Novartis: A New “Rock Star” In Compliance And Ethics

Donna Boehme – Corporate Compliance Insights – November 19, 2018

My readers are familiar with my analysis of the many Compliance 1.0 train wrecks over the past decade, including #GM(delayed ignition switch recall and “69 Naughty Words”), #VW (emission cheating scandal) and Wells Fargo (fake accounts cross-selling scandal), but only rarely do I have occasion to comment on a company reaching ”rock star” status with its compliance and ethics approach. That’s because many companies are still in the building phase of their modern compliance revamps. The last one I recall was Walmart’s compliance overhaul led by Jay Jorgensen, which I called at that time a “big nail in the coffin of Compliance 1.0.

So, I was thrilled to see recently the leadership of pharma-giant Novartis in its serious embrace of Compliance 2.0 – first, with its 2014 appointment of an independent and empowered chief compliance and ethics officer with true compliance subject matter expertise (via Siemens) reporting directly to the CEO and then, most recently this year, its expansion of that role to include all management risk functions and giving it a “seat at the table” on its executive management team. And now we learn that the company has established a new bonus system that links bonuses to ethical behavior, where any employee not meeting expectations on a three-tier rating system is deemed ineligible for bonus compensation. All compliance professionals should cheer this development, since this represents the holy grail that most CCOs and compliance programs have yet to find. This is the “incentives” feature long championed by compliance thought leader Joe Murphy, as set out in his 2011 SCCE white paper on the topic.

Without a doubt, Novartis has elevated its approach to compliance, culture and trust to rock star status since 2014! By elevating its chief compliance officer to a CEO direct report and giving the CCO a seat on the Executive Committee, the company made a clear statement of serious management support to an independent, empowered compliance program that meets the highest standards in the modern field. Similarly, tying bonus compensation to an ethics metric is a world-class step that deserves applause from the governance profession. The compliance profession has long championed this type of incentive link as the ultimate step that most encourages role-modeling of ethical leadership and trust and a culture of ethical leadership, trust and accountability.

The profession eagerly awaits more of the gold standard to be set by Novartis and its true compliance SME and CCO, because, with the right compliance SME positioned in a structure built to succeed (Compliance 2.0), the sky’s the limit!!

Originally published Nov 19, 2018 on Corporate Compliance Insights, reprinted by permission.

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