In their classic treatise on business strategy and management, Built to Last Collins and Porras identified Johnson & Johnson ("J&J") as the premier company in the pharmaceutical industry as chosen by its peers.
One of the key points in their analysis is that the truly great companies do not -- yes, do not -- set profits as their driving value. Contrary to right-wing economic mythology, companies whose mission is to deliver value to customers, employees and community actually perform the best over time.
The J&J "Credo" -- chiseled into the wall of its New Jersey headquarters -- was written in 1943 just before the company became publicly traded. Communicating it to J&J's multiple subsidiaries, so that each company lives it, is one of the J&J Chairman's major responsibilities.
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 obligations. 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 thecommunities in which we live and work and to the world community as well. We must be good citizens -- support good works and charities and pay 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. [Emphasis added].
In today's sterile economic debate, several elements of the Credo stand out. First, it was written by the Chairman of a major U.S. corporation, not an academic, not a sociologist, but long-time J&J CEO Robert Wood Johnson. Thus, it is inoculated from any suggestion that it arose from some nefarious left-wing source.
Second, it is very far ahead of its time, recognizing men and women, equality of opportunity, responsibility to community, facilitating employees' care for their families, and recognizing the importance of the environment. Indeed, it is quite humble, recognizing that the employees work "with," not "for," them, and that the property they own is a sacred trust for future generations.
Third, the Credo recognizes that the company has responsibilities to its customers, to its employees, to the environment, to the community and to their shareholders. It proposes that it pay its fair share of taxes, and that shareholders are entitled to a fair profit. Note it does not advocate avoiding paying taxes or maximizing profits at the expense of its other responsibilities.
The Credo is very detailed about its responsibilities to its employees: fair compensation, facilitating their caring for their families, treated with respect, provided a safe workplace.
J&J has shown that a modern corporation can be the most successful in its industry without screwing its workers, cheating its suppliers, despoiling the environment or avoiding taxes.
The J&J Credo makes for a much better company and a much better country than the Ayn Rand brand of capitalism the right-wing espouses.
(The author does not now and has never worked for J&J).