novartis headquarters in basel, switzerland

Pharma Giant Graduates to Compliance 2.0

Donna Boehme, the “Lion of Compliance,” comments on Novartis as a new “rock star” on the corporate compliance landscape, observing that the company has elevated its approach to compliance, culture and trust to best practice “Compliance 2.0” status – first, with its 2014 appointment of an independent and empowered CECO with true compliance SME (earned in the field) and now, with the elevation of the role to include all management risk functions and with a seat on the executive management team. She also notes as best practice the company’s establishment of a new bonus system that links bonuses to ethical leadership behavior, a feature many leading companies have yet to achieve.

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!!

Donna Boehme

Donna Boehme is an internationally recognized authority in the field of compliance and ethics, designing and managing compliance and ethics solutions for a wide spectrum of organizations. Founder and Principal of Compliance Strategists, a N.J.-based consulting firm, Boehme is the former chief compliance and ethics officer for two leading multinationals. She is a frequent speaker to business and professional groups, including as keynote speaker to Compliance Week Europe (Brussels), Ethics Practitioners Association of Canada (Ottawa), Society of Corporate Compliance and Ethics (SCCE), International Financial Executives Leadership Forum (Montreal) and Network for Good Business Ethics and Non-Financial Reporting (Copenhagen). She has been invited to speak twice on international corporate compliance and ethics topics at the U.K. House of Lords.

Boehme is also co-chair and co-founder of the RAND Compliance and Ethics Symposia series, an important vehicle of thought leadership for the profession. She has been named to The Top 100 Thought Leaders in Trustworthy Business for the past five years by Trust Across America, was named a Trust Across America 2018 Lifetime Achievement Honoree, is a recipient of the 2014 SCCE International Compliance and Ethics 10th Anniversary Award as the “Lion of Compliance” for extraordinary contributions to the field, was named as Who Compliance Professionals Should Follow on Twitter in 2013 by ComplianceX and has been shortlisted for the 2019 Women in Compliance Lifetime Achievement Award. Donna Boehme can be reached at [email protected]

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