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Business Ethics Insight: Johnson & Johnson’s Values-Based Ethical Culture: Credo Goes Beyond Compliance

by Michael Josephson on February 11, 2012

“The foundation of all our past success and future growth is formed by the core values embodied in our Credo. These values must always drive our decisions and they must never be sacrificed in the pursuit of business objectives.
- “Living the Credo at Johnson & Johnson,” a training and guidance manual created for Johnson & Johnson by the Josephson Institute of Ethics

This statement articulates the foundation of J&J’s pledge to perpetuate and preserve a values-based ethical culture grounded in a statement of principles that is literally in stone at the company’s New Brunswick, N.J., headquarters.

Living according to or up to the Credo principles is not automatic or easy and J&J, like other companies functioning in a dynamic, highly competitive global marketplace in a heavy regulated industry, has had occasional shortfalls that it has and should take seriously. In the last few years, it’s reputation (emphatically established by their exemplary handling of the Tylenol poisoning scandal in the 1980s), and the morale of many employees who are fiercely protective of J&J’s stellar image have been damaged by a spate of problems.

According to a November 20, 2011 article in USA Today: “As J&J’s profits last year swelled to a record $13 billion, the company has been found liable or reached settlements totaling $751 million in taxpayer health care fraud claims; paid $70 million to settle foreign bribery charges; been sued by consumers who say J&J’s hip replacement devices failed inside their bodies; and seen the shutdown of a major plant that produces Tylenol and other best-selling pain relievers because it failed to meet federal safety standards. . . . The company also faces the prospect of paying millions or more to settle outstanding government fraud claims stemming from what the government says is J&J’s questionable marketing of at least one brand-name drug.”

To the company’s credit, they have addressed the issues forthrightly rather than sweeping them under the rug. Discussion about the problems and the things J&J is doing to prevent them in the future was a prominent part of Chairman William Weldon’s statement in the company’s 2010 Annual Report .

* Seeking to reassure both internal and external stakeholders, Mr. Weldon said: “Unwavering commitment to the principles embodied in Our Credo and an appreciation for the elements of our operating model are as strong today as at any time in our history.”

The viability and durability of a company’s values is often tested by adversity, and it remains to be seen whether J&J will be able to fully restore what many veteran executives call it “trustmark.” My guess is it will never again be as good as it was, but I believe the company will remain a model of corporate moral stature because, I think, the concept of the Credo is in the DNA of the organization. Hence the statement: “Our Credo is much more than an ethics code that tells us what to do. It is a statement of our living heritage that tells us who we are.” That’s what it means to have a values-based ethical culture.

Though preventing future shortfalls may be easier said than done, J&J’s ongoing response to its troubles confirms and probably strengthens the company’s commitment to exemplary ethical practices and preservation of trust as its most valued and valuable asset.

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Most large companies today have a major corporate compliance program headed up by a senior executive. Many call this executive the “chief compliance officer.” Some include the terms “ethics” or “values” in the title, and many companies use the title “Ethics Officer.” J&J rejected the idea of creating a special department or position to assure that Credo principles — which embody but go beyond the concept of compliance — to guide all business decisions. Its former CEO, Ralph Larson, reasoned that every executive and every employee must see themselves as guardians of the Credo’s ethical principles. Moreover, the Credo is not relegated to posters and paperweights. Most conferences and major meetings devote a significant portion of time to discussing the importance of  and challenges presented by the Credo.

* More of Chairman Weldon’s statement: “. . .  our experience with the McNeil Consumer Healthcare recalls has been difficult for all of us. Most important, we disappointed our customers. Trust and confidence in Johnson & Johnson and our products are fundamental to everything we do. Even though millions of customers remain supportive of our work to assure quality and restore our consumer brands to the market, that trust and confidence have been truly tested. . . .  It is our responsibility to learn from what happened, address problems at their root causes and ensure that only the highest-quality products reach our customers. That hard work—and the subsequent results—will help earn back trust and respect. . . .  We are on our way to restoring McNeil Consumer Healthcare to the high levels of quality and compliance that people expect of all Johnson & Johnson companies and that we expect of ourselves.”

For more details, see The J&J Credo:

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