It was neither a new enzyme, nor was it a new source from which a better rennet could be extracted. This is of great interest because we would argue that this fundamental insight into processing that Christian Hansen later developed as a research assistant at the chemical laboratory at the Copenhagen University is one of our main arguments as to the status of Novo Nordisk as the leading manufacturer in the market for industrial enzymes. Today Chr. Hansen’s Laboratories is a world-wide company with a production subsidiary in Ireland and production plants located outside Copenhagen, in Milwaukee, in the Toronto area, in Adelaide, and in Milan. Moreover, the firm has established sales companies world-wide. Chr. Hansen’s Laboratories is still producing rennet, but has made a big expansion into the pharmaceutical business with strong biotechnological competencies focusing on the prevention of allergies. At almost the same time as Christian Hansen developed a new process to produce rennet, another major research institution, Carlsberg’s Laboratory, was founded. It is often said that you can’t manage what you can’t measure.
While this is not always true there are a number of advantages to measuring CSR. They include:
• Monitoring improvement over time and in comparison with others,
• Providing a good knowledge base for setting the stretch targets that eco-efficiency requires,
• Helping set priorities for action,
• Deciding between alternative courses of action,
• Providing information to external stakeholders.
However, measuring CSR is not easy. One difficulty reported by Novo Nordisk management is that CSR is often about getting more from less. Measures that only have an environmental parameter such as quantities of substances emitted and resources used are, while valuable for environmental management, not CSR measures because they cover only one side of the equation. Novo Nordisk management believes that true CSR measures have to show how more output is being obtained from a given resource input or environmental effect. While this is relatively straightforward for outputs expressed in physical units—as with miles per gallon or fuel consumption per ton of product as a measure of fuel efficiency—it is more problematic for economic outputs. Some companies and analysts relate resource utilization or emissions to turnover, for example. However, while this can be useful, there is a danger that the measures improve not because of real environmental action but because of other changes such as inflation of revenues through price increases, corporate reorganizations, or acquisitions (Reinemund, 1992).
Similar problems can occur with other output indicators, such as production, profitability, or value added. Whichever one is chosen needs to have a significant relationship with the environmental parameters. Novo Nordisk believes that decisions also have to be made about the boundaries of the measurement—is it the whole corporation, a division, a site, or a process within the site? There is also a danger that measuring CSR improvements in one environmental parameter can obscure deterioration in another. While this can be reduced by developing a wide range of individual measures covering all the main parameters, many non-specialists lack the time to absorb such detailed information and therefore seek a single CSR measure that relates an aggregate indicator of environmental impacts to output. However, this means comparing apples (e.g., the impact of a gaseous emission of sulfur dioxide) with pears (e.g., the environmental impact of producing a ton of copper)—a procedure for which there is no broadly accepted scientific methodology. A final difficulty is that, even if an individual organization can demonstrate that its activities and products are becoming more eco-efficient, for instance, this says nothing about its sustainability.
When markets are expanding rapidly, for example, any improvements in the eco-efficiency of making products may be outweighed by the effects of increased numbers in use and / or their greater utilization. The effects of some products and processes will also be unsustainable even with radical improvements in their eco-efficiency. CSR is a new concept and such difficulties are inevitable— after all, it took many decades for specialists to work out the standardized measures of financial performance that we now take for granted. But some companies are at least making initial steps that, for all their imperfections, are providing useful information and a solid foundation for further progress. Implementing CSR at Novo Nordisk David Elkington coined the concept of the triple bottom line in 1998 in his book Cannibals with Forks: the Triple Bottom Line of 21st Century Business.
The rationale behind this concept was that the single dimension of financial reporting cannot provide an adequate description of an organization. Given that a company is multifaceted, corporate reporting on social and environmental performance is necessary to present a coherent profile of the organization. This concept found favor within commerce and industry and has played a role in driving reporting practices by companies today. Corporate reporting has evolved to include the documentation of non-core business activities that are undertaken by companies and implemented to demonstrate their commitment to sustainability and a more transparent relationship with stakeholders. Novo Nordisk has made progress in developing matrices that allow for quantitative reporting in terms of a triple bottom line.
• economic value added (EVA)-a measurement technique developed to assess whether companies are adding or destroying value.
The company prof its are adjusted for the cost of capital employed, and a linked concept Market Value Added (MVA) calculates how much value has been created since the company was founded
• environmental value added- the adjustment made to allow a charge for the natural capital employed (renewable resources), and for non-renewable resources, for the one-off benefit derived from the resource
• social value added -the means of accounting for the knowledge and skills developed and lost. The focus of this may be on the levels of trust, resilience or mutuality a company enjoys with a local community. The release of the Social Accountability 8000 (SA 8000) guidelines has added substantially to the existing body of knowledge on valuing social capital. Source: Wilson, M. (2000).
Corporate Reputation and the Triple Bottom Line: The Social Responsibilities of Business, Washington: Pricewaterhouse Coopers Management Consulting Services. There is considerable interest in, and work being undertaken on, TBL approaches and metrics at Novo Nordisk. A means of integrating aspects of mainstream and alternative accounting, which is required to provide a perspective on the total net value added by a company, has not so far been developed. How exactly do CSR/TBL techniques increase Novo Nordisk’s competitiveness? The organization’s management illustrates the ways in which CSR/TBL implementation drive the company’s competitiveness. All of the below factors directly influence the ability of Novo Nordisk to win on the market.
• Acts of social responsibility by organizations help correct the social problems (such as air and water pollution) that organizations create.
• Organizations, as members of society, have a moral obligation to help society deal with its problems and to contribute to its welfare.
• The voluntary assumption of social responsibility discourages the creation and imposition of government regulations.
• The assumption of social responsibility balances corporate power with corporate responsibilities.
• Organizations are members of society. Because they take resources from society for their own use, they have a responsibility to return to society a value for those resources.
• Society should be able to determine the nature of the value to be returned and to expect organizations to assist in solving social problems. After all, organizations are social instruments that exist and operate at the discretion of society.
The realization of Novo Nordisk having a broader appeal to many stakeholders has resulted in wider use of corporate performance measures that are both financial and social. As a result of these and other efforts, many Novo Nordisk’s stakeholders are increasingly concerned about the relationship between corporate social performance (CSP) of the organization and financial performance. Unbiased and rather conclusive empirical evidence demonstrates that Novo Nordisk being simultaneously committed to social and environmental issues important to its stakeholders also has superior financial performance and superior reputations as well. More specifically, although there appear to be mixed results on the relationship between socially responsible behavior and business performance, the empirical evidence for Novo Nordisk in terms of positive correlation between stakeholder inclusive, socially responsible business practice and business performance—as defined by growth in sales or stock price—is quite compelling.
Similar evidence has emerged with respect to Novo Nordisk’s organizational structure and is sustainability, that is, its combined social, environmental, and financial performance. The importance of CSR and TBL for Novo Nordisk is also evident in facts suggesting that both are important in the job choice process, as job seekers regularly perceive organizations such as Novo Nordisk to be more attractive than those who don't demonstrate a commitment to CSR and TBL. For example, job seekers consider TBL important to assessment of organizations and rate five specific TBL dimensions (environment, community relations, employee relations, diversity, and product issues) as more important than six other work related dimensions. For instance, environment, community relations, and diversity dimensions have the largest affect on attractiveness ratings for job seekers in Novo Nordisk. Thus one can see how Novo Nordisk has developed a growing level of confidence in concepts such as corporate social responsibility and TBL. Increasingly, they are argued from a pragmatic perspective, they are grounded in business language, and, perhaps most important, they reinforce the importance of and potential for enhanced financial performance.
Despite clear evidence of a positive relationship between corporate social and financial performance, stagnant capital spending is impacting many organizations' corporate social responsibility initiatives, even though many senior executives are aware of investors’ positive bias in this area, according to a recent survey. Surprisingly, some three-quarters of the CEOs favored investing their own money in companies with demonstrable CSR policies, even though they would not spend money bolstering CSR practices at their own organizations, according to a recent survey conducted by Jericho Communications (Stock 2002). Over one-third of the 264 Fortune 1,000 CEOs interviewed said they were more conscious of CSR/TBL since the September 11, 2001, attacks.
The terrorism angle was important to many of the surveyed CEOs, over half of whom believed that global social responsibility programs could curtail support for terrorist groups. However, only 12 percent of companies were allocating more resources, and only 9 percent were committing more money to social issues. Two supporting arguments deserve mention: Novo Nordisk has the resources and Let Novo Nordisk try. These two views maintain that because Novo Nordisk has a reservoir of management talent, functional expertise, and capital and because so many others have tried and failed to solve general social problems, Novo Nordisk should be given a chance. These arguments have some merit, because there are some social problems that can be handled, in the final analysis, only by business.
Examples include a fair workplace, providing safe products, and engaging in fair advertising by Novo Nordisk. An additional argument is that pro-acting by Novo N0rdisk is better than reacting. This position holds that pro-acting (acting in a proactive manner, anticipating and initiating) is more practical and less costly than simply reacting to problems once they have developed. Environmental pollution is a good example, particularly business’s experience with attempting to clean up rivers, lakes, and other waterways that were neglected for years. In the long run, it would have been wiser to have prevented the environmental deterioration from occurring. A final argument showing why CSR/TBL increase Novo Nordisk’s competitiveness is that the public strongly supports it. A 2000 Business Week/Harris poll revealed that, with a stunning 95 percent majority, the public believes that companies should not only focus on profits for shareholders but also be responsible to their workers and communities, even if making things better for workers and communities requires companies to sacrifice some profits.
In order to adopt this more holistic perspective-the perspective of an organism/organization in an ecological niche within a wider environment, where the organism and environment are mutually sustaining- Novo Nordisk has developed a model that acknowledges, and is applicable to, the increasingly complex and disaggregated nature of the modern workplace. It is clear that if Novo Nordisk is to make an effective evaluation of the sustainability and effectiveness of new developments in the workplace, it will require an assessment methodology and indicators that take a new approach, one that enables this company to evaluate both the specific sustainability and effectiveness of any particular workplace as well as its sustainability and effectiveness relative to alternative options. At present, in addition to assessing the environmental sustainability of the organization and its workplace, the methodology and indicators of the TBL at Novo Nordisk evaluate the workplace in terms of its contribution to the social sustainability of the individual, the working community and the wider community.
Lastly, these indicators are framed in the context of ensuring the economic sustainability of individuals within an organization, the organization itself, and the organization’s contribution to the wider community. In this respect, a new set of indicators was derived in concept from the TBL procedures, but reformed to construct a set of workplace-specific indicators-indicators that do not simply focus on the building, but that instead focus on the “performance” of staff in their workspace. It must be remembered that the concept of the workplace now extends well beyond the traditional office environment. Since the workplace, the nature of work and the way Novo Nordisk now functions within society are all constantly evolving, it is important that the indicators of workplace performance and sustainability are not static at this company. To remain useful, they must develop in line with the evolution of the organization they are assessing and contributing to. Thus, the indicators must be flexible, and must be readily open to adaptation to deal with new situations.
CSR and modern stakeholders Today’s modern organization in many instances is the institutional centerpiece of a complex society made up of many people with a multitude of interests and with many expectations as to what organizations ought to provide. As highlighted in this paper, the social contract between organizations and various stakeholders (e.g., employers and employees) has continually changed, producing new demands that all parties rethink their relationships (Reinemund, 1992). Those organizations likely to survive in the future will pay particular attention to how to successfully respond to ever-changing expectations. These organizations will need to meet many legal, ethical, and social or philanthropic expectations while still being able to change proactively in response to economic incentives.
Ethical and socially responsible employee behavior is important to the viability of all organizations as they attempt to change and respond to stakeholder expectations. To Novo Nordisk and its employees, acting ethically and legally means saving billions of dollars each year in theft, lawsuits, and settlements. Research has shown that corporations also have paid significant financial penalties for acting unethically. Novo Nordisk realizes it must be responsive to an increasingly diverse audience, made up of individuals and groups that they may have been able to ignore in the past. The growing importance of the role of stakeholders in the organizational equation over the past few decades has made it apparent that organizations must address the legitimate needs and expectations of stakeholders if they want to be successful in the long run. Stakeholder inclusion is the key to Novo Nordisk success in the twenty-first century. Novo Nordisk must continuously address stakeholders; it is the ethical course of action to take, and stakeholders clearly have claims, rights, and expectations that should be honored. A stakeholder approach to understanding organizational situations like the Enron debacle can help us to understand better why such ethical organizational demises occur (Backhaus et al., 2002).
Organizational management at Novo Nordisk truly cares about business and corporate social responsibility. It is proactive rather than reactive in linking strategic action and ethics. It steers away from ethically and morally questionable business opportunities and business practices. If this organization’s stakeholders conclude that management is not measuring up to ethical standards, they have recourse. For example, concerned investors can protest at the annual shareholders’ meeting, appeal to the board of directors, or sell their stock. Concerned employees of Novo Nordisk can unionize and bargain collectively, or they can seek employment elsewhere. Novo Nordisk customers can switch to competitors. Suppliers can find other buyers. The community and society can do anything from staging protest marches and urging boycotts to stimulating political and governmental action. Novo Nordisk also realizes it must recognize the rights or interests of various stakeholders—not only stockholders and employees but also outsiders affected by the company’s actions.
” That’s the conclusion reached by Nic Marks, who helped devise the Index of Sustainable Economic Welfare-an earlier attempt to provide an alternative to the justly-maligned GDP as a useful indicator. He’s now working on an ambitious new national index of well-being, which will combine familiar objective data on everything from the economy to the environment and social cohesion, with distinctly subjective views on levels of affection, creativity, security…things rarely if ever measured (and widely seen as beyond the scope of public policy), but deeply relevant to individual happiness and fulfillment. It may sound woolly, but as a brave attempt to link personal wellbeing with policy development- and what’s the point of policy if it’s not even trying to touch our well-being?-it’s groundbreaking. (http://www.greenfutures.org.uk) If sustainability is being incorporated into measures of the economic health of the country and the general well-being of its citizens, it is more than time that such considerations were included in our assessment of where and how we will work in the future. The wider implications for this in terms of commercial development and the landscape of urban areas are unknown.
Thinking about work space based on CSR and TBLA is, however, a real opportunity and one that could drive a paradigm shift in the way work takes place. Sustainability considerations can be incorporated at many stages of the development of a workplace strategy and, when used alongside, or better, integrated with, more traditional measures of workplace effectiveness, they can lead to a truly productive and sustainable workplace and organization. Too much focus on short-term effectiveness at the expense of sustainability will mean there is no future for the organization, long term. Too little focus on effectiveness will also, in the end, be unsustainable. The two must be considered in tandem. More energy must be put into testing and extending the work already done on TBL, in order to move this towards becoming a mainstream approach to accounting and company reporting and evaluation. Conclusion Combination of TBL/CSR policies greatly increases Novo Nordisk’s competitiveness. This firm offers a certain number of stocks to its employees at lower than market price, with the option to keep or sell them after a number of years. This will increase the employees’ involvement in the company, which will, in turn drive its level of competitiveness higher.
This and similar partial ownerships of stocks increase the Novo NOrdisk’s motivation and the productivity of the employees because they feel that good performance by the company will eventually increase their monetary return. Employee ownership is rapidly growing in Novo Nordisk that follows the world-wide tendencies in this matter. For example, in the United States, employee stock ownership plans (ESOPs) increased rapidly during the last two decades. Also, in the European Economic Area (EEA), which includes the fifteen EU countries and the EFTA countries, labor participation in enterprise decision making is growing. Employee ownership also takes the form of ESOPs in Britain, Italy, Hellas, and other European countries, while in France and Sweden it takes the form of workers’ consultation, and labor--capital co-management or co-determination in Germany. In order to avoid economic and social downsizing through its own creative destruction the management approaches of Novo Nordisk should be modernized. The recent spread of shareholding, through ESOPs or otherwise, is a process which reforms and improves the system. Although automation and foreign competition exercise heavy pressure on the middle class, modern or democratic capitalism based on private ownership and self-interest, which is essential to promote wealth will prevail through innovations and reforms. The government can encourage such ownership diffusion by providing tax and other incentives, thereby discouraging wealth concentration and monopolization. For Novo Nordisk to compete in the global marketplace, greater sharing of management and information with employees is needed. The management of this company realizes that by giving greater responsibility to employees, workplace innovations, competitiveness, and productivity increase. A healthier workplace is created through a policy of providing information to the employees who participate in company affairs. Early in the employment process at Novo Nordisk, a social contract is formed between this company and employee.
Social contracts typically cover the inducement of the employer and the contribution of the employee. The degree to which both parties satisfy the expectations established by this contract affects the success of the relationship. It is important for organizations and employees to understand the expectations of the social contract as well. It is important for leaders and managers to understand that if the two do not or cannot agree on this aspect, then the relationship will suffer. Because ethical behavior cannot be reduced to simple do’s and don’ts, both parties have ever-changing expectations, and thus there must be opportunity and structure to address evolving. Training employees to make an ethical analysis as part of their decision making is critical. Training can be formal, focused on the organization’s goals and objectives and on techniques of decision making. Training can also be achieved through the normal socialization during orientation of a new employee. If the employer is operating ethically, then the role models whom the employees emulates will exhibit the proper ethical behavior. The system of rewards and punishment will confirm and reinforce ethical behavior. It may be a tough time to be in business for Novo Nordisk, but an ethical orientation can help companies weather the storm. Novo Nordisk can withstand the lean years, but the only organizations that will do so are those whose organizational culture encourages right action and rewards ethical behavior. This breeds long-term trust from employees and customers and reassures investors.
It is not enough to sign a paper that says your company is behaving ethically. It is not enough to give money to worthy causes and be socially responsible, although it is a nice start. Organizations like Novo Nordisk must reorient themselves to the practice of business. Another way to put this is, if the next generation of managers is not trained to recognize that a competitive edge is no longer solely based on market share, then these companies—no matter how committed their leadership is to implementing an ethical approach to business—will fail to reach their desired state. Based on the above discussion, one can conclude that social responsibility is an important function that affects organizational performance and corporate standing in the community.
To ensure their commitment to social concerns, Novo Nordisk has created permanent committees to monitor social responsibility and ethical functions. These committees, often called “social responsibility” or “public policy” committees, serve two functions within an organization. First, they lend legitimacy to the consideration of a social and an ethics agenda at the highest level of organizational decision making. Second, they symbolically communicate to employees and external stakeholders of the organization their commitment to high social and ethical principles in conducting business.
Calculate the Price of Your Paper
PROCESS
Order now
Discounts
About
Reviews
FAQ