Code of Ethics of Johnson & Johnson - Research Paper Example

?Running Head: of Ethics of Ethics [Institute’s of Ethics Introduction With operations in 57 countries and existence, through product, in more than 175 countries of the world, “Johnson & Johnson is one of the world’s largest and most reputed global American pharmaceutical, medical devices and consumer packaged goods manufacturer” (Flamholtz & Randle, 2011). The company has around 57 subsidiaries under its umbrella and combined, they generated revenue of more than 61 billion US dollars in the year 2010. Founded in “1886 by Robert Wood Johnson along with his brothers James Wood Johnson and Edward Mead Johnson, the company has its headquarters in New Brunswick, New Jersey. The current J&J head is the CEO and Chairman of the company, William C. Weldon” (Flamholtz & Randle, 2011). Unlike other companies, J&J does not have a mission or vision statement but it has a Credo that has been guiding all the actions and decisions of the company for more than the past 60 years. Furthermore, unlike other companies, this Credo or code of ethics is a simple one-pager document that hangs on the walls of company office in 57 countries and in 36 different languages (Flamholtz & Randle, 2011). Discussion “It was in the year 1943, when the Chairman and a member of the company’s founding family, write this credo for the company, just before it was going public” (Leonard-Barton, 1998). The term corporate social responsibility did not even exist at that time. The period of James E. Burke who served as the company’s Chief Executive Officer (1976-1989) was the defining moment in the history of the company ad its credo. During his period, the company faced several allegations and litigations and he asked his fellow executives to either follow the Credo or tear it down the wall. However, during the mid 1970s, Burke found that the classical Credo of the company has lost its legacy and influence in the company. He took up the task to revitalizing the energy of the Credo and sat down with other executives to make minor adjustments to it (Wit & Meyer, 2010). Burke believed that there was another more important for the company than its Credo because for the past one hundred, it has been the values and ethical standards of the company defined in the Credo, which have helped the company to perform well and outclass its competition (Flamholtz & Randle, 2011). Since then, the company has been putting a lot of its emphasis on the Credo regardless of the situations or the geographical regions. All the employees in the company, whether at managerial or non-managerial, regardless of their geographical location, know about the Credo since from their day one. At every office and floor of the company, the Credo is framed and hung on the wall. Employees receive extensive trainings to ensure that they know about the ethical values of the company and its history of compliance to ethical values (Pride, Hughes & Kapoor, 2008). There are four essential elements of the Credo, which are customers, employees, community, and stockholders. The company has the responsibility of providing good and quality products to the customers. Employees must receive the due respect and development through their career. For the community, the company must act as good and responsible citizens of the community. Lastly, the stockholders of the company must receive a fair return (Lagan & Moran, 2005). The credo of J&J does not have the greatest words or the unique ones in the history of businesses. What males J&J credo so influential and important is the order of those words. J&J believed that customers come first, then employees, then the community and lastly, the stockholders (Flamholtz & Randle, 2011). It does not mean that the stockholders could be avoided but it means that the company believes that if customers are receiving quality products, employees are being respected, we become good citizens of the community, and then profits would flow for the stockholders as well. Furthermore, important here to note is that the Credo does not talk about great, high or the highest products but it talks about a “fair return on investment” (Leonard-Barton, 1998). The most important question of the paper is that is the Credo of the company realistic enough. There are many reasons to answer in yes. First, if it were not then the company would not have been able to survive for the past more than 60 years (Wit & Meyer, 2010). Second, the pursuit for high profits may be able to give success to any organization in short term but in long run, it is the conduct and ethics of the company that distinguishes it from the others. Companies that have well defined code of ethics are able to inspire people and motivate them to perform with all their potentials since they feel that they are a part of something good and meaningful (Alsop, 2006). Furthermore, these companies are more likely to attract the best talent in the market. That explains why J&J is one of the best employers in the world for the past many decades. Third, these companies develop customer loyalty and satisfaction, which lasts for ages and they reap these benefits in the end. Furthermore, the statement of company former CEO Burke is important in this regard, in which he said, “Whenever we cared for the customer in a profound-and spiritual-way, profits were never a problem” (Lagan & Moran, 2005). Interestingly, research reveals that 97 percent of the organizations with more than 10000 employees in United States would have a formal and written code of ethics. In fact, around 93 percent small and medium sized organizations in United States would also have some sort of code of ethics. Furthermore, there popularity is increasing with every day. Another research conducted by the Institute for Global Ethics with the business organizations of 22 countries found out that 78 percent have formally stated statement of ethical standard or code of ethics (Nelson & Quick, 2010). Furthermore, they do not tend to differ from each other. Most of them, in some way or the other, include the enforcement of values such as honesty, fairness, respect, responsibility, and caring. Moreover, their code is likely to fall into three categories. These are, first, being a dependable organizational citizen, second, avoidance of unethical and unlawful behaviours and third, being nice of the customers and shareholders (Flamholtz & Randle, 2011; Trevino & Nelson, 2010). The point here is that like Johnson & Johnson, majority of other companies around the world have their own “Credos”. The important question here is that are these code of ethics effective enough to tame the employee behaviour and enforce ethical standards in the organization. Unfortunately, the answer is no. More than 75 percent of the employees in United States state that they have witnessed things such as illegal actions, deceptive business practices, sexual harassment, unsafe working conditions, environmental violations, and others in the past 12 months at their workplaces (Trevino & Nelson, 2010). In fact, even Enron had a detailed 60-pager code of ethics, which was there all around the organization (Nelson & Quick, 2010). Does this mean that codes of ethics are useless? After considering the case of Johnson and Johnson, the answer would be a definite no. It was in the fall of 1982 that Johnson & Johnson and its best selling US drug Tylenol was in deep trouble. The drug was not only responsible for generating revenues of almost 400 million per year but this drug and its performance was symbol of commitment, honesty, and quality of Johnson & Johnson. “The problem was that the drug caused the death of seven residents from Chicago. The extra strength Tylenol capsules were found to be under contamination of cyanide” (Alsop, 2006). The next few weeks were the most pressurizing and painful for J&J managers and executives. The prime reason behind these pressures and pain was not the Tylenol case but the decision of the executives to open all door for public and media to ask and communicate. Investigation showed that cyanide became a part of the drug after the capsules left the company and the problem is only in the Chicago area. Nevertheless, the sales of the drugs dropped sharply and research revealed that more than 60 percent of the customer decided to buy any more drugs from J&J (Lagan & Moran, 2005; Wit & Meyer, 2010). The major here was about the fate of the 31 million bottles, which were lying on the shelves of Chicago’s drugstores. The FBI, Food, and Drug Administration, consultants and others advised the company executives not to take any drastic action. However, they could not sit quietly as it was against the Credo. Surprisingly, they decided that they would call all the drugs immediately and bear the cost of 100 million US dollars. After a few weeks, the company introduced the capsules in a new better packing and announced that it was ready to buy back all the previous drugs from the customers. It continued its cooperation with the media to gain support from the customers and even established a customer hot line exclusively for this purpose. In the spring of 1983, the research showed that 93 percent of the customers think that the company did a good job in handling the crisis (Pride, Hughes & Kapoor, 2008). “Unfortunately, the executives of the company found themselves in another crisis when a 23 old woman died after taking a cyanide-laced Tylenol capsule in 1986” (Pride, Hughes & Kapoor, 2008; Nelson & Quick, 2010). This time the company decided to bear the cost of 150 million US dollars in order to replace all the capsules with caplets. Throughout the history of the company, there are various other examples, where it has followed its Credo boldly and earned the reputation of the one most ethical and socially responsible company in the world. Once again, if the company has taken the decision to avoid or exploit the issue, it would have never ever gone to become what it has become today (Pride, Hughes & Kapoor, 2008; Nelson & Quick, 2010). The current Credo is largely the same as it was in the year 1943 when Robert Wood Johnson drafted it. However, there have been some minor changes, which are related to either the order of the essence of the credo. Despite the fact that there is no formal procedure listed at J&J for revisiting or amending the Credo, it appears that the board of the company and its executive directors reserve the authority to do the same with consensus (Leonard-Barton, 1998). References Alsop, R. J. (2006). The 18 Immutable Laws of Corporate Reputation: Creating, Protecting, and Repairing Your Most Valuable Asset. Kogan Page Publishers. Flamholtz, E., & Randle, Y. (2011). Corporate Culture: The Ultimate Strategic Asset. Stanford University Press. Lagan, A. & Moran, B. (2005). Three Dimensional Ethics: Implementing Workplace Values. Cengage Learning. Leonard-Barton, D. (1998). Wellsprings of knowledge: building and sustaining the sources of innovation. Harvard Business Press. Nelson, D. L., & Quick, J. C. (2010). Organizational Behavior: Science, the Real World, and You. Cengage Learning. Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2008). Foundations of Business. Cengage Learning. Trevino, Linda K., & Nelson, Katherine A. (2010). Managing Business Ethics. John Wiley and Sons. Wit, B. D., & Meyer, R. (2010). Strategy: Process, Content, Context, an International Perspective. Cengage Learning EMEA. Appendix Read More