Johnson & Johnson Comments
Please peruse the Johnson & Johnson web site, especially the Credo and its history, before the visit by Bill Nielsen on Tuesday. You can "comment" on this post to make your reaction and thoughts public for the rest of the class.
posted by prteacher at
3/04/2007 12:56:00 PM
10 Comments:
The Johnson and Johnson credo is probably one of the most detailed company credo’s that I have ever seen. The interesting thing is, they mention their responsibility to their stakeholder publics specifically in credo, customers, doctors and nurses, employees, communities and stockholders. We all know it is one thing to have a credo or mission statement, almost everyone does. But Johnson and Johnson has another section that explains the history of the credo, times when it was put into action. To me, this is what makes their credo so important. It is not necessarily that they have one, but that they implement it.
The credo history mentions the Tylenol crisis in the 80s (although, the link is broken). Obviously, in this situation, they followed the credo in all of their actions. This leads me to thinking, it seems that there are some crises that it would be difficult to prepare for or hard to predict. Although the public relations person should be ready to handle any situation and have a plan, a good company credo could serve as guidelines for a difficult situation as well. What does everyone else think? I’m not necessarily saying that a crisis communication plan should be replaced by a credo, but it is an excellent supplement. As mentioned earlier, the corporation is only as good as how closely they plan on following their credo, it is not sufficient enough to just have one written up. It should also be very specific. Chris Pentilla wrote, “many of today's mission statements are too vague to make them useful as a benchmark” (http://www.entrepreneur.com/magazine/entrepreneur/2002/may/51106.html). Vagueness is a problem, and so is the intent behind the statement. Even Enron had a mission statement! They listed four values: respect, integrity, communication and excellence. How well do you think they followed that one?! Not a good idea, the truth will eventually “find you out.” Customers and especially employees will be able to see right through an unethical company’s statement no matter how well it’s written. What do you think about mission statements or credos? Can you think of any corporations that follow theirs closely? Or what about those that you can see right through their mission statement and they do not really follow it?
Also, Johnson and Johnson emerged from the Tylenol crisis stronger than they were before. Sticking to their credo turned out to be good for their creditability and customer loyalty. People feel like they can trust Johnson and Johnson. Knowing this, why would any company choose to take the morally corrupt road and ignore their mission statement like Enron? I won’t get into a discussion on human nature, because I believe that is what it comes down to; but it still floors me that there are corporations blatantly violating their own statements everyday. Not only are they making unethical decisions, but they are lying to their stakeholder public by going against their word.
I found an amusing anecdote that takes a satirical look at corporation’s mission statement, and whether it actually means anything. Who better to make fun of this than Dilbert, and that is why there is a “Random Mission Statement Generator” on his Web site. Here is the link: http://www.dilbert.com/comics/dilbert/games/career/bin/ms.cgi. I wonder how many organizations actually us this generator; I wouldn’t be surprised if Enron did.
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Catherine, at 1:11 PM
Johnson & Johnson’s transparent handling of the Tylenol crisis in 1982 is regarded as the model example of crisis management. In 1982, Johnson & Johnson's Tylenol medication commanded 35 per cent of the US over-the-counter analgesic market representing something like 15 per cent of the company's profits. When seven people died after ingesting cyanide-laced Tylenol capsules, Johnson & Johnson immediately alerted customers nationwide via media not to consume Tylenol products. Along with stopping production and advertising of Tylenol, they recalled all Tylenol capsules which totaled about 31 million bottles valued at more than $100 million. The cost was a high one. In addition to the impact on the company's share price when the crisis first hit, the lost production and destroyed goods as a result of the recall were considerable. However, the company worked with customers, media and officials from the outset and won praise for its quick and appropriate action. Having acted quickly with completely openness, they achieved the status of consumer champion. Within five months of the disaster, the company had recovered 70% of its market share for the drug. Over time, the fact showed that the company had succeeded in preserving the long term value of the brand as their credo suggested.
The credo is the most detail description about how a corporation acts in a social responsible manner to their customer, employees, communities and stockholders. Archie Carroll (1991) was one of the first academics to make a distinction between different kinds of organizational responsibilities as he suggested a firm’s “pyramid of corporate social responsibility.” The pyramid suggested social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time. Fundamentally, a firm’s responsibility is to produce an acceptable return on its owner’s investment. An important component of this, within a law-based society, is a duty to act within the legal framework drawn up by the government and judiciary. Taken one step further, a firm has an ethical responsibility to do no harm to its stakeholders and within its operating environment. Finally firms have a discretionary responsibility, which represents more proactive, strategic behaviors that can benefit the firm and society, or both. Ethical and discretionary in Carroll’s model is becoming increasingly necessary today due to the changing environment within which business operate. I think the J&J credo represents a proactive example.
We all insist on the importance of CSR that is concerned with treating the stakeholders of the firm ethically or in a responsible manner from public relations standpoint. However, for the small company that pursues cost-down and profit, what are their points of view?
Scholars have identified three benefits of CSR to brands.
1. Positive Brand Building
The Body Shop is distinguished in the minds of consumers and gains a strategic advantage. Whether you agree with the stance that The Body Shop adopted on a numbers of fair trade and other social issues, many consumers were drawn to purchase the company’s products because of the position it too. The stances of against animal testing, supporting community trade and protecting environment help differentiate the firm’s offerings and stands out in the minds of consumers. Likewise, BP has repositioned itself as the most environmentally and social responsible of the extraction companies with a $200 million rebranding exercise. ExxonMobil, contrast to BP, faces ongoing NGO attacks, consumer boycotts and activist-led litigation as a result of its decision to oppose the environmental movement.
2. Brand insurance
CSR as brand insurance is needed because even the most prestigious brands have substitutes. Werther and Chandler (2005) suggested that a CSR mindset throughout the organization heightens the brand-user bond, reducing the brand’s vulnerability to internal management lapses. The reason why firms need CSR is not because they necessarily have a pressing problem at the moment but so that they can avoid (or at least lessen) problems that undermine their brand going forward. As the ancient Chinese philosopher Sun Tzu (2002, p. 177) observed, “Subjugating the enemy’s army without fighting is the pinnacle of excellence.” Simply put, CSR represents conflict prevention and can be thought of as modern day boiler insurance.
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Jiun-Yi (Jenny) Tsai, at 6:33 PM
I'll hit on the credo, too. It's excellent, and as Catherine said, they also show that they implement it.
The order of importance is blatantly laid out for all to see and anyone investing in the company know that they fall at the end, thereby reducing, somewhat, the power money can sometimes hold over an organization.
I want to know what J&J does communicate and maintain their relationships with the "doctors, nurses and patients, mothers and fathers and all other" who use the products with the J&J logo.
Obviously they are somewhat more removed from these important publics than they are with any of the other publics described in their credo.
I looked into some of their 230 subsidies and they all follwoed a very similar credo, sometimes linking directly to J&J's. I am impressed, also, with the amount of support directed at all the publics that they mentioned. This leads me to believe that there is a good level of communication between the company and its various publics.
I was amazed at the amount of information and was especially interested in the pharmaceutical pipeline feature under "Investor Relations." It showed a number of the drugs they were working on and what stages of approval each one was in. The latest date I could detect was July, 2006.
It also appears that their 2006 annual report will be available this month. It was relatively easy to find.
I did do a search regarding findings at the National Institute of Health, about the toxin methylisothiazoline (MIT) in things like shampoo. It was linked to nerve damage in people and may be a factor in the development of Alzheimer's.
I don't remember J&J beign a part of it, however, I figured that the company would have a stance on it and I could find nothing on their Web site, or on their affiliated Web sites. This surprised me since it would be something that, as a consumer, I would be worried about.
I admit, I did not go too in-depth in my searching, but it didn't pop up on baby.com, or johnsonsbaby.com.
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Paul Jonas, at 8:00 PM
One thing that I’ve wondered since I learned about the Tylenol case is, if the crisis had happened to a smaller company that would have been destroyed by the recall, would our society have still expected them to recall their product? My guess would be yes.
I visited the company’s Web site and can say that I am impressed by Johnson & Johnson’s (J&J) stated commitment to the three “R” principles (Replacement, Reduction, Refinement) in regard to animal testing. However, the irony of my initial experience must be noted: I logged onto jnj.com and typed “animal testing” into the search feature only to be led to the search results page in which I was asked if I meant to search for “uninteresting.”
In their commitment to social responsibility, it makes perfect sense that the following three statements are included in their section on Laboratory Animal Facilities Compliance:
• In no case can random-source companion animals be used in research studies. Johnson & Johnson policy dictates that only purpose-bred animals can be used.
• In certain geographic regions of the world, purpose-bred companion animals are not available. Under these circumstances, animals must be obtained through licensed dealers that meet Johnson & Johnson criteria for the humane care and use of laboratory research animals.
• All animal vendors must be Class A certified and have the appropriate government regulatory body licensure.
The first two bullets addressed the company’s pursuit of dogs and cats (companion animals) that are purpose-bred, meaning bred specifically to be used in animal testing. I understand that it is a responsible way of preventing people’s stolen pets from ending up in animal testing laboratories, but I wonder, does testing on a dog that was bred by a human for the purpose of animal testing make the dog more likely to choose a laboratory rather than a family’s home? The third bullet listed above addressed the problem of Class B dealers. These are dealers who buy animals (mostly dogs from what I understand) from pounds, shelters and small breeders to sell to animal testing laboratories. Although these Class B dealers are required to not accept stolen pets and treat the animals humanely, they often do not adhere to those requirements. HBO made a documentary about a Class B dealer: http://www.hbo.com/docs/programs/dealingdogs/index.html.
J&J’s Policy on the Humane Care & Use of Laboratory Research Animals states the following:
• No laboratory animal shall be subjected to unnecessary pain and/or distress. Where pain and/or distress are unavoidable, appropriate analgesics, anesthetics and tranquilizers shall be used except where their use will interfere with the scientific results. All exceptions are reviewed and approved on a case by case basis by the Institutional Animal Care and Use Committee (IACUC).
• Mistreatment of animals or failure to abide by these principles is a serious violation of policy and will be grounds for dismissal.
Although I find it sad that pain killers are not required at all times, I am glad to know that their employees are held accountable for their actions.
J&J’s section on Alternatives to Laboratory Animal Research Testing included the following statement: “Today, our companies do not test cosmetic or toiletry products on animals.” However, PETA lists J&J as a company that tests its cosmetics on animals. According to PETA’s Web site, PETA has had constructive communication with J&J regarding its animal testing policy (http://www.stopanimaltests.com/feat/gta/jj.asp). Therefore, I wonder whether J&J simply has not conducted environmental scanning or whether PETA has chosen to keep them on their list of cosmetics companies that perform animal testing because of the company’s large role in animal testing for medications and devices.
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Nadya, at 8:23 PM
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Minji, at 9:29 PM
[Enter Post Title Here]
“Ethics Management” has become a buzz word in every business. In our contemporary society, the expectation from publics is getting higher than ever, plus, business is certainly not about simply fulfilling the demand and supply of goods.
Here are some of the benefits of ethics management that the Free Management Library Web site, provided by Authenticity Consulting, presents:
1. Attention to business ethics has substantially improved society.
2. Ethics programs help maintain a moral course in turbulent times.
3. Ethics programs cultivate strong teamwork and productivity.
4. Ethics programs support employee growth and meaning.
5. Ethics programs are an insurance policy -- they help ensure that policies are legal.
6. Ethics programs promote a strong public image.
In addition to these benefits, ethics management can prevent some of the crisis situations. When every crisis communication book emphasizes the importance of the relationship/credibility building as an ongoing effort of crisis prevention, I used to think it’s such a cliché type of guideline that a textbook provides. However, J&J’s credo has proved that implementing value-oriented practice in business is normative as well as is positive. Furthermore, through a series of product tampering incidents, J&J showed that its credo helps not only during the crisis event stage but also during every other stage of crises. When the first product tampering occurred, J&J made a prompt action according to the prioritized values firmly stated by its credo; therefore, the company could maintain a moral course during the crisis event stage. Since they earned credibility from its stakeholders by playing a proactive role of being a responsible company based on its credo, when the second incident happened, they could communicate more effectively with its concerned publics. As Coombs (1999) in Ongoing Crisis Communication, asserts, “the benefit of credibility is that it increases the believability of an organization’s message (p. 49).”
Having a credo that hangs on the wall is one thing and being an ethical company is another, though. As the word credo, defined as “a set of fundamental beliefs or a guiding principle” in a dictionary, suggests, it is only worth is when every employee has a strong conviction and acts up to the company’s credo. One of the sources about ethics management on Free Management Library reveals more about J&J credo story: “Bob Kniffin, Vice President of External Affairs, at J&J Company, said that it was not the J&J to handle the crisis so well. Rather, it was the ongoing “challenge sessions” that the company regularly held in order for each person to clarify their own perspective and commitment to the J&J Credo.” If only every employee shares the values and belief, a statement becomes the true credo of a company.
On the flip side of entrepreneurship, however, it still is the main purpose of a corporation to make profits out of its operation. No matter how devoted philanthropreneur they are, there must be a moment when companies should draw a line. In addition, how detailed a credo may be, sometime two different stakeholders, employees and communities for example, might expect conflicting actions. My question is, when a company faces such kind of challenging decision-making, how do they choose a fine line of legitimacy? Since J&J credo states that their first responsibility is o the customers, do they end up sacrificing their stockholders? Some people suggest trying to find a decision on which they can pass the Red Face Test. I heard that J&J once had to go through reconstruction process which resulted in closing 20 factories around the globe. I wonder how the company lived up to its credo at that moment. I will be expecting a wise answer from Mr. Neilson to my silly question.
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Minji, at 9:34 PM
Johnson & Johnson credo
With 230 subsidiaries and consumer products such as Aveeno, Acuve, BAND-AID, Clean & Clear, and Baby care, people are exposed to products of Johnson & Johnson from the day they are born. As a matter of fact, I started my life with Johnson’s baby powder pampered all over my tiny body! J&J, a multinational pharmaceutical-based corporation, is renowned for its corporate philanthropy, social activities, and friendly working environment. As a matter of fact, it was named #6 on Fortune’s 2006 Most Admired Companies list, and first in pharmaceuticals category. General performance of the company is outstanding as well: J&J was ranked 32nd on the 2006 Fortune 500 and 26th on Business Week’s 50 best performing companies.
For those of us who study PR, Johnson & Johnson is more familiar as the corporation that practiced excellent crisis communication during the tampered Tylenol crisis in 1982. It is the classic example of “good public relations” during a crisis situation, and this case has set up a standard for all other corporations on how to communicate during crisis. I’ve learned from case studies on what J&J did during the crisis and why their actions were effective. I greatly believe that there was an awesome public relations manager in this corporation during that time to implement crisis communication plans. After visiting their Web site, I now understand that J&J has and had a strong corporate credo that brought upon such behaviors in the first place.
The credo for J&J is almost too good to be true. It literally attempts to touch every public engaged in a relationship with the company in any manner. The credo is detailed, specified and communicated in clear-cut language which I find to be impressive. It does not appear to be a jumble of idealistic phrases combined altogether to make the organization look good, but rather a sincere statement that rooted out from genuine concept of the organization. As Catherine stated, a separate section describing the history of the credo, and the abundant contents provided on the Web site focusing on corporate social responsibilities and diversity issues gives strength to how important the company takes its credo. However, this wonderful statement aroused yet another question mark in my head.
Maybe a conspiracy theory is playing in my head, but I wonder is J&J in living of the image of the Tylenol crisis. Yes, they faced a crisis situation that was severe enough to bring a corporation down, and yes they did do an excellent job during the situation. It’s great to know this corporation is putting so much emphasis on corporate ethics, but a recent incident makes me wonder if J&J is as “ethical and responsible” as they claim to be. A scandalous event took place last February when certain subsidiaries engaged in inappropriate payments
(http://www.newsvine.com/_news/2007/02/12/565667-jj-improper-payments-possible-at-unit). According to sources, some of its foreign subsidiaries “may have made improper payments in connection with the sale of medical devices in two small-market countries.” J&J did the usual: disclosed information voluntarily, resigned the director from its position and announced that further investigation will take place and that the corporation is taking this matter seriously. However, the corporate spokesperson Jeffery Leebaw did not disclose the countries, subsidiaries, products or other company employees involved, nor did he mention when the wrongdoing occurred. Statement of apologia was missing as well.
Companies make mistakes we all do. What’s so good about this imperfection is that we learn from it, and try not to make the same mistakes twice. J&J have a corporate credo for obvious reasons, and they are even revered for their responsible actions. This condition is pretty rare for a corporation to gain. However, the recent improper money-take is a huge shock since it happened within a corporation that shouted ethical managing in every activity. I’m pretty sure that if this happened in WalMart, people wouldn’t be too surprised or feel betrayed. As Minji said, any corporation can have a credo hanging on their wall. Bring this into implementation is another thing. I know this single incident cannot bring down all the other outstanding performances done by J&J, but this happening is something that completely counterattacks the so-deliberately stated credo. The classical example of excellent Tylenol crisis communication can’t save J&J’s reputation forever.
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Min, at 10:45 PM
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Unknown, at 12:11 AM
The Johnson & Johnson credo, which is an aberration (I am not aware of any other company that has such guiding principles, or at least followed through on it with regards to its commitment to its stakeholders), is the obvious reason the company was able to bounce back on its feet in spite of loosing its market share, millions of dollars from the product recall, and plummeted stock.
The credo is an aberration because it emphasizes importance and concern for consumers over stakeholders in a capitalist economy where the opposite should be the case. The company places importance in its customers, its employees, its communities, and then its stakeholders, in that order, thus setting an early example of Corporate Social Responsibility. It is amazing to note that the top management of J&J still went ahead with a nationwide recall of Tylenol knowing full well what the financial implications were, and in spite of the fact that the contaminated capsules were known to have originated from only one geographical area. Mitroff (2004) would contend that J&J were able to handle the crisis as well as they did because they were able to think outside the box thereby freeing themselves from the alluring trap of applying ordinary solutions to an extraordinary situation, extraordinary situations require extraordinary actions. The underlying principle of the credo seems to be a well articulated cost/benefit analysis where the company’s founders realized that the cost of not acting responsibly or not keeping stakeholders interests at the fore of the company’s operations would far outweigh the financial short-term benefits.
More impressive is the fact that J&J had no precedent to refer to in coming up with a solution to their quagmire. In spite of the scope of the crisis, they were able to make the right decisions and more importantly, make those decisions quickly. They took steps to protect their consumers in spite of the fact that the cyanide poisoning occurred through no fault of their own and this won them the adulation of civil and corporate America. The company’s actions had the far reaching effect of not only revolutionizing the packaging of pharmaceutical products, but all consumer products.
“The features that made Johnson & Johnson's handling of the crisis a success included the following:
• They acted quickly, with complete openness about what had happened, and immediately sought to remove any source of danger based on the worst case scenario - not waiting for evidence to see whether the contamination might be more widespread
• Having acted quickly, they then sought to ensure that measures were taken which would prevent as far as possible a recurrence of the problem
• They showed themselves to be prepared to bear the short term cost in the name of consumer safety. That more than anything else established a basis for trust with their customers”
Companies in Crisis
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Unknown, at 12:12 AM
Right off the bat, I was surprised at how many different stakeholder groups the Johnson and Johnson credo addresses. It begins each paragraph by addressing a new audience: consumers and health service employees, J&J employees, the local and global community in which the corporation operates, and its shareholders. It’s very specific in its responsibilities to each group. I was also surprised to see how much information is available regarding the credo on the Johnson & Johnson web site. It detailed the history of the crisis and it provided a tool to translate the credo into any number of languages. Also, when I searched the web site for “Tylenol 1982” I found links to a couple of different articles about the incident, including information on how to obtain the packet from J&J detailing the corporation’s response to the crisis. This seems to reinforce the credo’s focus on responsibility to its community. By allowing people to request materials on such a enormous event in the corporation’s history, they’re increasing their transparency and providing students, investors, consumers, and others the tools they need to investigate the company.
This was not the first time I’d heard of the great job J&J did handling the Tylenol scare, but I read more about the topic this time. Tamara Kaplan of Penn State wrote a good article about the case that I used as my source. Kaplan details how many felt the corporation would never be able to sell Tylenol again, but then goes on to explain the corrective actions Johnson & Johnson took to ensure the safety of their customers. Beyond recalling Tylenol products and swallowing a huge loss, they put their responsibility to the safety of the general public at the top of their agenda. Some might argue that the company neglected its responsibility to its shareholders, as outlined in the credo, by voluntarily taking such a huge loss. I’d argue that J&J did what they needed to do to restore consumer confidence and ensure the future success of the corporation.
Perhaps the J&J case stands out because it contrasted sharply with the way other corporations handled product contaminations at the same time. Kaplan wrote about the Source Perrier case that broke earlier in 1982 in which Perrier water in the US was found to be contaminated with benzene. Kaplan explained that Perrier took the position that it was a one time problem and only recalled limited quantities of its North American products. When the same contamination was found in its water in Europe, Perrier backpedaled, admitted that people all over the world were consuming contaminated water, and conducted a global recall.
J&J immediately became involved when the Tylenol tampering was discovered. Kaplan explains that the corporation worked with law enforcement in the Chicago area to keep the communication channels open during the investigation. J&J even offered a $100,000 reward for information leading to the capture of the person responsible for the contamination.
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Meredith, at 8:18 AM
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