Chairman’s Letter
Employees
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Management Report
Employees
On December 31, 2006 the Bayer Group had 106,000 employees worldwide, compared to 82,600 on the same date in 2005. This increase is due largely to the inclusion of the employees of Schering. The 9,700 employees in discontinued operations are not included in the overall number.
Since the second quarter of 2006, the number of employees has been converted to full-time equivalents, which means part-time employees are included in proportion to their contractual working hours. We believe this presentation improves the comparability of personnel expenses and employee numbers. The previous year’s data have been restated accordingly. A breakdown of employees by segment and region is provided in the segment table in Note [1] to the consolidated financial statements. Personnel expenses increased by 24.7 percent in 2006 to €6,630 million. This figure includes Schering employees from the effective date of the Schering acquisition.
Our employees are our most important capital. Bayer’s human resources policy is centered around fostering their individual potential through continuing education and programs to help employees reconcile career and private goals. Our ambitious efforts in these areas make us a very attractive employer worldwide, as also demonstrated by various honors presented to Bayer in 2006 in Germany and around the world.
In October 2006 the Bayer European Forum formulated a joint declaration confirming the high importance of a diverse employee structure for our company. For many years, social dialogue between the employer’s and the employees’ representatives at Bayer’s European companies has been a central element of the cross-border exchange of information and opinions.
It has been a long-standing priority at Bayer to give young people a career start, and we once again intensified our traditionally strong efforts in vocational training. We established 30 additional vocational training positions as a contribution to the pact formed between the German government and industry to promote occupational training and the development of young managerial staff. Overall more than 1,000 young people entered an occupational training program at Bayer in 2006. Also, for many years, we have maintained a special program to prepare socially and educationally disadvantaged young people for vocational training courses.
At our many sites around the world, we uphold an ongoing commitment to vocational training and continuing education for our employees. In 2006, for example, we invested a total of approximately €4.5 million in continuing education measures for our employees in Latin America, with Brazil alone accounting for about €1.7 million of this figure.
In connection with the more competitive alignment of our administrative functions, we began reorganizing our human resources (HR) activities in October 2006. A clear distribution of tasks strengthens the focus on value-creating processes, reduces complexity and significantly improves support to our employees at all levels. In the individual Bayer Group companies, HR Business Partners advise management on strategic personnel issues and HR Experts develop human resources strategies and instruments for Group-wide application. The HR Shared Service Center Europe in Leverkusen offers rapid and competent assistance to all employees on a wide range of personnel issues. Other human resources processes of the Bayer Group in Europe are to be transferred successively to the Shared Service Center through the end of 2008. The company plans to establish additional shared service centers in North and South America in 2007 and later on in Asia.
We have further modernized our policy on health protection at the workplace by developing a comprehensive declaration on non-smoker protection, thus taking a firm stance on this issue. Our company health management plan includes both counseling and courses to help employees stop smoking.
Variable income component systems based on corporate performance have traditionally been a core element of our employee remuneration policy. For example, short-term incentive payments in a record amount of approximately €59 million were made to the some 18,400 active non-managerial employees of the subgroups, services companies and Corporate Center in Germany in 2006. Through the introduction of a Group component based on the EBITDA margin, the company’s success will be even more clearly reflected in the future in calculating short-term incentive payments.
In many countries we have offered various stock participation programs for a number of years that enable our employees to purchase Bayer shares at more favorable rates, thus making an important contribution to asset formation. Due partly to its high earnings goals, stockholder friendliness and transparency, the “Aspire” program we introduced in 2005 for the executive management level was honored just one year later by the asset management specialist Union Investment as the best program offered by the 30 German DAX companies.
Since the second quarter of 2006, the number of employees has been converted to full-time equivalents, which means part-time employees are included in proportion to their contractual working hours. We believe this presentation improves the comparability of personnel expenses and employee numbers. The previous year’s data have been restated accordingly. A breakdown of employees by segment and region is provided in the segment table in Note [1] to the consolidated financial statements. Personnel expenses increased by 24.7 percent in 2006 to €6,630 million. This figure includes Schering employees from the effective date of the Schering acquisition.
Our employees are our most important capital. Bayer’s human resources policy is centered around fostering their individual potential through continuing education and programs to help employees reconcile career and private goals. Our ambitious efforts in these areas make us a very attractive employer worldwide, as also demonstrated by various honors presented to Bayer in 2006 in Germany and around the world.
In October 2006 the Bayer European Forum formulated a joint declaration confirming the high importance of a diverse employee structure for our company. For many years, social dialogue between the employer’s and the employees’ representatives at Bayer’s European companies has been a central element of the cross-border exchange of information and opinions.
It has been a long-standing priority at Bayer to give young people a career start, and we once again intensified our traditionally strong efforts in vocational training. We established 30 additional vocational training positions as a contribution to the pact formed between the German government and industry to promote occupational training and the development of young managerial staff. Overall more than 1,000 young people entered an occupational training program at Bayer in 2006. Also, for many years, we have maintained a special program to prepare socially and educationally disadvantaged young people for vocational training courses.
At our many sites around the world, we uphold an ongoing commitment to vocational training and continuing education for our employees. In 2006, for example, we invested a total of approximately €4.5 million in continuing education measures for our employees in Latin America, with Brazil alone accounting for about €1.7 million of this figure.
In connection with the more competitive alignment of our administrative functions, we began reorganizing our human resources (HR) activities in October 2006. A clear distribution of tasks strengthens the focus on value-creating processes, reduces complexity and significantly improves support to our employees at all levels. In the individual Bayer Group companies, HR Business Partners advise management on strategic personnel issues and HR Experts develop human resources strategies and instruments for Group-wide application. The HR Shared Service Center Europe in Leverkusen offers rapid and competent assistance to all employees on a wide range of personnel issues. Other human resources processes of the Bayer Group in Europe are to be transferred successively to the Shared Service Center through the end of 2008. The company plans to establish additional shared service centers in North and South America in 2007 and later on in Asia.
We have further modernized our policy on health protection at the workplace by developing a comprehensive declaration on non-smoker protection, thus taking a firm stance on this issue. Our company health management plan includes both counseling and courses to help employees stop smoking.
Variable income component systems based on corporate performance have traditionally been a core element of our employee remuneration policy. For example, short-term incentive payments in a record amount of approximately €59 million were made to the some 18,400 active non-managerial employees of the subgroups, services companies and Corporate Center in Germany in 2006. Through the introduction of a Group component based on the EBITDA margin, the company’s success will be even more clearly reflected in the future in calculating short-term incentive payments.
In many countries we have offered various stock participation programs for a number of years that enable our employees to purchase Bayer shares at more favorable rates, thus making an important contribution to asset formation. Due partly to its high earnings goals, stockholder friendliness and transparency, the “Aspire” program we introduced in 2005 for the executive management level was honored just one year later by the asset management specialist Union Investment as the best program offered by the 30 German DAX companies.
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