Johnson & Johnson CEO Alex Gorsky explains that a 75-year-old "credo" is not a marketing tool but a way of life at the company.
Many companies have mission statements, and they're handy to reference in all-hands meetings or a quarterly report, but they're more for rhetorical purposes than anything else. But that's certainly not the case at Johnson & Johnson, explained CEO Alex Gorsky at the CECP's CEO Investor Forum in February.
The forum was convened to discuss how CEOs and investors can have constructive dialogue around creating long-term value that benefits customers, employees, shareholders, and society, as opposed to embracing a toxic short-termism defined by myopic decisions. Gorsky said that the late Johnson & Johnson chairman Robert Wood Johnson, son of the company's founder, was passionate about this issue back in 1943. It was the year he wrote the company's "credo," a 309-word mission statement published ahead of Johnson & Johnson's initial public offering.
Gorsky said it remains "a huge source of inspiration and aspiration" at the company. He noted that he's often met with skeptics who ask him, "Do your shareholders ever give a damn that you get out there and talk about that?" He said that it's not a matter of whether they care, because it's the driver of conversations he has with the company's top five to 10 investors.
The credo opens with, "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."
It then lists responsibilities the company has to suppliers and distributors, for making a fair profit; to employees, for respecting their dignity and paying fairly; to communities, for supporting charities, paying taxes fairly, respecting the environment, and fostering health education; and to stockholders, for making profits and continually growing the business.
"It's an and-and document," Gorsky said. "It doesn't say take care of your patients and your consumers, or take care of your employees, and if you get a chance take care of the communities or your shareholders."
The credo is in front of every J&J office in the world.
And each year, all 140,000 employees answer a 100-question survey that assesses the leadership team's performance agains the credo's values. (Gorsky said there is about a 93% completion rate of the survey.)
The resulting "credo scores" then influence individual promotions and the allocation of resources to different teams. "Over time we find a very tight correlation between credo scores and company performance," Gorsky said.
The leadership team also has regular "credo sessions," where Gorsky will guide the company's top executives through the credo and facilitate discussions of what's working and what isn't, as measured against its ideals. He will also present case study scenarios based on actual decisions at the company that yielded undesirable results. For example, the leadership team will be presented with an ethics question a supply-chain manager in China recently faced, and will then discuss the ideal response, weighed against what actually happened.
Gorsky said that the credo isn't meant to be a feel-good document, but a way to remain on track. "It doesn't mean that we can't be competitive," he said. "It just means that we're competitive in the right way."
You can read the full credo at Johnson & Johnson's website.