“
I always tell the next generation members, you are caretakers, you are trustees and nothing else
several international subsidiaries in Asia and North and South America. Its sales revenues grew from €160 million to €4 billion. Hans Joachim convinced the family members to change the way Merck ownership was organised and got its stock listed on the Frankfurt Stock Exchange in 1995. In 2000, the 11th generation member, Dr Frank
Stangenberg-Haverkamp and his cousin Jon took charge of leadership at Merck. Together with the members of the management board, they developed a grand strategic vision for Merck. As a result, Merck improved its strategic focus, identified key product and service areas to strengthen, and made several large acquisitions that expanded its business in scale and scope. Business operations were grouped under three divisions—healthcare, life science, and performance materials. Some of the non-core businesses like, generics and over the counter drugs were sold-off as part of the restructuring exercise. By the end of the financial year of 2017, Merck registered
sales of €15.3 billion, up 2% on the previous year, despite currency headwinds. Profit rose in 2017 by nearly 60% to a record level of €2.6 billion, boosted by its successful operating business and US tax reform. The company was focused on cutting-edge research and innovation and was poised for robust growth in the future.
BONDING GENERATION TO GENERATION Over the centuries, strong family cohesion, mission and values guided and shaped Merck. Values of courage, achievement, respect, responsibility,
integrity, and transparency formed the core of all the activities and are practiced daily by family members. An important aspect of Merck is its strong family
Above, from top: After his scientific training, Heinrich Emanuel Merck took over the Engel- Apotheke in 1816;
Merck quality control laboratory, around 1900. Heinrich Emanuel Merck placed particular importance on the quality of the products. In a letter to a customer in 1851, he wrote: “I guarantee you consistent purity of my preparations and will compensate you for any loss
arising from an impure preparation.”
Opposite: Dr Frank Stangenberg- Haverkamp, 11th generation member of the Merck family
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togetherness. It has developed the ability to keep all the 258 family members bonded together. Merck family members spend quality time together in the board room and annual holidays. This means that while the family continue to have a keen oversight on the strategic direction of the business, the familial bonds of togetherness are renewed and strengthened regularly. A core theme that ran across generations of the Merck
family is their detachment to and caution against material wealth. Members viewed their work as a service to mankind and themselves as the custodians of business and wealth. In an interview with the authors, Stangenberg- Haverkamp says: “I always tell the next generation members, you are caretakers, you are trustees and nothing else. More than 50,000 people work for the company every day and their families depend on it. All you have to do is make sure that this heritage is passed on in one piece to the next generation”. Merck family and business strategy is strongly based on values. Their ancestor Heinrich Emanuel Merck
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advocated the philosophy of ‘business first’ and intended family members to remain invested in the business and to live on their own incomes without dependence on dividends. Strong governance
structures and mechanisms at Merck, such as the family shareholder’s council or the board of partners and the rules that governed those, ensure that family members conduct themselves in accordance with the mutually agreed norms and practices and work together to achieve the common objectives. Another key feature on
the family side of the Merck story is the continued involvement of family members belonging to several generations. For 12 generations, Merck has been able to successfully groom its next generation members to take on the mantle of business leadership following mechanisms that were rooted in a system that values merit and excellence. “We have at least one
meeting a year with the youngsters, two meetings of two different age groups and the AGMs—to educate them on business,” says Stangenberg-Haverkamp. The group also established
Merck University, which, in collaboration with other academic institutions, passes on the knowledge and skills required to build business leadership capability among next generation members of the family who are to take the Merck legacy forward.
ISSUE 74 | 2018
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