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Metrics and Balanced Scorecards at Bristol-Myers Squibb

Peter M. Fasolo, Ph.D.

October, 2003

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Content

Company Introduction

Metrics at BMS

Examples

Employee Preference Survey

Retention Scorecard

Americas Region Scorecard

Executive Committee Scorecard

What’s Next

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Bristol-Myers Squibb’s Mission

Our company’s mission is to extend and

enhance human life by providing the highest-

quality pharmaceutical and related health care

products.

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% of 2001% of 2001Global Sales*Global Sales*

Worldwide MedicinesWorldwide MedicinesPrescription PharmaceuticalsPrescription Pharmaceuticals

Consumer MedicinesConsumer Medicines

Healthcare ProductsHealthcare ProductsMead Johnson Nutritionals Mead Johnson Nutritionals

ConvaTecConvaTec

(ostomy & modern wound care)(ostomy & modern wound care)

Medical Imaging*Medical Imaging*

44%%1010%%

8686%%

…………....…...…………......…...………….....……......……...

.....….….......….…..

* Excludes DuPont Pharma sales* Excludes DuPont Pharma sales

Our Businesses

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%% of 2001 Global Sales of 2001 Global Sales

Sales by Geographic Area

United States

68%

Europe,Europe,Mid-EastMid-East& Africa& Africa

19%19%

Other Western Other Western HemisphereHemisphere

6%6%

PacificPacific

7%7%

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Bristol-Myers Squibb Organizational Context

New Chairman and CEO with Bold Transformation Plan Focus on Core Rx Business Rebuild Executive Team Divest and Spin-off Businesses Focus on Core Acquisitions, In-Licensing and Partnerships

Recent Product Launches Abilify Reyataz Pravigard

Promising Late-Stage Pipeline Erbitux Entecavir Factor XA Dual PPAR CTLA4Ig

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BMS Employer of Choice

Why Bristol-Myers Squibb? - External Confirmations

Money Magazine No. 3 in Best Company Benefits Survey 2001

One Of The Top 10 Best Companies for Working Mothers

Top 500 Companies in Using Technology

America’s Most Admired Pharmaceutical Company-2001

http://www.bms.com/aboutbms/awards/data/index.htmlAnd More >>

Hope, Triumph, and the Miracle of Medicine

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Relentless Focus on Performance at Bristol-Myers Squibb

A Balanced Scorecard Strategy Supports the

Enterprise Direction of Objective Performance

Assessment, Alignment and Personal

Accountability

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Phases of Metrics Development

Descriptive

Prescriptive

Diagnostic/Strategic/Consultative

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Metrics Journey

2000 2001 2002 2003

Diagnostic/

Strategic/

Consultative

Prescriptive

Descriptive

EPS I

TurnoverAnalysis

AmericasRegion

Scorecard

RetentionScorecard

Exit Survey

HR MetricsLaboratory

ExecutiveCommitteeScorecard

Metrics/SurveyCOE

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Example 1: Employee Preference Survey

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. . . the following US employees voluntarily departed Worldwide Medicines

Based on Employment Data from 2001

1 of 10 Worldwide Medicines Employees (10%)

1 of 6 US Medicines Employees* (16%)

1 of 6 US Sales Employees (16%)

1 of 4 US Marketing Employees (24%)

*HQ, SP&A, Global Marketing, PC, BMSOV

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Worldwide Medicines US Turnover - 2001(including Puerto Rico)

Population on 1/1/2001: 15,176 Terminations: 2,624 = 17% Voluntary: 1,484 = 10% of total

population

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Worldwide Medicines Direct Costs Associated with 2000 Staffing

Advertising $ 85,000

Sign on Bonuses 3,272,000

Full Year Bonus Guarantees 400,000

Referral Bonuses 20,000

Relocation 35,204,000

Agency Fees (6 mos. actual 2001) 2,461,000

Training 9,000,000

$ 50,442,000

(US 17,800,000)

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Key Data Points - ExamplesValue Skyline

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Key Data Points - ExamplesEmployee Retention Index

Index Value ERI Level1 No intention to leave

0.67 Strong intention to stay0.33 Moderate intention to stay

0 Neutral-0.33 Moderate intention to leave-0.67 Strong intention to leave

-1 Intention to leave, job search underway

0.45

0.31

0.48

0.48

0.44

0.46

0.48

0.42

0.47

HIPOs

Marketing

Sales

Professionals

Managers

Males

Females

Benchmark

Overall

0.33 0.67 1.000.00ERI Index Values

In August 2001, survey scores of individuals who voluntarily terminated were compared with employees who remained with the Company.An analysis of ERI scores revealed its predictiveness. Employees with lower ERI scores actually left the company at a much greater rate.

Termination Analysis:

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Example 2: Retention Scorecard

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Retention ScorecardGoals and Objectives

Significantly reduce voluntary turnover across the

organization

Focus managers on the primary means of retaining talent

Put emphasis on reasonable actions managers can take to

broaden the talent mix

Communicate and emphasize organizational priorities

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Retention ScorecardField Study Design

Scorecard and Monetary Reward*

Scorecard Only Control Group

* $5000 upside kicker

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Retention ScorecardRetention Scorecard

Development Yes No Weighting

Standards & Expectations set and reviewed throughout the year

Development Plans established and reviewed throughout the year

Career Dialogue conducted (career direction and work-life balance)

Annual Development Summary completed

Management Capability Yes NoPercent of

Reward

Team meetings/teleconferences, at least monthly

One-on-One feedback and coaching, in addition to LD process

Retention** Yes NoPercent of

Reward

100%*

* 100% of talent management reward = $5,000** Managers required to enter names in at least one of the Retention Measures*** If no high performing employees are identified, it is expected that the

Excellence Award budget for this manager is $0

Complete all aspects of the Leadership Development process for all direct reports:

Maintain overall quality score of 4.0 or higher on career and personal development discussions, as assessed by your direct reports

All direct reports understand how skill sets and career goals are aligned with job responsibilities, e.g., Position Profiles

100% completion required for

participation in Scorecard

30%

Ensure a diverse slate of candidates for each position filled during the year

Turn or manage out 100% of identified low performing employees

Direct Reports have a clear understanding of their role, role objectives and fit with the department/district/region's objectives, as assessed by employees 30%

Direct reports understand the department/district/region objectives and how they align with business unit objectives, as assessed by employees

Conduct regular communication and coaching sessions with direct reports:

Lose no more than one of your highest performing employee, as identified in January***

40%

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Retention Scorecard Results

No difference between monetary and “scorecard

only” group

Both groups were significantly better at

development, management capability and retention

than control group

What you measure matters

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Example 3: Americas Region Scorecard

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AMERICAS SCORECARD (SAMPLE DATA) August 2003

Goal Perf Annual Goal

YTD

Goal

YTD

Actual

Perf vs

YTD Goal

Mission 75% 80% Sales 35,000$ 26,000$ 23,000 88.5%Pledge 65% 60% BUC 16,000$ 9,754$ 10,212 104.7%

Pride 80% 85%All dollar values reported in millions

Annual

Goal

YTD

Goal

YTD

Actual

Perf vs

YTD Goal Exit Share

YTD

Goal

YTD

Actual % Attn

Reported Sales U.S. Market Share

Pravachol 1,546$ 1,203$ 1,324$ 110.1% Pravachol 56.2 44.6 44.5 99.8%Plav ix 2,545 2,124 2,012 94.7% Plav ix 67.1 70.1 71.2 101.6%

Glucovance 454 367 365 99.5% Glucovance 12.1 15.7 16.2 103.2%Glucophage XR 656 578 600 103.8% Glucophage XR 4.6 4.6 4.3 93.5%

Tequin 242 168 157 93.5% Tequin 3.7 3.9 2.5 64.1%Avapro/ Avalide 454 375 375 100.0% Avapro/ Avalide 21.6 19.5 14.8 75.9%

HIV 879 745 799 107.2% HIV 35.4 37.8 25.9 68.5%Paraplatin 578 457 465 101.8% Paraplatin 3.7 2.3 4.3 187.0%Cardiolite 574 487 467 95.9% Cardiolite 45.9 54.6 58.5 107.1%Excedrin 241 178 164 92.1% Excedrin 64.2 37.9 31.3 82.6%

Annual

Goal

YTD

Goal

YTD

Actual

Perf vs

YTD Goal Goal Perf

Product Net Sales One BMS Culture Index - Enterprise 65% 68%Abilify 356$ 256$ 260$ 101.6% One BMS Culture Index - Management 85% 73%

Metaglip 256 195 172 88.2% Belief in Pipeline 60% 62%Pravigard 87 64 70 109.4% Belief in Future 90% 85%

Atazanav ir 87 62 36 58.1% Energize 95% 92%Definity 21 11 9 80.6% Focus 45% 45%

Excedrin Quick Tabs 18 12 13 111.8%

Goal Lost YTD Ann.YTD

Voluntary Turnover TOTAL 11% 496 5.0%Primary Care 13% 300 6.5% Development Goal Perf

BMSOV 9% 32 7.1% Employee Development Index 80% 86%Consumer 8% 12 11.2% Development Plan Rate (D6+) 95% 92%

Medical Imaging 7% 38 6.5%LA - C 4% 60 2.3%

Tech Ops 12% 54 10.0%

Key Talent Turnover TOTAL 5% 33 3.5%Primary Care 6.3% 23 5.1% Exit Data

BMSOV 4% 4 6.9% Top 3 reasons 1. Direct Manager Quality (43% )Consumer 3% 3 2.3% 2. Developmental Opportunity (21% )

Medical Imaging 5% 1 1.2% 3. Company Culture (19% )LA - C 4% 2 3.2%

Tech Ops 6% 0 0.0%

Strengthen Our Team & Develop Our People

Lead with a Compelling Vision by

Living our Mission and Pledge

Build Sustainable Long-Term Growth While

Achieving our 2003 Financial Objectives

Create a OneBMS CultureDeliver Pipeline Value

Drive Key Brand Growth

Americas Region Scorecard

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Example 4: Executive Committee (EC) Scorecard

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Purpose of the EC Scorecard

Track progress against company priorities

Assess employee perceptions of Bristol-Myers

Squibb

Guide action planning

Provide CEO and Board of Directors with year end

results

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BackgroundSurvey

50 questions assessing EC priorities & BMS as a best place to work 1 open-ended item: “What is working well at BMS?”

Survey administered April 7 to April 21, 2003

Stratified random sample of 5400 worldwide employees (D6+ internationally, excluding hourly employees in manufacturing)

64.4% response rate (n = 3464)

Salary Grade DistributionKey Executive: 128Key Manager: 1437 Professional: 1516Non-Exempt: 383

Gender47.1% Male51.2% Female

48 countries represented

21 functions represented

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The Survey

EC LeadershipEC LeadershipPrioritiesPriorities

BMS as a BestBMS as a BestPlace to WorkPlace to Work

Criteria of InterestCriteria of Interest(i.e.Intent to Leave)(i.e.Intent to Leave)

Items Assess:Items Assess:

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Leaders Make the Difference

Nine out of the top ten factors which are correlated

with an employees intention to stay with the

company are strongly influenced by an employee’s

manager

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Leaders Make the Difference• I am confident I can achieve my career goals at BMS

58%

• I am treated in a fair and just manner 73%

• I am proud to tell others outside of BMS that I work here 73%

• My contributions to the company are recognized56%

• We have a culture that encourages high performance with

the highest integrity62%

• It is clear what is expected of me at work83%

• I work in an environment where people support each other74%

• The leaders in my organization listen openly to all points of view 57%

• The better my performance, the more I will be rewarded 47%

• I am compensated fairly56%

All Employees % Favorable

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Process and Next Steps

Results presented to Chairman and CEO

Workshop for EC and Top 35 Executives of the

Company

Action Planning and Employee Communication

Underway

Change in Scores Tied to Variable Pay

Next administration in September/October 2003

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What’s Next?

Expanded Online Exit Survey

HR Measurement Laboratory

Follow-on Executive Committee Scorecard in

September/October

Metrics/Survey Center of Excellence for B-MS