beyond compliance and crisis management wec – ief workshop november 4, 2003 karl f. schmidt vp,...
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Beyond Compliance and Crisis Beyond Compliance and Crisis Management Management WEC – IEF WorkshopWEC – IEF Workshop
November 4, 2003November 4, 2003
Karl F. SchmidtVP, Worldwide Process Excellence
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Our CredoWe 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 1943Written by “the General” in 1943
• A shared system of values -WorldwideA shared system of values -Worldwide
• The “glue that holds us together” The “glue that holds us together”
• 36 languages - key responsibilities to:36 languages - key responsibilities to:
Our Credo
CustomersCustomers
EmployeesEmployees
Communities/EnvironmentCommunities/Environment
StockholdersStockholders
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Why Beyond Compliance?
Protect and enhance J&J reputationProtect and enhance J&J reputation
Reduce and eliminate riskReduce and eliminate risk
Drive Operational ExcellenceDrive Operational Excellence
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Definition ofBeyond Compliance
Meets all Johnson & Johnson standards and regulatory Meets all Johnson & Johnson standards and regulatory requirementsrequirements
Optimizes products, processes and facilities by Optimizes products, processes and facilities by designing in quality, safety, engineering and designing in quality, safety, engineering and environmental standardsenvironmental standards
Proactively partners with regulators and anticipates Proactively partners with regulators and anticipates changes in regulations, standards and public changes in regulations, standards and public expectationsexpectations
Achieves Operational ExcellenceAchieves Operational Excellence
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Crisis Management “Lessons Learned”
Tylenol Case StudyTylenol Case Study
Incident ManagementIncident Management
Public RelationsPublic Relations
Risk CommunicationRisk Communication
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Tylenol Tampering Incident WhenWhen
Sept. ’82 (Chicago) and Jan. ’86 (NY)Sept. ’82 (Chicago) and Jan. ’86 (NY) What happenedWhat happened
7 people die from Tylenol poisoning. 2 tampered 7 people die from Tylenol poisoning. 2 tampered capsules found in store after initial police search. capsules found in store after initial police search. Cyanide source of poisoning, with evidence pointing to Cyanide source of poisoning, with evidence pointing to tampering. Quick decision to recall all capsule product tampering. Quick decision to recall all capsule product by CEO. by CEO.
Actions takenActions taken CEO chaired crisis mgmt team, daily communicationsCEO chaired crisis mgmt team, daily communications Credo based decision makingCredo based decision making Full cooperation w/ authorities, open with mediaFull cooperation w/ authorities, open with media Innovative package design , industry standardInnovative package design , industry standard
DamageDamage Business impact – $100MM write-off, sales rebounded Business impact – $100MM write-off, sales rebounded
70% in 4 months, 90% in 1 yr, stock price bounced back70% in 4 months, 90% in 1 yr, stock price bounced back
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The Story behind “THE” Case Study
Starts with excellent reputation built on deep Starts with excellent reputation built on deep personal emotional trust and Valuespersonal emotional trust and Values buys benefit of doubt in difficult timesbuys benefit of doubt in difficult times
Conduct scenario planningConduct scenario planning Get top mgmt involved and visible fast!Get top mgmt involved and visible fast! Manage the information flowManage the information flow Train and strengthen local expertiseTrain and strengthen local expertise Use “outside – in” thinking - sensitivityUse “outside – in” thinking - sensitivity
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Incident Management ObjectivesIncident Management Objectives
Bring situation under control Emergency response
Comply with regulatory requirements
Recovery strategy
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Typical Plan Components Emergency Response Emergency Response
First hour reaction to an emergencyFirst hour reaction to an emergency Focus on damage assessment & controlFocus on damage assessment & control
Incident ManagementIncident Management From second hour through day 2-4From second hour through day 2-4 Internal / External Communications Protocol: Internal / External Communications Protocol:
w/ employees, customers, suppliers, media, etc. w/ employees, customers, suppliers, media, etc. Recovery Strategy Recovery Strategy (~70% of development effort)(~70% of development effort)
From day 2 to months beyondFrom day 2 to months beyond Actions to bring Manufacturing, Administration / Actions to bring Manufacturing, Administration /
Support back as quickly as possibleSupport back as quickly as possible
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Incident Information Incident Information Management ObjectivesManagement Objectives
Information control– have the facts prior to release
to the public.
Maintain public trust.
Maintain license to operate.
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Public RelationsPublic RelationsIssuesIssues
Protect and enhance the company’s reputation among all audiences
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Communications IssuesCommunications Issues
The Audiences
Customers/Suppliers Employees, Neighbors Elected Officials (at all levels) NGOs, activists News Media …. and many more!
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Communications IssuesCommunications 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!
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Risk Communications Principles
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The Communications EnvironmentThe Communications Environment
The BAD newsThe public believes they are faced with greater risks today than in the past.
Product recalls Plant closings versus corporate
profits Governance issues Environmental damage
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The Communications EnvironmentThe Communications Environment
The GOOD newsThe 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.
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What the Public WantsWhat the Public Wants to Knowto 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?
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Why We Don’t CommunicateWhy We Don’t Communicate
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
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Is Silence Golden?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”
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General Communications GuidelinesGeneral Communications Guidelines
Point to your achievements in terms of your reputation
product safety and efficacy environmental & safety record proactive efforts within the
community (outreach)
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General Communications GuidelinesGeneral Communications Guidelines
Use government or commonly accepted stds for comparison
Demonstrate that you share the public's feelings.
– Share their concerns– Avoid technical jargon
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General Communications GuidelinesGeneral Communications Guidelines
Deal with the emotional issue before discussing fact.
Be a “person” before you’re a “spokesperson”
Employees are your best ambassadors
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ControlControl
ClarityClarity
ConcernConcern
CompetenceCompetence
ConfidenceConfidence
Crisis Management Summary
Aim for the 5 “C’s”…