ethical use of AI. HR works in alignment with relevant councils and data privacy offices on an ongoing basis to ensure AI is being applied appropriately and in a governed fashion. 

Through these efforts, Merck KGaA Germany created a data agreement that “sets the playing field for AI-related people use cases and the applications that we all agree to,” said Saussinan.  “That really helps us when it comes to scale.”

Key Takeaways

There are numerous positive ways the Phenom platform has impacted how Merck KGaA Germany leverages their skills data to make well-informed decisions that affect their workforce today and in the future. 

If you’re trying to evolve into a skills-forward organization, Saussinan offered the following parting advice: 

1. Create a minimum threshold of data that’s necessary to provide insight into strategic workforce planning. “We don’t include too much or too little information, but rather the ideal balance that allows us to effectively forecast,” he said.

2. Give employees the opportunity to privatize their data — but make sure they understand that choosing that route limits their ability to receive personalized recommendations surrounding their career development.

3. Leverage artificial intelligence as best as you can because elevating strategic workforce planning and holistic implications quickly is where HR can make a big impact on business evolution.

4. Stakeholder buy-in is essential. Having a strong level of advocation from leaders across the business for strategic workforce planning accelerates possibilities.

By embracing AI, multiple scenario planning, and a commitment to upskilling, Merck KGaA Germany has positioned itself as a forward-thinking, adaptive organization, ready to face the challenges of the future. 

As workforce dynamics continue to evolve, Saussinan’s takeaways provide a roadmap for businesses aiming to hack the complexities of strategic planning and skills management.

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