Beyond Compliance and
Crisis Management
WEC – IEF Workshop
November 4, 2003
Karl F. Schmidt
VP, Worldwide Process Excellence
Our Credo
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 recognize 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 fulfill
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.
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 order
the 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 realize a fair return.
Johnson & Johnson
• Written by “the General” in 1943
• A shared system of values -Worldwide
• The “glue that holds us together”
• 36 languages - key responsibilities to:
Customers
Employees
Communities/Environment
Stockholders
Why Beyond Compliance?
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Protect and enhance J&J reputation
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Reduce and eliminate risk

Drive Operational Excellence
Definition of
Beyond Compliance
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Meets all Johnson & Johnson standards and
regulatory requirements
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Optimizes products, processes and facilities by
designing in quality, safety, engineering and
environmental standards

Proactively partners with regulators and
anticipates changes in regulations, standards and
public expectations

Achieves Operational Excellence
Crisis Management
“Lessons Learned”
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Tylenol Case Study
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Incident Management

Public Relations

Risk Communication
Tylenol Tampering Incident
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When
 Sept. ’82 (Chicago) and Jan. ’86 (NY)
What happened
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Actions taken
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7 people die from Tylenol poisoning. 2 tampered
capsules found in store after initial police search.
Cyanide source of poisoning, with evidence pointing to
tampering. Quick decision to recall all capsule product
by CEO.
CEO chaired crisis mgmt team, daily communications
Credo based decision making
Full cooperation w/ authorities, open with media
Innovative package design , industry standard
Damage

Business impact – $100MM write-off, sales rebounded
70% in 4 months, 90% in 1 yr, stock price bounced
The Story behind “THE” Case Study

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Starts with excellent reputation built on deep
personal emotional trust and Values
 buys benefit of doubt in difficult times
Conduct scenario planning
Get top mgmt involved and visible fast!
Manage the information flow
Train and strengthen local expertise
Use “outside – in” thinking - sensitivity
Incident Management Objectives


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Bring situation under control
 Emergency response
Comply with regulatory
requirements
Recovery strategy
Typical Plan Components

Emergency Response
First hour reaction to an emergency
 Focus on damage assessment & control


Incident Management
From second hour through day 2-4
 Internal / External Communications Protocol:
w/ employees, customers, suppliers, media, etc.

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Recovery Strategy (~70% of development effort)
From day 2 to months beyond
 Actions to bring Manufacturing, Administration
/ Support back as quickly as possible

Incident Information
Management Objectives

Information control
– have the facts prior to release
to the public.

Maintain public trust.

Maintain license to operate.
Public Relations
Issues
Protect and enhance the company’s reputation among all
audiences
Communications Issues
The Audiences

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Customers/Suppliers
Employees, Neighbors
Elected Officials (at all levels)
NGOs, activists
News Media
…. and many more!
Communications Issues
News Media Sources
Police, fire, ambulance crews, medical and scientific
experts, local authorities, government, neighbors,
current and former employees, specialist writers,
trade publications, psychologists and “disaster”
consultants, public records, annual reports,
competitors, analysts, unions, neighbors, pressure
groups, etc. etc. etc.
And There’s More!
Risk Communications
Principles
The Communications Environment
The BAD news
The public believes they are faced with
greater risks today than in the past.
 Product recalls
 Plant closings versus corporate
profits
 Governance issues
 Environmental damage
The Communications Environment
The GOOD news
The public is not looking for zero risk.
 People are human, mistakes
happen.
 To maintain shareholder value,
sometimes difficult decisions must
be made.
 Even with a good EHS program,
incidents can happen.
What the Public Wants
to Know

What happened?

How dangerous is the situation?

What are you doing about it?

How long will it take?

Will there be any danger afterwards?
Why We Don’t Communicate

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Don’t have all the facts
Want to avoid panic
Lack of a spokesperson
Legal implications
Protect the corporate image
Can’t solve the problem
Fear of revealing proprietary
information
Is Silence Golden?
Company says,
“No Comment”
Media says,
“Company not forthcoming”
Public says,
“No smoke without fire”
“They’re hiding something”
“They’re guilty”
General Communications Guidelines

Point to your achievements in terms
of your reputation

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product safety and efficacy
environmental & safety record
proactive efforts within the
community (outreach)
General Communications Guidelines

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Use government or commonly
accepted stds for comparison
Demonstrate that you share the
public's feelings.
– Share their concerns
– Avoid technical jargon
General Communications Guidelines

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Deal with the emotional issue
before discussing fact.
Be a “person” before you’re a
“spokesperson”
Employees are your best
ambassadors
Crisis Management Summary
Aim for the 5 “C’s”…
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Control
Clarity
Concern
Competence

Confidence