Reputation save: Novartis links employee bonuses to ethical behavior

In an effort to save its reputation from the hit it took earlier this year, Swiss pharmaceutical giant Novartis revealed its employees will only get bonuses if they meet or exceed expectations for ethical behavior, according to Reuters.

Vas Narasimhan, the drugmaker's CEO, has vowed to boost the company's ethics culture after it was linked to a bribery scandal, and its payments to President Donald Trump's personal lawyer Michael Cohen were exposed earlier this year.

Under the new bonus policy, employees will receive a score between 1 and 3 based on their values and behavior. A score of 2 means an employee met expectations, a score of 3 is classified as "role model" behavior, which would make an employee eligible for a bonus of up to 35 percent of their compensation.

"Unless the sales representative scores a 2 or 3, they will not be eligible for their variable compensation," Samir Shah, Novartis's head of investor relations, told Reuters.  "That's how we've tried to make sure we’ve got the right balance between pay for performance and having the right behavior."

When an employee scores below a 2, additional action will be taken, and he or she could be dismissed.

"This allows us to look at the behavior metric before any money leaves Novartis and catch potential misconduct before there is any risk to our reputation," Novartis general counsel Shannon Klinger told Reuters.

Novartis gained public attention earlier this year when news broke that its then-CEO Joe Jimenez and former legal head Felix Ehrat signed off on $1.2 million in payments to Mr. Cohen for healthcare policy lobbying services.  Mr. Jimenez left the company before the scandal surfaced. Mr. Ehrat claimed responsibility for the scandal and resigned. In addition, the drugmaker recently settled corruption cases in China, South Korea and the U.S. 

To help bounce back from the scandals, Novartis hired a new chief ethics officer, Klaus Moosmayer in August. Mr. Moosmayer comes from Siemens, where he spent more than 10 years helping the engineering firm recover from bribery scandals.

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