Organizational & operating model
Our business groups are the main building-blocks of the company’s organization. They have integral long-term and short-term responsibility for business and have at their disposal all functions that are crucial to their business success. As the company’s primary organizational and entrepreneurial building-blocks, our business groups focus on four primary business functions: Innovation and R&D, Direct Sourcing, Manufacturing & Operations, and Marketing & Sales. Intra-company product supplies are contracted by the business groups on an arm’s-length basis.
The business groups are organized into clusters, thus ensuring coherence of operations and the leveraging of resources within each cluster. The clusters are the main organizational entities for external strategic and financial reporting. This structure ensures flexibility, efficiency and speed of response to market changes. In order to ensure sufficient independence regarding financial management, the CFO has no business groups reporting to her.
Our business groups receive services from global support functions and functional excellence departments and are supported by the regional organizations. This set-up enables us to create a global, high-performing organization focused on meeting its targets and achieving its ambitions. The support functions and functional excellence departments are paid for their services by the users — the business groups and, to a lesser extent, other DSM units. Corporate departments are paid from a corporate budget.
Support functions provide those services that can be delivered more efficiently (in terms of total cost of ownership) by leveraging them across the company, thus capturing scale benefits and delivering higher quality at lower cost, rather than having them arranged in each business group separately. There are support functions in the areas of Finance, People & Organization, Legal, Indirect Sourcing, Communications and ICT. Each support function reports to a Managing Board member or a member of the Executive Committee.
Within support functions, centers of expertise provide specialist support, while shared service centers provide standard transactional support. Business partnering is the concept that acts as the interface between the business groups and the support functions. Business partners consequently have a second reporting line in the business. In order to ensure that the functional policies sufficiently reflect regional requirements, the support functions work closely with the regional organizations and integrate their advice.
Corporate functions (small, high-level groups) supporting the Managing Board and Executive Committee are also seen as support functions. The corporate departments are: Corporate Strategy & Acquisitions, Corporate Operational Audit, Corporate Risk Office, Corporate Sustainability, Corporate Investor Relations and Corporate Affairs.
Functional excellence departments are mandated by the Managing Board to help the businesses achieve excellence in their respective fields. They cover the areas of Operations & Responsible Care, Marketing & Sales and Science & Technology. Functional excellence departments support our businesses in improving their performance. They also provide guidance in setting aspiration levels and targets.
The following figure depicts our company’s overall governance framework and the most important governance elements and regulations at each level.
The Managing Board and Executive Committee adhere to the Regulations of the Managing Board. In addition, DSM has a Management Framework in place which implies, among other things, that the units adhere to the DSM Code of Business Conduct and applicable corporate policies and requirements.
The company’s strategic direction and objectives are set by means of a Corporate Strategy Dialogue. In June 2018, DSM presented its updated purpose-led, performance-driven strategy, which is described in more detail in
The units conduct their business within the boundaries of the Management Framework. This implies, among other things, that they:
- Comply with the DSM Code of Business Conduct, Corporate Requirements and Directives
- Establish the strategy, objectives and operational targets of their business according to the Business Strategy Dialogue, in alignment with the Corporate Strategy Dialogue, in which various scenarios and related risk profiles are investigated, and report on the achievement of these
- Implement a risk management framework, which includes taking accountability for the identified risks and related mitigation through annually signing the Letter of Representation
- Implement company-wide standards for support functions (systems, processes, vendors, etc.)
- Implement annual functional improvement plans
Independent audits for all operational units are conducted by the Corporate Operational Audit (COA) department. The Director of COA reports to the CFO and has access to the Chair of the Managing Board, the external auditor and the Audit Committee of the Supervisory Board. Furthermore, the Director of COA acts as the compliance officer regarding inside information and is also the secretary of the Disclosure Committee. The Director of COA additionally chairs the DSM Alert Committee, which is responsible for our whistleblower policy, systems and processes.
Chaired by the CFO, the Disclosure Committee ensures the timely and accurate disclosure of share-price-sensitive information related to the company and is responsible for the implementation of company rules on the holding and execution of transactions in the company’s financial instruments, among other things.
A third committee at corporate level is the Fraud Committee, which was installed to ensure structural follow-up of fraud cases with the aim of reducing fraud exposure. Relevant corporate functions participate in the Fraud Committee, which is chaired by the Group Controller.