This excerpt taken from the NVO 6-K filed Feb 6, 2006.
I know of a New York
restaurant that has outsourced its reservation service to a company in
India. Thats my favourite metaphor for globalisation. What theyve
done is to take advantage of the digital revolution to move one function
just the one function where it makes perfect business sense to
do so. The chef and waiters stay in New York. You dont have to disaggregrate
an entire business; but if you want to stay competitive, you have to look
at what elements can be done better in new ways. Thats how a company
can be responsible to shareholders, employees and society.
are evidently two sides to glob-alisation. Fundamentally it offers advantages.
In emerging economies, by and large Western companies are a force for
good. Paying a premium for talent sends a signal that education pays.
hope we have
and the solution to global inequity is moving these countries in
the right direction. Acquire technological skills, knowledge thats
how we can improve the world. The message to people should be: you can
plug into the global economy and prosper.
caveat is that there is going to be intense competitive pressure on the
workforce in the West. Thats the central dilemma. We owe it to Western
workers to enable them to move up the value chain. Those with easily reproducible
skills are most at risk. The real challenge is to make massive investments
in training and retraining. This requires governments and private organisations
to invest and work together not just take protective measures,
which is a short-term defense.
NOVO NORDISK APPROACH
For Niels-Erik Olsen,
shop steward for Novo Nordisks largest insulin production facility
in Kalundborg, Denmark, the companys strategy to expand its production
beyond its traditional production base in Denmark prompts anxiety among
some of his fellow workers concerned about their job security.
meetings held in 2005 between employees in Denmark and Lars Rebien Sørensen,
president and CEO of Novo Nordisk, globalisa-tion was a hot topic: employees
wanted to understand the rationale behind the decision to extend production
outside Denmark, and they wanted senior management to advocate wage tax
reductions in Denmark to lower living costs and the ensuing pressure to
retain a high wage level.
Rebien Sørensen recognises the dilemmas. Many rich countries
with high tax levels and living costs are concerned that glob-alisation
will mean jobs moving out. The reality is that in recent years we have
managed to create around 2,500 new jobs outside Denmark while at the same
time creating around 800 new jobs in Denmark. This has been possible because
we are competitive and constantly
Fareed Zakaria was invited
by Novo Nordisk to provide a perspective on the hot topic of globalisation
and to outline some of the issues currently under debate.
Dr Masae Minami has
type 1 diabetes and works as a diabetes
her own clinic in Fukuoka, Japan.
grow our business.
We have also been able to secure existing jobs through new skills development
and job transfers. The companys success is the best job guarantee
for anyone. But I can understand that for the individuals exposed to these
changes, it causes a lot of anxiety. Thats why we engage in a dialogue
with our people and offer competence upgrades. A Job Transfer Center
for production employees in Denmark gives employees from downsized Danish
production sites a chance to register their skills and preferences and
be referred to jobs and relevant training within Novo Nordisk. Since May
2004, 166 employees have received a new job at Novo Nordisk through the
centre. In another initiative, employee trade unions in Denmark and Novo
Nordisk management took part in the Future Work Life project to explore
conditions for and development opportunities in operations in Denmark
over the next 10 years.
appreciate the open dialogue; its important that we can talk about
these issues, says Niels-Erik Olsen.
Many faces to
There is another side
to the story: Novo Nordisks investments in new and growing markets,
often with struggling economies, are also seen as a boon. For example,
Athos Avelino, mayor of Montes Claros, Brazil, welcomed Novo Nordisks
decision to invest substantially in an additional insulin production facility
in his city. It meant jobs and a boost to the local economy.
investment brings more money to our community, not just the 600 permanent
jobs at the facility, but 2,500 construction jobs and
more service jobs
to satisfy the needs of the influx of people into the city, says
comes down to balanced growth. Novo Nordisk views globalisation as an
opportunity to retain its competitive edge as a focused pharmaceutical
company through market expansion, global sourcing and building a diverse
workforce. But these are transitions that must be handled responsibly.
Novo Nordisk recognises its role in supporting balanced economic growth
and assumes a particular responsibility wherever the company has a local
presence. Global outreach and a strong international mindset are required
in a globalised economy, as well as consistent values, global standards
of business conduct and a readiness to deal with the concerns of those
affected by the impact of globalisation.
access to talent
Globalisation is not
only about moving work-places to locations with lower costs and taxation
levels. It is also about getting access to international talent and investments.
todays business environment, it is critical that we can attract
the best people, says Kåre Schultz, chief operating officer
for Novo Nordisk. Among other things, this means having a presence
where we have the best conditions for attracting top talent.
That was one of the reasons why the NovoSeven®
marketing function was moved from Denmark to Zurich, Switzerland,
in 2005. This decision offers a number of advantages seen from an
operational and organisational perspective, says Kåre Schultz.
The international environment, access to highly qualified people
with pharmaceutical experience, and
the proximity to two
of our regional headquarters make Zurich an attractive location.
Wider reach, deeper
With its global expansion
Novo Nordisk achieves significant business benefits and helps build healthier
societies through the provision of its core products and services.
addition, the company seeks to measure its economic footprint and its
contributions to social benefits and economic growth by providing increased
employment, skills development, technology transfer and investments.
the same time, establishing business and operations across diverse cultural
and political boundaries exposes the company to a host of ethical challenges
around issues such as labour rights, human rights and bribery and corruption.
This makes it more essential than ever to ensure that business is conducted
in accordance with the principles and values laid out in the Novo Nordisk
Way of Management and the Triple Bottom Line approach.
be better prepared to take on these challenges, in 2005, Novo Nordisk
formulated a business ethics policy (see pp 3637) setting global
standards for ethical business conduct. Several support functions launched
programmes in response to strategic responsibility challenges. Examples
are the People Strategy with its focus on mobility and leadership development
(see pp 2829), and the corporate brand promise changing diabetes
that builds on the companys core value propositions.
more about Novo Nordisks initiatives in
response to globalisation at novonordisk.com/
annual-report Click: How we work