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Case StudyCase StudyCase StudyCase Study

1919thth August 2004 August 2004

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Johnson & Johnson?

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ConsumerConsumer

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Sales Results By Segment Sales Results By Segment Sales Results By Segment Sales Results By Segment

3535%% 1717

%%

4747%%Medical Medical

Devices & Devices & DiagnosticDiagnostic

ConsumerConsumer

PharmaceuticalPharmaceutical

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Medical Devices & DiagnosticsMedical Devices & DiagnosticsMedical Devices & DiagnosticsMedical Devices & Diagnostics

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PharmaceuticalPharmaceuticalPharmaceuticalPharmaceutical

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Overview of Johnson & Johnson

A Broadly Based Health Care Company

Johnson & Johnson is the world’s mostJohnson & Johnson is the world’s most comprehensivecomprehensive andand broadly basedbroadly based manufacturer of health care products andmanufacturer of health care products and services for theservices for the consumer, pharmaceutical, consumer, pharmaceutical, and medical & diagnosticsand medical & diagnostics markets. markets.

Johnson & Johnson is the world’s mostJohnson & Johnson is the world’s most comprehensivecomprehensive andand broadly basedbroadly based manufacturer of health care products andmanufacturer of health care products and services for theservices for the consumer, pharmaceutical, consumer, pharmaceutical, and medical & diagnosticsand medical & diagnostics markets. markets.

The Corporation achieved this leadership by The Corporation achieved this leadership by concentrating on a unique form ofconcentrating on a unique form of decentralized managementdecentralized management, following the, following the ethical principles embodied in our Credoethical principles embodied in our Credo and and managing the business for themanaging the business for the long termlong term..

The Corporation achieved this leadership by The Corporation achieved this leadership by concentrating on a unique form ofconcentrating on a unique form of decentralized managementdecentralized management, following the, following the ethical principles embodied in our Credoethical principles embodied in our Credo and and managing the business for themanaging the business for the long termlong term..

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OverviewOverview

• Founded in 1886 as a supplier of health care products

• Headquartered in New Brunswick, NJ

• Companies in 57 countries, selling products in more than 175 countries

• 2003 sales were US$41.9 billion

• Over 110,600 employees worldwide

• Extensive worldwide research and supply chain capabilities

• More than US$280 million pa philanthropy

• Founded in 1886 as a supplier of health care products

• Headquartered in New Brunswick, NJ

• Companies in 57 countries, selling products in more than 175 countries

• 2003 sales were US$41.9 billion

• Over 110,600 employees worldwide

• Extensive worldwide research and supply chain capabilities

• More than US$280 million pa philanthropy

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• Leadership position in ethical and OTC pharmaceuticals, medical/surgical supplies, diagnostics and a variety of consumer products

• 75% of sales from categories where we are No.1 or No.2 globally.

• Strong commitment to R&D. $ 15 billion spent in the last 5 years.

• One of only eight corporations with a Triple A credit rating

World’s Leading Health Care Supplier

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Sales By Region

61%61%

12%12%

21%21%

U.S.U.S.

Asia-Pacific/Asia-Pacific/AfricaAfrica

EuropeEurope

6%6%

Latin America Latin America & Canada& Canada

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30 %30 %

*Products Introduced Products Introduced in Past 5 Yearsin Past 5 Years

*Products Introduced Products Introduced in Past 5 Yearsin Past 5 Years

NewNewProductsProducts*ProductsProducts*

2001 Worldwide Sales2001 Worldwide Sales2001 Worldwide Sales2001 Worldwide Sales

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R e s e a r c h & D e v e l o p m e n tR e s e a r c h & D e v e l o p m e n tR e s e a r c h & D e v e l o p m e n t

1997 1998 1999 2000 2001 20021997 1998 1999 2000 2001 2002

$ 2 .1 $ 2 .3$ 2 .6

$ 2 .9

$ 3 .6$ 4 .0

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StructureStructure

• A family of companies consisting of more than190 decentralized operating units

• Organized around three groups

– Pharmaceuticals

– Consumer & Personal Care

– Medical Devices & Diagnostics

• A family of companies consisting of more than190 decentralized operating units

• Organized around three groups

– Pharmaceuticals

– Consumer & Personal Care

– Medical Devices & Diagnostics

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The Johnson & Johnson family of companies in

Australasia.• Johnson & Johnson

Medical/DePuy• Johnson & Johnson Pacific• Janssen-Cilag• Visioncare (Vistakon)• Johnson & Johnson Research• Tasmanian Alkaloids• Ortho Clinical Diagnostics

• Johnson & Johnson Medical/DePuy

• Johnson & Johnson Pacific• Janssen-Cilag• Visioncare (Vistakon)• Johnson & Johnson Research• Tasmanian Alkaloids• Ortho Clinical Diagnostics

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Employer of Choice

• Values – Credo

• Standards of Leadership

• Process Excellence

• HR Strategy

• Basics – not Rocket Science

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J&J Credo

• What is it?• History

– 1935 “Try Reality”– 1943 first published– 1975 Credo Challenge meetings– 1982 & 84 Tylenol poisonings– 1986 Credo Survey– 1997 EC III

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Our Credo 

We believe our first responsibility is to the doctors, nurses and patients,to mothers and fathers and all others who use our products and services.

In meeting their needs everything we do must be of high quality.We must constantly strive to reduce our costs

in order to maintain reasonable prices.Customers’ orders must be serviced promptly and accurately.

Our suppliers and distributors must have an opportunity to make a fair profit.

 We are responsible to our employees,

the men and women who work with us throughout the world.Everyone must be considered as an individual.

We must respect their dignity and recognise their merit.They must have a sense of security in their jobs.

Compensation must be fair and adequate,and working conditions clean, orderly and safe.

We must be mindful of ways to help our employees fulfil their family responsibilities.Employees must feel free to make suggestions and complaints.There must be equal opportunity for employment, development

and advancement for those qualified.We must provide competent management,and their actions must be just and ethical.

 

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Our Credo 

 We are responsible to the communities in which we live and work

and to the world community as well.We must be good citizens – support good works and charities

and bear our fair share of taxes.We must encourage civic improvements and better health and education.

We must maintain in good orderthe property we are privileged to use,

protecting the environment and natural resources. 

Our final responsibility is to our stockholders.Business must make a sound profit.

We must experiment with new ideas.Research must be carried on, innovative programs developed

and mistakes paid for.New equipment must be purchased, new facilities provided

and new products launched.Reserves must be created to provide for adverse times.

When we operate according to these principles,the stockholders should realise a fair return.

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The Credo – How is it Kept Alive?

• Credo Survey - PE• Standards of Leadership• Credo Decision Making Process

training• 360 degree survey• Corporate Orientation• Credo Challenge Meetings• Business Conduct Policy - signoffs• Moments of Truth - video

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Credo Survey

30%

40%

50%

60%

70%

80%

90%

100%

3 0 %

4 0 %

5 0 %

6 0 %

7 0 %

8 0 %

9 0 %

1 0 0 %

C o m p a ny R e s ults A /P N o rm 2 0 0 2 T a rge t%F

avor

able

% F a v o r a b le

J C A u s t r a l ia C o m p a n y R e s u l t s C o m p a r e d t o

W o r ld w id e T a r g e t s & A /P R e g io n N o r m s

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Standards of Leadership

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Process Excellence

a set of preferred tools to help

make the business perform

better

Assessment Improvement Recognition

Process Excellence

SixSigmaSixSix

SigmaSigma

MetricsMetricsMetricsLean

ThinkingLean Lean

ThinkingThinking

DesignExcellence

DesignDesignExcellenceExcellence

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ASSESSMENT

Customer/MarketFocus

Customer/MarketFocus

Results

LeadershipLeadership

Business Information

Managementand Analysis

Business Information

Managementand Analysis

BusinessPlanning

BusinessPlanning

HumanResource

Development& Management

HumanResource

Development& Management

Process Management

Process Management

Business ResultsBusiness Results

SystemDriver

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KEY INITIATIVES

KEY DRIVERS

2004-2011 Human Resources DEPARTMENT STRATEGIC OBJECTIVES

To attract, develop, retain, motivate and enable sufficient quantity and quantity of talent to achieve JC Aust/NZ short and long term business objectives.

Competency Profiling key functional & leadership roles

Attract Recruitment Solution Project MBA Recruitment Program Employer of Choice initiatives

Develop Developmt Planning–fully deploy

with process tools & metrics “Talentscope” (succession

planning) Reviews at Departmental and Mgt Bd levels

Enhance Leadership Devt Prog

Retain Exit Interview Analysis program Retention plans for Critical/HiPo

Develop Compensation Programs:

Differentiation of compensation for high performance

Enhance quantity, quality and comprehensiveness of market data

Position non-salary benefits as competitive

Link compensation to team performance

Greater flexibility in packaging Incentives for retention purposes

Improve Recognition Programs

Simplify, communicate and promote

Performance Processes Align business and individual

performance planning processes Improve process & deployment

objective settingperformance measurement – set reviewsRating (incl distn)

Align Performance & Competency with Rewards, Progression

Improve linkages between comp. programs and performance

Deploy Competency based selection

Australia / NZ• Partner with JC Line Managers Leverage across J&J sectors in

Aust/NZ through Aust/NZ HR Council

Recruitment ProjectHR Services InitiativeNZ Resourcing SolutionAlignment of policies

Asia Pacific Leverage/support A/P wide

processes through A/P HE VP

J&J Worldwide Leverage J&J Corp initiatives Global HR Council “HR

Imperatives” CompNav/TalentNav deployment Global HR Data Warehouse

High Performance Organisation

J&J HR Partnering

KEY BUSINESS PERFORMANCE MEASURES

Attract, develop and retain high

performing/ potential talent

“Employer of Choice” Work Environment

Performance Ratings, Labour Turnover, Exit Interview Analysis, Succession Planning Outcomes, Employee Satisfaction, Retention of Hi-Po’s, Cost Savings

Competitive Reward and Recognition Programs

MeasurementFull Credo Survey360 degree tool deploymentFocus groups with MDBest Employers Study – HewittAustralian HR AwardsEOWA Women in Ldrship Awds

InitiativesFull follow-through implementation from staff surveys, focus groups etcDiversity initiatives including Womens Leadership Initiative (WLI), part-time working group projectTeam Building programsWork/Life Balance initiatives including PE project, Best Employers benchmarking

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Recognition

Wall Street JournalCorporate Reputation Survey

– 2004 J&J ranked #1 for fifth year in a row

Source Wall Street Journal Feb 2004

based on results of annual reputation survey by Harris

Interactive and the Reputation Institute

Wall Street JournalCorporate Reputation Survey

– 2004 J&J ranked #1 for fifth year in a row

Source Wall Street Journal Feb 2004

based on results of annual reputation survey by Harris

Interactive and the Reputation Institute

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Recognition

Fortune MagazineGlobal Most Admired CompaniesGlobal Most Admired Companies

– 2002 J&J ranked #6– 2003 J&J ranked #5– 2004 J&J ranked #7

Source The World's Most Admired Companies

FORTUNE Magazine

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Recognition

• AGSM, AFR, Hewitt “Best Employers to Work For” study

– 2004 J&J named in “Best Employers” group for third consecutive year

Source “Best Employers to Work for in Australia”, published by Hewitt Associates Dec 2001, Mar 03, Jul 04

• AGSM, AFR, Hewitt “Best Employers to Work For” study

– 2004 J&J named in “Best Employers” group for third consecutive year

Source “Best Employers to Work for in Australia”, published by Hewitt Associates Dec 2001, Mar 03, Jul 04

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Recognition• Australian Human Resources Awards

– 2003 J&J• Winner – Employer of Choice – more than 500

employees• Ranked in top 4 – Best Learning & Development

Strategy• Ranked in top 5 – Best e-Learning Strategy

– 2002 J&J• Winner – Best HR Technology• Ranked in top 4 – Best Learning & Development

Program

– 2001 J&J • Winner – Best Retention Strategy• Ranked in top 3 – Most Innovative Recruitment

StrategySource Human Resources

Magazine, “Australian Human

Resources Awards ” 2001/2/3,

• Australian Human Resources Awards – 2003 J&J

• Winner – Employer of Choice – more than 500 employees

• Ranked in top 4 – Best Learning & Development Strategy

• Ranked in top 5 – Best e-Learning Strategy

– 2002 J&J• Winner – Best HR Technology• Ranked in top 4 – Best Learning & Development

Program

– 2001 J&J • Winner – Best Retention Strategy• Ranked in top 3 – Most Innovative Recruitment

StrategySource Human Resources

Magazine, “Australian Human

Resources Awards ” 2001/2/3,

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Standards of Leadership

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Business Results• 71 Consecutive years of Sales increases• 19 Consecutive years of double digit Earnings

increases• 42 Consecutive years of Dividend increases

• 71 Consecutive years of Sales increases• 19 Consecutive years of double digit Earnings

increases• 42 Consecutive years of Dividend increases

Reported NetIncome

Reported NetIncome

ReportedSales

ReportedSales

OperationalSales

OperationalSalesYearYear

100 +10.6 +11.0 +10.7100 +10.6 +11.0 +10.7

50 +10.5 +11.2 +13.1 50 +10.5 +11.2 +13.1

20 +9.5 +10.5 +13.5 20 +9.5 +10.5 +13.5

10 +10.1 +11.9 +15.1 10 +10.1 +11.9 +15.1

5 +8.5% +11.3% +14.8% 5 +8.5% +11.3% +14.8%