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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%