Novo Nordisk Way of Mangement
The Novo Nordisk Way of Management forms the values-based governance framework for the company. From vision to policies, it describes how people at Novo Nordisk put values into action and defines the principles for how the company does business.
The Novo Nordisk Way of Management consists of three elements: the Vision, the Charter and global company policies.
The Vision sets out the direction for Novo Nordisk. It expresses what Novo Nordisk is striving for, how the company works and how it is guided by its values in its endeavours to find the right balance between commercial interests and acting as a responsible business.
The Charter describes the company’s values, commitments, fundamentals and follow-up methods. The values underpin the commitments to the Triple Bottom Line and sustainable development. The fundamentals are a set of 11 management principles to ensure focus on business objectives, customers, compliance, collaboration and sharing of better practices, and quality mindset. And the follow-up methods provide ongoing systematic and validated documentation of performance in all material areas of Novo Nordisk.
The global company policies set global standards and give operational guidelines in 13 specific areas: bioethics, business ethics, communication, environment, finance, global health, health and safety, information technology, legal, people, purchasing, quality and risk management.
The follow-up methodology has four key components which provide assurance to stakeholders of the quality of the company’s processes and performance.
- Financial and non-financial audit is a systematic methodology to assess performance as accounted for in the annual reporting.
Furthermore, Novo Nordisk voluntarily includes independent assurance of the company’s non-financial reporting. - Facilitation is a specific follow-up method that is unique to companies in the Novo Group. It is used to provide systematic and validated documentation of the levels of compliance with the Novo Nordisk Way of Management. The global facilitator team consists of senior people with deep insight into the business and the business environment.
- Organisational development is assessed through an annual Organisational audit, commissioned by the Board of Directors and Executive Management. This process, conducted at senior management level, includes an assessment of ‘linking business and organisation’ as well as succession management.
- Quality audit monitors adherence to the quality requirements, including quality management systems. It aims to ensure continuous improvements and optimal use of internal standardisation. Quality audit supplements inspections by regulatory bodies.
Commitments: the Triple Bottom Line
Novo Nordisk is committed to sustainable development and balanced growth. The principles of sustainable development – to preserve the planet while improving the quality of life for its current and future inhabitants – resonate well with the philosophy upon which the company was founded and how it does business today: constantly striving to improve performance as measured by the Triple Bottom Line principle.
In Novo Nordisk’s Articles of Association it is stated as the objectives that the company ‘strives to conduct its activities in a financially, environmentally and socially responsible way’. This implies that any decision should always seek to balance three considerations: Is it economically viable? Is it socially responsible? And is it environmentally sound?
This is the Triple Bottom Line business principle, which ensures that decision-making balances financial growth with corporate responsibility, short-term gains with long-term profitability and shareholder return with other stakeholder interests.
The Triple Bottom Line is how Novo Nordisk has chosen to interpret its commitment to sustainable development. It is built into the corporate governance structures, management tools, individual performance assessments and reward schemes.
Economically viable means managing the business in a way that ensures corporate profitability and growth, and seeks to leave a positive economic footprint in the community. Environmentally sound decisions address the company’s impact on the external environment as well as the bioethical implications of its activities. Socially responsible implies caring for people. For Novo Nordisk, this applies to the people who rely on the company’s products and to employees. It also considers the impact of the business on society.
Setting long-term targets
Sustainability is a moving target. Understanding the dynamics of society and the business environment that can enhance or impede corporate growth helps identify risks and opportunities for the company as a commercial business and as a corporate citizen. Such insights are gained via trendspotting, scenario analyses and forecasting in a 10-year perspective as part of the Strategic Planning Process.
This translates into medium- and short-term priorities and targets for the company’s financial and non-financial performance. Novo Nordisk has adopted the Balanced Scorecard as the company-wide management tool for measuring progress. As part of the remuneration package, individuals are rewarded for performance that meets or exceeds the financial and non-financial targets in the Balanced Scorecard, which comprise corporate, unit-specific and individual targets. Progress is tracked against targets in the annual accounts. Financial performance is guided by a set of four long-term targets focusing on growth, profitability, financial return and cash generation. Non-financial performance is guided by measures for the company’s impacts on the Triple Bottom Line.
These include socio-economic impacts such as job creation, the ability to manage environmental impacts and optimise resource efficiency, and social impacts related to employees, patients and communities.
