The Quote Of The Week: J&J CEO Should Resign
4 CommentsBy Ed Silverman // August 30th, 2010 // 7:15 am
Okay, it is only Monday, so maybe another comment will come along. But how’s this for being direct? In a remark given to the Associated Press, which spoke briefly with Johnson & Johnson ceo Bill Weldon, corporate image consultant Al Ries echoes other criticism that the health care giant should do more than appoint a vice president to fix quality control problems that led to a string of product recalls (see this).
Appointing one vice president to resolve the quality problems “seems trivial…If I were the ceo, I would call a special board meeting and I would resign,” Ries tells the AP, adding that if the board did not agree, the CEO should propose major internal changes. The board is unlikely to agree that Weldon should resign, though, as The Wall Street Journal notes. J&J board members will probably ask Weldon, who is 61 and expected to retire next year, “to stick around and fix” the problems that have triggered the recalls, the paper writes, citing one unnamed person who is apparently close to the operation.
Another unnamed source tells the Journal Weldon wouldn’t want to leave J&J in the lurch. “There is a kind of competitive streak in him, and he feels he needs to fix” the situation, this person tells the paper. Of course, he should want to fix the situation, although some might argue Weldon has already left J&J in the lurch by overseeing an organization where recalls have become systemic - in addition to over-the-counter pediatric meds, J&J units have recalled contact lenses and hip replacement devices.
Consequently, the FDA is considering criminal charges, US Attorney’s Office in Philadelphia sent grand jury subpoenas about the recall of millions of bottles of over-the-counter pediatric medicines by its McNeil Consumer Healthcare unit. J&J has also received Civil Investigative Demands from multiple state Attorneys General Offices. At least $600 million in sales will be lost this year along with 300 McNeil jobs and a Congressional committee is continuing its own investigation. So what do you think?
Should J&J CEO Bill Weldon Resign?
- Yes (80%, 163 Votes)
- No (20%, 42 Votes)
Total Voters: 205
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Cassandra
Yes, he should resign. J&J’s problems are company-wide, not limited to McNeil only, and a heavy responsibility rests with the CEO. Maybe he isn’t guilty in the criminal sense, but the buck has to stop somewhere, and in J&J that is on Weldon’s desk. His resignation, if anything, would give a boost to employee morale and consumer confidence.
But don’t forget that until recently, the person tipped as Weldon’s successor was Colleen Goggins, the head of the consumer division. The gossip has it that while she presided over the billion-dollar disaster at McNeil, Goggins was primarily worried about the style of J&J advertisements. And what of Peter Luther, the Incredible Invisible Manager?
J&J would do best to attract an outside manager, somebody with pharma experience and a good track record. He or she would need to do some serious house-cleaning in J&J management circles. And, judging from the results of Fortune’s investigation, there are structural problems with J&J’s management structures which would require a serious re-wiring of responsibilities and management lines.
pharmavet
Why should Weldon resign? History would suggest otherwise. When Abbott VP of QA/QC of Abbott Diagnostics was Miles White, the company was mired in a similar mess. In fact, my ex-colleagues at Abbott Park said that White expected to be indicted on criminal charges.
Skip the ugly boring history and today Miles White is Abbott CEO, the highest paid one in the industry, and Abbott continues its legacy of paying more consective quarterly dividends to shareholders (it’s over 340 by now) than any other health care company.
I noticed a few years back when I drove past Abbott HQ that the sign at the entrance had been changed from “Abbott Laboratories-Health Care Worldwide” to “Abbott Laboratories-QUALITY Healthcare Worldwide”. Maybe Miles’ punishment was having to pay for the new sign.
Cassandra
I think it was Saint-Just who commented that “one cannot reign innocently”. Consumers, employees and shareholders have a right to diligent management from the CEO. This very embarrassing series of recalls and other incidents happened under his watch. Even if Weldon’s only fault was to know nothing and to do nothing, he should go. Because he should have known, and he should have acted.
If something like this happens, and the CEO is permitted to stay on and continue to collect his princely remunerations, it would set a bad precedent not just for J&J but for American industry. A perverse incentive if there ever was one.
Actually the investigation done by Fortune shows both that the causes can be tracked back to J&J’s corporate management, and that Weldon has been disinterested in providing oversight of the consumer division.
Besides, the serious quality problems have been a matter of public record for at least a year now, and Weldon has done very little. Back in February, the FDA took J&J’s management to task for its tardy and ineffective response to quality problems. So far Weldon’s response has been limited to the appointment of a new VP and some waffling about the company’s commitment to quality. He does not appear to believe that the problems are really serious, or perhaps he is incapable of accepting his own responsibility in the matter.
Tom Dougherty
Does any know the name of the Director of Quality (at DePuy) who resigned in 2006. I beleive it was an Indian name……….
Thanks