Johnson & Johnson: Management Without Fault?
Johnson & Johnson claims that its numerous product recalls last year can be attributed to poor management, staffing cuts, and integrating the consumer unit it purchased from Pfizer Inc., the company said in court papers.
The report makes clear, however, that top executives are not to blame. This poses an interesting question: How can management be to blame, but not the leaders of the company? Isn’t it part of the CEO’s job to ensure that the company is properly managed?
Unfortunately, no one seems to want to take responsibility for the record number of product recalls. Until someone steps up to the plate, won’t Johnson & Johnson’s woes continue?
A special committee of Johnson & Johnson board members filed the report in response to investor lawsuits. The report placed blame with problems of quality-control and production for the company’s recent product recalls. The special panel also urged Johnson & Johnson to create a new regulatory and compliance panel.
Investors have recently filed lawsuits against the company, making allegations of management’s bribery and kickbacks as well as negligence with regards to quality control issues.
Over the past two years, dozens of Johnson & Johnson products, including Motrin, Tylenol, Benadryl, contact lenses, insulin pumps, and artificial hips, have been recalled. In fact, Johnson & Johnson has recalled so many products that it even has a web site dedicated to the recalls: http://www.mcneilproductrecall.com/.
According to the report filed by the special committee, Johnson & Johnson’s quality compliance program was cut by 35% in 2007, which could be part of the cause of the quality-control issues. Presumably these cuts were approved or at least known by company executives.
Johnson & Johnson purchased Pfizer’s consumer health-care unit in 2006 for $16.6 billion. Pfizer is the world’s largest health care-company by sales, with Johnson & Johnson coming in second. According to the committee report, the acquisition of the Pfizer unit also complicated operations and impacted procedures, which may have led to some of the company’s issues.
As long as Johnson & Johnson continues to point fingers and speculate as to the cause of all the recalls, no improvements will be made. Top executives need to take responsibility for the company’s problems and create a unified front in order to address the quality-control issues.