Rutgers MBA Session-11!04!06 W-o Notes

Barbara J. ElbertsonDirector General Management Talent Development

November 4, 2006

For DiscussionFor DiscussionFor DiscussionFor Discussion

About Johnson & JohnsonAbout Johnson & Johnson

Our Culture, Our CredoOur Culture, Our Credo

Employee Engagement-Employee MotivationEmployee Engagement-Employee Motivation

Q&AQ&A

About Johnson & JohnsonAbout Johnson & Johnson

Our Culture, Our CredoOur Culture, Our Credo

Employee Engagement-Employee MotivationEmployee Engagement-Employee Motivation

Q&AQ&A

A Company With a Rich HistoryA Company With a Rich HistoryA Company With a Rich HistoryA Company With a Rich History

Founded in 1886 by Robert Wood JohnsonFounded in 1886 by Robert Wood Johnson in New Brunswick, NJ in New Brunswick, NJ

Founded in 1886 by Robert Wood JohnsonFounded in 1886 by Robert Wood Johnson in New Brunswick, NJ in New Brunswick, NJ

Robert WoodRobert Wood

James WoodJames Wood

Edward MeadEdward Mead

First Johnson & Johnson FacilityFirst Johnson & Johnson Facility

World’s Most Comprehensive and Broadly World’s Most Comprehensive and Broadly Based Health Care CompanyBased Health Care Company

World’s Most Comprehensive and Broadly World’s Most Comprehensive and Broadly Based Health Care CompanyBased Health Care Company

115,700 Employees115,700 Employees

230 Operating companies in 57 countries230 Operating companies in 57 countries

Selling products in 175 countriesSelling products in 175 countries

Highly decentralizedHighly decentralized

115,700 Employees115,700 Employees

230 Operating companies in 57 countries230 Operating companies in 57 countries

Selling products in 175 countriesSelling products in 175 countries

Highly decentralizedHighly decentralized

PharmaceuticalsPharmaceuticals

Consumer & Personal CareConsumer & Personal Care Medical Devices & DiagnosticsMedical Devices & Diagnostics

OTC’s and NutritionalsOTC’s and Nutritionals

18.0%

44.2%

37.8%18.0%

44.2%

37.8%

Balanced PortfolioBalanced PortfolioBalanced PortfolioBalanced Portfolio

Medical Devices& Diagnostics

Medical Devices& Diagnostics

PharmaceuticalsPharmaceuticals

ConsumerConsumer

2005 Sales: $50.5 Billion2005 Sales: $50.5 Billion

6%

24% 56%

14%

6%

24% 56%

14%

2005 Sales by Geographic Area2005 Sales by Geographic Area2005 Sales by Geographic Area2005 Sales by Geographic Area

Europe$12.2 Billion

Europe$12.2 Billion

U.S.$28.4 Billion

U.S.$28.4 Billion

W. Hemisphere$3.1 Billion

W. Hemisphere$3.1 Billion

Asia, Pacific, Africa$6.8 Billion

Asia, Pacific, Africa$6.8 Billion

Total Sales: $50.5 BillionTotal Sales: $50.5 Billion

Historical PerformanceHistorical PerformanceHistorical PerformanceHistorical Performance

100 +10.5% +11.0% +10.9%

50 +11.1 +11.7 +14.2

20 +10.9 +10.8 +15.3

10 +10.5 +11.3 +15.9

5 +11.6 +10.3 +16.0

1 +6.7 +6.0 +13.3

100 +10.5% +11.0% +10.9%

50 +11.1 +11.7 +14.2

20 +10.9 +10.8 +15.3

10 +10.5 +11.3 +15.9

5 +11.6 +10.3 +16.0

1 +6.7 +6.0 +13.3

73 Consecutive years of Sales increases73 Consecutive years of Sales increases 21 Consecutive years of double digit Earnings increases21 Consecutive years of double digit Earnings increases(1)

43 Consecutive years of Dividend increases43 Consecutive years of Dividend increases

NetNetIncomeIncome(1)(1)

NetNetIncomeIncome(1)(1)

ReportedReportedSalesSales

ReportedReportedSalesSales

OperationalOperationalSalesSales

OperationalOperationalSalesSalesYearYearYearYear

(1) Proforma excluding In-process R&D, net taxes on repatriated cash under the AJC Act and other charges and credits(1) Proforma excluding In-process R&D, net taxes on repatriated cash under the AJC Act and other charges and credits

Broadly based Broadly based in Humanin Human

Health CareHealth Care



Foundation Foundation Built On Built On

Ethics andEthics andThe CredoThe Credo



A Culture ofA Culture of ManagingManaging

For theFor theLong-termLong-term



Decentralized Decentralized ManagementManagement PhilosophyPhilosophy


Performance Driven by Four Performance Driven by Four Enduring Strategic PrinciplesEnduring Strategic PrinciplesPerformance Driven by Four Performance Driven by Four Enduring Strategic PrinciplesEnduring Strategic Principles















Leadership and Growth ImperativesLeadership and Growth ImperativesLeadership and Growth ImperativesLeadership and Growth Imperatives

Leadership & GrowthLeadership & Growth • CompetitivenessCompetitiveness• SuperiorSuperior GrowthGrowth

• LeadershipLeadership• Talent ManagementTalent Management• Global Leadership ProfileGlobal Leadership Profile

““The The most important responsibilitymost important responsibility all of us have is all of us have is to develop the leadersto develop the leaders of the future. It’s the of the future. It’s the greatest challenge we have, and the greatest challenge we have, and the most most

important legacyimportant legacy that we can leave behind.” that we can leave behind.”

William C. WeldonWilliam C. WeldonChairman and Chief Executive OfficerChairman and Chief Executive Officer

LeadershipLeadershipLeadershipLeadership

Talent Management-Talent Management-A Critical Business ImperativeA Critical Business Imperative

Talent Management-Talent Management-A Critical Business ImperativeA Critical Business Imperative

To develop and retain a diverse and robust pipeline of Extraordinary Leaders capable of meeting current,

emerging, and future challenges

Mission

AcquiringAcquiringTalentTalent

RecruitingSelectionOn-boarding

RecruitingSelectionOn-boarding

AssessingAssessingTalentTalent

Performance Management

360 AssessmentSuccession and

Development Planning

Performance Management

360 AssessmentSuccession and

Development Planning

DevelopingDevelopingTalentTalent

Critical Job Experiences

Skills EnhancementLeadership EducationCoaching

Critical Job Experiences

Skills EnhancementLeadership EducationCoaching

Rewarding/Rewarding/ CompensatingCompensating

TalentTalent

Performance Driven Compensation

Leadership Awards

Performance Driven Compensation

Leadership Awards

Diversity…Productivity…Results

Business Strategy

Talent Management Process

Leadership Accountability

Integrity and Credo-based Actions

Strategic Thinking

Big Picture Orientation with Attention to Detail Organization & Talent Development Intellectual Curiosity Collaboration and Teaming Sense of Urgency Prudent Risk-taking Self-awareness and Adaptability Results and Performance Driven

Long-Term Growth StrategyLong-Term Growth StrategyLong-Term Growth StrategyLong-Term Growth Strategy

Strong internal R&D capabilityStrong internal R&D capability

Strategic alliancesStrategic alliances

Selected acquisitionsSelected acquisitions

Strong internal R&D capabilityStrong internal R&D capability

Strategic alliancesStrategic alliances

Selected acquisitionsSelected acquisitions

Johnson & JohnsonJohnson & Johnson

C&PCC&PC MD&DMD&D PHARMPHARM CORP.CORP.

Foundation BuiltFoundation BuiltOn Ethics andOn Ethics and

The CredoThe Credo


The CredoThe Credo

A Culture ofA Culture of Managing For Managing For the Long-termthe Long-term




Leadership & GrowthLeadership & GrowthLeadership & GrowthLeadership & Growth





Four Enduring Strategic PrinciplesFour Enduring Strategic PrinciplesEnabling Leadership & GrowthEnabling Leadership & Growth

Four Enduring Strategic PrinciplesFour Enduring Strategic PrinciplesEnabling Leadership & GrowthEnabling Leadership & Growth

Science in the Science in the Service of ConsumersService of Consumers

Consumer & Personal CareConsumer & Personal CareConsumer & Personal CareConsumer & Personal Care

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

28.7

21.1

19

16.2

8.8

8.7

8.4

6.8

6.4

4.7

4.2

2.7

0 5 10 15 20 25 30 35

In-Vitro Diagnostics

Orthopaedics

Cardiovascular

Imaging**

Patient Monitoring

Ophthalmology

Surgical Instruments

Dialysis

Wound Care

Respiratory

Needles & Syringes

Neurology

2004-2008 CAGR

6.9%

13.3%

16.0%

5.1%**

3.2%

7.0%

7.5%

5.5%

5.5%

9.0%

10.0%

15.0%

= J&J Participation

$U.S. Billions

Worldwide MD&D MarketWorldwide MD&D MarketWorldwide MD&D MarketWorldwide MD&D Market

Source: McKinsey 2004 (Dorlands)Source: McKinsey 2004 (Dorlands) *Estimate based on Frost & Sullivan, Freedonia*Estimate based on Frost & Sullivan, Freedonia

$ 180 Billion Market*$ 180 Billion Market*’’04 – ‘08 CAGR: 9%**04 – ‘08 CAGR: 9%**$ 180 Billion Market*$ 180 Billion Market*’’04 – ‘08 CAGR: 9%**04 – ‘08 CAGR: 9%**

PharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticals

Therapeutic Growth EnginesTherapeutic Growth EnginesTherapeutic Growth EnginesTherapeutic Growth Engines

Sustainable leadership in current marketsSustainable leadership in current markets– CNSCNS– Pain managementPain management– Immune-Mediated Inflammatory Diseases Immune-Mediated Inflammatory Diseases

(I.M.I.D.)(I.M.I.D.)– AnemiaAnemia

Four new global growth enginesFour new global growth engines– VirologyVirology– OncologyOncology– Anti-BacterialsAnti-Bacterials– Cardiovascular DiseaseCardiovascular Disease

Sustainable leadership in current marketsSustainable leadership in current markets– CNSCNS– Pain managementPain management– Immune-Mediated Inflammatory Diseases Immune-Mediated Inflammatory Diseases

(I.M.I.D.)(I.M.I.D.)– AnemiaAnemia

Four new global growth enginesFour new global growth engines– VirologyVirology– OncologyOncology– Anti-BacterialsAnti-Bacterials– Cardiovascular DiseaseCardiovascular Disease

Enabling Leadership & GrowthEnabling Leadership & GrowthEnabling Leadership & GrowthEnabling Leadership & Growth

• EmpowermentEmpowerment• EntrepreneurshipEntrepreneurship

Principles of DecentralizationPrinciples of Decentralization

• AccountabilityAccountability• CollaborationCollaboration


The CredoThe Credo


The CredoThe Credo





Leadership & GrowthLeadership & Growth

Broadly based Broadly based in Human in Human




Standardization


Decentralized Decentralized ManagementManagementPhilosophyPhilosophy

Decentralized Decentralized ManagementManagementPhilosophyPhilosophy


External Environment

Business Planning

Organizational & Talent Planning

StrategyCompetitivenessCompetitiveness Superior growthSuperior growth




The CredoThe Credo


The CredoThe Credo







Enabled By

A Culture ofA Culture ofManaging ForManaging ForThe Long-termThe Long-term

A Culture ofA Culture ofManaging ForManaging ForThe Long-termThe Long-term





The CredoThe Credo


The CredoThe Credo







Foundation BuiltFoundation BuiltOn Ethics and On Ethics and

Our CredoOur Credo

Foundation BuiltFoundation BuiltOn Ethics and On Ethics and

Our CredoOur Credo



Our CredoOur CredoOur CredoOur Credo Written by General Robert Written by General Robert

Wood Johnson, Jr. in the Wood Johnson, Jr. in the 1940s1940s– Visionary business Visionary business

leader leader

Among the first to speak Among the first to speak openly of a company’s openly of a company’s responsibility responsibility – Responsibilities far Responsibilities far

beyond the beyond the requirements of its requirements of its stockholdersstockholders

– Committed company to Committed company to adhere to a set of adhere to a set of responsibilitiesresponsibilities

Written by General Robert Written by General Robert Wood Johnson, Jr. in the Wood Johnson, Jr. in the 1940s1940s– Visionary business Visionary business

leader leader

Among the first to speak Among the first to speak openly of a company’s openly of a company’s responsibility responsibility – Responsibilities far Responsibilities far

beyond the beyond the requirements of its requirements of its stockholdersstockholders

– Committed company to Committed company to adhere to a set of adhere to a set of responsibilitiesresponsibilities

Our CredoOur CredoOur CredoOur Credo

CustomersCustomers

EmployeesEmployees

CommunityCommunity

ShareholdersShareholders

CustomersCustomers

EmployeesEmployees

CommunityCommunity

ShareholdersShareholders

Four Tenets

Our CredoOur CredoOur CredoOur Credo

Reflects our profound inclination Reflects our profound inclination to put the needs of others firstto put the needs of others first

Guides us in all our actionsGuides us in all our actions– Reinforces our deep Reinforces our deep

conviction to conviction to meet customers’ and meet customers’ and patients’ needspatients’ needs

– Global community of caring Global community of caring employeesemployees

– Help rebuild destroyed Help rebuild destroyed communitiescommunities

– Positions us to meet Positions us to meet shareholder expectationsshareholder expectations

Evidenced by what each of us do Evidenced by what each of us do every day of the year – at work, at every day of the year – at work, at home, in our communitieshome, in our communities

Reflects our profound inclination Reflects our profound inclination to put the needs of others firstto put the needs of others first

Guides us in all our actionsGuides us in all our actions– Reinforces our deep Reinforces our deep

conviction to conviction to meet customers’ and meet customers’ and patients’ needspatients’ needs

– Global community of caring Global community of caring employeesemployees

– Help rebuild destroyed Help rebuild destroyed communitiescommunities

– Positions us to meet Positions us to meet shareholder expectationsshareholder expectations

Evidenced by what each of us do Evidenced by what each of us do every day of the year – at work, at every day of the year – at work, at home, in our communitieshome, in our communities

Credo ValuesCredo Values

CitizenshipCitizenship• Obey laws/regulationsObey laws/regulations

• Protect the environmentProtect the environment

• Support worthy causesSupport worthy causes

CaringCaring• Be concerned about theBe concerned about the

well-being of otherswell-being of othersaffected by our actionsaffected by our actions

ResponsibilityResponsibility• Recognize interests Recognize interests

of all stakeholdersof all stakeholders

• Be personally Be personally accountableaccountable

• Consider impact Consider impact long-term and long-term and beyond your area beyond your area of responsibilityof responsibility

RespectRespect• Do not exploit, demean Do not exploit, demean

or discriminateor discriminate

• Our actions should earn Our actions should earn respect from respect from stakeholdersstakeholders

TrustworthinessTrustworthiness• Strive for a good, ethical solutionStrive for a good, ethical solution

• Align behavior with stated valuesAlign behavior with stated values

• Avoid misrepresentation – Avoid misrepresentation – be honestbe honest

• Keep promisesKeep promises

• Be worthy of stakeholder loyaltyBe worthy of stakeholder loyalty

FairnessFairness• Be fair in dealings with customers, Be fair in dealings with customers,

suppliers, communities, employees suppliers, communities, employees and competitorsand competitors

• Be unbiased/objectiveBe unbiased/objective

• See things through the eyes of othersSee things through the eyes of others

Credo-Based Decision ProcessCredo-Based Decision ProcessCredo-Based Decision ProcessCredo-Based Decision Process

Recognize Recognize the moral the moral challengechallenge

Is there a Is there a conflict between conflict between two “goods?” two “goods?”

Proactively Proactively address the issueaddress the issue

Avoid Avoid rationalizationsrationalizations

Gather pertinent Gather pertinent factsfacts

In conflict, think In conflict, think long-termlong-term

• Weigh conflicting Weigh conflicting interests against interests against Credo values Credo values placing emphasis placing emphasis on core valueson core values

• Assess motives/Assess motives/intentintent

• Assess impact of Assess impact of alternatives on alternatives on stakeholdersstakeholders

Search forSearch for a good solution a good solution

Address threshold issuesAddress threshold issuesUse more than one Use more than one ethical approachethical approach

Act with Act with couragecourage

Accept the Accept the discomfortdiscomfort

Acknowledge Acknowledge any downsideany downside

Test your Test your provisional provisional

decisiondecision

Ask yourself:Ask yourself:

• Does it pass the Does it pass the “Tell All” test?“Tell All” test?

• Could you explain Could you explain it to those affected, it to those affected, to your family, to your family, your peers?your peers?

• Will it harm the Will it harm the Company’s reputation Company’s reputation if reported in the media?if reported in the media?

Talk with others:Talk with others:• Use your management, Use your management,

others at corporate as a others at corporate as a sounding boardsounding board

A critical component in retaining talentA critical component in retaining talentA critical component in retaining talentA critical component in retaining talent

Employee EngagementEmployee Engagement,, or the extent to which or the extent to which employees are willing and able to contribute to employees are willing and able to contribute to company successcompany success

Employee EngagementEmployee Engagement,, or the extent to which or the extent to which employees are willing and able to contribute to employees are willing and able to contribute to company successcompany success

The top ten drivers of ENGAGEMENT are about the The top ten drivers of ENGAGEMENT are about the things that enable employees to make a difference things that enable employees to make a difference Towers Perrin Talent Report 2003Towers Perrin Talent Report 2003

The top ten drivers of ENGAGEMENT are about the The top ten drivers of ENGAGEMENT are about the things that enable employees to make a difference things that enable employees to make a difference Towers Perrin Talent Report 2003Towers Perrin Talent Report 2003

Benefits

Challenging work

Customer orientation

Career advancement opportunities

Senior management vision

Senior management interest in employee well-being

Decision-making authority

Reputation of the company

Collaboration with co-workers

Resources to get the job done

Input on decision making

Learning andDevelopment

Pay

Work Environment

Top 10Engagement

Drivers

Our study provides a talent management mantra that says...

To attract me, you’ve got to get the basics right (pay, benefits, career, people)…

But to really engage me, leadership has to show interest in me, you’ve got to give me challenge and authority, and the company has to focus on success (customers)

Benefits

Overall satisfaction with benefits needed in day-to-day life

When it comes to RETENTION, the rewards that matter When it comes to RETENTION, the rewards that matter most are about advancement, keeping good people and most are about advancement, keeping good people and the work environmentthe work environment Towers Perrin Talent Report 2003Towers Perrin Talent Report 2003

When it comes to RETENTION, the rewards that matter When it comes to RETENTION, the rewards that matter most are about advancement, keeping good people and most are about advancement, keeping good people and the work environmentthe work environment Towers Perrin Talent Report 2003Towers Perrin Talent Report 2003

Pay

Providing competitive base pay


Retaining high caliber people

Developing skills of employees

Challenging work

Overall work environment


Manager provides clear goals

Manager inspires enthusiasm

Top 10Retention

DriversWork

EnvironmentLearning andDevelopment

NOTE: Italics indicate organizational performance on these areas that overlap with engagement drivers…



To retain me, you’ve got to help me advance, keep the good people, and provide the right work environment…

The Johnson & Johnson Worldwide Credo Survey is a reflection of each associates thoughts and ideas regarding their Company and their work.

Measures the Impact of Leadership Behavior

OnOrganizational Beliefs

Measures the Impact of Leadership Behavior

OnOrganizational Beliefs

Outcomes

AssessedCredo Values/ethical

conduct

Company Innovation

High Performance

Job Demands

Valuing People

Customer Focus

Talent Pipeline

Employee Engagement

Credo Survey ProcessCredo Survey ProcessCredo Survey ProcessCredo Survey Process

ParticipationParticipation InterpretationInterpretation

CommunicationCommunication

100% Web Based

Translated Into 50

Languages

All Johnson & Johnson

Employees

Turning data into information

Normative ComparisonsGlobal, Regional, Functional,

Business Unit

Turning data into information

Normative ComparisonsGlobal, Regional, Functional,

Business Unit

Employee Feedback

Sessions

Acknowledged Areas of

Strength

Identified Areas of

Opportunity

Action Planning / AccountabilityAction Planning / Accountability

Linked With Each Report

Supervisory Review and Approval

Knowledge Sharing Resource

Status Tracking

Linked With Each Report

Supervisory Review and Approval

Knowledge Sharing Resource

Status Tracking

ImprovementImprovement

Benefits

Overall satisfaction with benefits needed in day-to-day life

When it comes to retention, the rewards that matter When it comes to retention, the rewards that matter most are about advancement, keeping good people and most are about advancement, keeping good people and the work environmentthe work environment Towers Perrin Talent Report 2003Towers Perrin Talent Report 2003

When it comes to retention, the rewards that matter When it comes to retention, the rewards that matter most are about advancement, keeping good people and most are about advancement, keeping good people and the work environmentthe work environment Towers Perrin Talent Report 2003Towers Perrin Talent Report 2003

Pay

Providing competitive base pay


Retaining high caliber people

Developing skills of employees

Challenging work

Overall work environment


Manager provides clear goals

Manager inspires enthusiasm

Top 10Retention

DriversWork

EnvironmentLearning andDevelopment

NOTE: Italics indicate organizational performance on these areas that overlap with engagement drivers…



To retain me, you’ve got to help me advance, keep the good people, and provide the right work environment…

Targeting the “Right” Targeting the “Right” Development at the “Right” TimeDevelopment at the “Right” TimeTargeting the “Right” Targeting the “Right” Development at the “Right” TimeDevelopment at the “Right” Time

EC/CGCs Incumbents

Pipeline for EC& GOCs

Pipeline for:- Presidents- IVPs- MDs

GlobalRegionalLocal

“Further Out”/Emerging Talent

Rol

es &

Exp

erie

nces

Per

form

ance

Man

agem

ent

Suc

cess

ion

Pla

nnin

g

Executive &

Leadership Developm

ent

Shared Talent Mindset & Behaviors

• A pervasive Credo-based philosophy and culture

• Critical combination of programs and processes tailored to meet the needs of growing and developing leaders

• A belief that talent impacts business results

• Performance bar is continually raised

Keys to Building a Deep Bench of Talent

• Robust processes in:

• Assessment

• Assignment Management

• Performance Management

• Recruiting

• Rigorous, action oriented talent review process

• Line accountability

• Deployed consistently and strategically aligned with GOC and J&J businessimperatives

• Programs and processes identified through the Organizational & Talent Planning Process

• Tailored and customized by GOC as required by the business demands

DevelopingDevelopingTalentTalent

Now that your know more about J&J…Now that your know more about J&J…Now that your know more about J&J…Now that your know more about J&J…

What do you believe drives What do you believe drives organizational behavior in this organizational behavior in this

company?company?

What do you believe drives What do you believe drives organizational behavior in this organizational behavior in this

company?company?

LearningsLearnings LearningsLearnings

It’s about the industry we are privileged to work inIt’s about the industry we are privileged to work in

It’s about our decentralizationIt’s about our decentralization

It’s about Credo valuesIt’s about Credo values

It’s about talent acquisition, engagement and It’s about talent acquisition, engagement and retentionretention

It’s about leaving a legacy, securing the company It’s about leaving a legacy, securing the company for the futurefor the future

It’s about LeadershipIt’s about Leadership

It’s about the industry we are privileged to work inIt’s about the industry we are privileged to work in

It’s about our decentralizationIt’s about our decentralization

It’s about Credo valuesIt’s about Credo values

It’s about talent acquisition, engagement and It’s about talent acquisition, engagement and retentionretention

It’s about leaving a legacy, securing the company It’s about leaving a legacy, securing the company for the futurefor the future

It’s about LeadershipIt’s about Leadership

Q&A

Thank YouThank You Thank YouThank You

Documents

Rutgers MBA Session-11!04!06 W-o Notes