Unleash the power of our people

Culture helps to drive innovation and long-term performance. In 2022, we moved to an integrated company structure to align with our focused strategy, while also putting in place measures to help employees manage through this significant change. We also continued to phase in new ways of working and advanced our efforts to increase workforce diversity.

Changes to our organizational model

Executing on our strategy as a focused medicines company requires us to work differently. We reorganized our company to create a more agile and simpler organization that is aligned with our focused strategy and will support innovation, growth and productivity. Regrettably, our Transforming for Growth initiative also entails job losses as we reshape our company to focus on our core Innovative Medicines business.

We recognize that these changes cause considerable uncertainty for many of our employees. To manage the process, we put in place six basic principles:

• Fairness in decision-making: all decisions were taken in line with our Code of Ethics and Values and Behaviors.
• Balanced representation: where units were merged, we ensured proper balance in terms of both organizational structure and opportunities for leadership positions.
• Equal opportunities: throughout the process, we worked to ensure equal opportunities for all employees to maintain our commitment to diversity, equity and inclusion.
• Support and care: those affected by the changes had access to various support programs to help them transition to new roles, either within or outside Novartis.
• Social dialogue: during the process, we consulted with Works Councils and other employee representative bodies in accordance with local law and regulations.
• Simple approvals: we simplified approval processes so that key decisions could be taken as quickly as possible.

We appointed a dedicated transformation team, led by our Executive Committee, issued clear guidance to management, and set up targeted engagement plans for employees in critical roles or identified as top talent.

With the new organization, we will see a reduction in our workforce over the next two years. In total, through Transforming for Growth we expect to reduce our workforce by up to 8 000 positions by the end of 2024. In 2022, employee turnover stood at 15%. Voluntary turnover was 9%, up from 8% in the previous year.

Investing in our culture

We are investing in our culture to help drive our long-term performance as a focused medicines company. We encourage all Novartis employees to be inspired, curious and unbossed to unlock innovation and drive performance. For us, this is about building an agile, diverse workforce and making sure we attract and retain talent for the future.

Diversity, equity and inclusion (DEI)

We are focused on creating a work environment in which all employees feel they belong and can do their best work. We do this not only because it is right, but also because it helps generate new ideas, gives us access to a wider pool of talent and brings us closer to the diverse perspectives of customers, patients and other stakeholders. To support this approach, we embed DEI into objectives for managers and in internal policies and controls, including our Code of Ethics.

Gender equity is an important part of our DEI strategy. Women now make up 47% of our overall management, compared with 46% in 2021 and 42% five years ago.

As part of our public pledge to the UN’s Equal Pay International Coalition (EPIC), we are also committed to further improving pay equity and transparency. Based on the latest data available as of December 31, 2021, Novartis has a global mean pay gap of +3.1% and a global median pay gap of –3.0%, compared with +3.3% and –2.3%, respectively, in the prior year. While we acknowledge this percentage is influenced by worldwide workforce demographics, our global mean pay gap is significantly ahead of the Bloomberg benchmark of +19% mean for the same period.

Across the organization, we are also increasing pay transparency and systematically removing historical salary data when hiring to reduce the likelihood of perpetuating possible discrimination. At the end of 2022, 84% of our global hiring was taking place on this basis. Our aim is to complete preparations for full pay transparency for all employees by the end of 2023, in time for annual pay discussions in February 2024.

We have more than 80 dedicated employee resource groups that connect employees with shared experiences or backgrounds. We also support the UN Standards of Conduct for Business to tackle discrimination against LGBTQI (lesbian, gay, bisexual, transgender, queer and intersex) employees and are members of the International Labor Organization’s (ILO) Global Business and Disability Network. In 2022, we received the Stonewall Top Global Employer Silver Award and were included in the Bloomberg Gender Equality Index, a recognition of the progress we continue to make in providing a positive and inclusive work environment for all employees.

Through our parental leave program, introduced in 2019, all Novartis employees regardless of gender or sexual orientation can benefit from a minimum period of 14 weeks paid parental leave following the birth or adoption of a child, ensuring equity and greater flexibility for birthing and non-birthing parents.

New ways of working

In recent years, working models have become more flexible – a logical step during the upheavals of the pandemic. In 2020, we took an experimental approach and launched a program called Choice with Responsibility to give employees more flexibility and maintain business continuity, while also emphasizing the importance of working together onsite on occasions to support innovation and strengthen teamwork and collective responsibility.

As the pandemic has subsided in many countries, we have made the decision to further evolve our approach to hybrid working to increase our focus on collaboration and innovation. Our updated guidance was announced in 2022 and will be implemented in 2023 pending local consultations and country-specific requirements, including local health and safety regulations. We aim to provide flexibility where it makes sense, while also prioritizing time spent together, encouraging a team-first mindset, and giving greater clarity and accountability to our teams.

The diversity of roles across our organization allows for different levels of flexibility. As a result, we have provided specific guidance for our field force, office workers, lab workers and manufacturing workers.

Employee engagement

We measure employee engagement every quarter. The engagement score decreased in the second half of 2022 to 73, two points below the global benchmark. Engagement favorability, which measures the percentage of “agree” or “strongly agree” survey responses, was 76% in the fourth quarter, compared with 85% a year earlier. This outcome was anticipated following the announcement of our Transforming for Growth initiative.

The engagement score is based on responses to two questions: “How happy are you at Novartis?” and “Would you recommend Novartis as a great place to work?”. The voluntary and anonymous survey, which is sent to all Novartis employees, is carried out by an external consultant to ensure independence. In Q4 2022, 69% of Novartis employees took part in the survey. Results are used on an aggregated basis to identify potential risks and make improvements to working conditions, training and development, access to support programs and other areas where necessary.

Learning, growth and leadership development

We want a future-ready workforce that can achieve our strategic objectives. To do this, we continue to promote curiosity, learning and growth, which helps us to adapt to our changing business environment and ensures we build strategic skills, particularly in areas such as R&D, data science, and launch excellence to drive performance.

Since 2019, we have made significant investments in learning and development through our ‘Going Big on Learning’ initiative, which has led to an approximately 50% increase in average employee learning hours since 2018. In 2022, employees dedicated an average of 42.4 hours to learning. While this was down from 52.1 hours in the previous year, largely due to the impact of organizational changes in our business, it was still ahead of pre-pandemic levels.

Although overall learning objectives and investments are being recalibrated in line with the broader organizational transformation at Novartis, we continue to prioritize learning as a key part of our culture to drive innovation and performance. Alongside mandatory training in areas like ethics and health and safety, approximately 36 000 employees took courses through LinkedIn and Coursera on a range of topics including data science, digital skills and marketing.

In addition, more than 11 000 managers have taken part in our Unbossed Leadership Experience pro­­gram since 2020, which gives them the skills to lead cultural change within the organization. We also provide dedicated training to first-time managers.

Match is our cross-company online platform that allows employees to take charge of their own learning and career development through a range of offerings, from jobs and mentoring opportunities to short-term project assignments and ‘bite-sized’ training modules. In 2022, we rolled out Match across the company. The number of users increased to over 33 000 - with more than 900 mentorships, over 350 project assignments and about 250 000 learning units on the platform completed.

Performance management and career development

All Novartis employees receive support for performance management and career development through a flexible, continuous system of coaching, feedback and recognition by managers and colleagues. Teams and individuals create objectives that focus on both short- and longer-term impact. In addition, managers and employees have regular discussions on topics including progress toward goals, development, feedback and well-being.

Supporting mental health and well-being

Mental health is increasingly in the spotlight as the COVID-19 pandemic and other factors have taken a toll on people’s mental, social and physical well-being. The effects of stress on daily life is the most frequently reported mental health issue globally, according to the Ipsos World Mental Health Day 2022 survey.

At Novartis, we have a dedicated well-being program for employees, known as Energized for Life. In 2022, we stepped up our employee assistance programs and e-training, as we recognized that Transforming for Growth would inevitably add to pressures for many employees.

In February, we launched a new version of “How are you feeling?”, an online library of tools and resources, accessed by over 10 500 employees during the year. We also added a question on well-being to our regular employee engagement survey.

We measure employee attitudes before and after our well-being programs to ensure we are on the right track. Figures for 2022 show those participating in our programs had better work-life balance, communicated more with colleagues and were able to manage their time more effectively.

Wages and cost of living

Novartis is committed to paying employees a living wage that meets or exceeds the amount for basic living needs, in line with our UN Global Compact commitment.

The cost of living is understandably a concern for many of our employees as inflation remains high in many countries. While we continue to monitor macroeconomic conditions, we do not make changes to pay based solely on inflation – we also consider factors such as our competitive position, business needs and our EPIC and Living Wage commitments. Historically, our approach has led to salary increases in many countries above the local rate of inflation.

Our Employee Share Purchase Plan enables employees to voluntarily purchase Novartis shares at a discounted price. The plan currently covers employees in North America (the US, Puerto Rico and Canada), with rollout to employees in other countries and regions scheduled over the next several years. All permanent employees are eligible for the plan (with certain exceptions).

Engaging employees through volunteering

Our Novartis Engagement & Volunteering Program empowers employees to make a difference through giving, community initiatives and skills-based volunteering with civil society partners in a chosen community. Over time, the program has evolved into a sustainable, skills-based model that generates impact for employees, Novartis, partners and society in areas that are aligned with our strategy and purpose.

We signed a new partnership with the UN High Commissioner for Refugees, while also providing support for those affected by the war in Ukraine

In 2022 we signed new partnerships with organizations such as the UN High Commissioner for Refugees, while also providing support for those affected by the war in Ukraine (see page 61). Our projects over the past year included mentoring health-tech entrepreneurs, supporting environmental sustainability in the supply chain, and working with the UN on projects for innovation.

Providing a safe and secure working environment

Our commitment to occupational health and safety is built into our Code of Ethics. In addition, we have strict health and safety controls across our sites that go beyond legal requirements:

• At all our sites, we conduct regular audits to assess compliance with regulations and internal controls.
• We also carry out risk assessments to determine the necessary frequency of these audits, and have crisis management plans in place to deal with emergency situations.
• Both our own employees and outside contractors receive regular health and safety training

Health and safety standards are also incorporated into our supplier contracts and risk assessments. In addition, 18 of our sites have ISO 45001 certification, covering 35% of employees and third-party personnel working in manufacturing and supply.

Safety incident rates returned to pre-pandemic levels in 2022, consistent with industry benchmarks. However, over the longer term we continue to see improvement with the total recordable incident rate for employees and third-party personnel trending downwards, due in part to the implementation of new management systems.

UN SDG target 8.8 reads: Protect labor rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment.

Please see "Measuring our impact" for more information on our impact on the SDGs