A Report to senior managers at Johnson and Johnson

Introduction

The purpose of this report is to evaluate business ethics of Johnson and Johnson’s approach to marketing and selling opioids from the perspective of a middle manager for senior managers.

This report brings forward Johnson and Johnson’s position as an ethical company and the consequences of selling opioids drugs while offering misleading information to its stakeholders. Therefore, doctors were prescribing more opioids drugs, which led to an opioid addition crisis eventually (BBC, 2019; The Guardian 2019). Moreover, these findings caused an overwhelming scandal in the media accusing Johnson and Johnson of manipulating scientific findings, colluding with other companies, influencing the medical practice and misleadingly advertising over the internet (The Guardian, 2019)

Johnson and Johnson’s reputation is affected by these actions, declining its ethical position and role in the society. The ethical dimension of the problem should be addressed as the company attaining an extensive power within the society and a major contribution to it, namely the health sector, and its malpractice generated massive harm on patients, challenging all its stakeholders (Crane & Matten, 2016).

As Johnson and Johnson has to pay $572m to the state to mitigate the effects of the opioid addiction crisis, these measures will lead to low profits and lower overall performance of the company (Crane & Matten, 2016; Mella & Gazzola, 2015).

Furthermore, this report will be a guide to the senior managers, exploring factors and challenges of the main issue – opioid addiction crisis, while offering recommendations and, at the same time, answering to the dilemma: What should be the responsibility of a drug company?, which will inform about how companies should act ethically.

1.1 Role of business in society

Corporate social responsibility showed an essential impact on the policies and companies’ behaviour throughout the world, with a definite linkage between CSR and strategic marketing (Nigel & Nikala, 2009). Furthermore, CSR is a multi-layered concept as shown in Figure 1. where stakeholders’ interest must be preserved while abiding to the law and doing what is right, just and fair and improving the quality of life at various levels – employees, community and the society (Crane & Matten, 2016; Luo & Bhattacharya, 2006)

Following the CSR brings value to customers, changes stakeholders’ perceptions and social credibility. It also raises performance and the company gain a greater financial reward so there will be no conflict between ethical concerns and profitability of the company (Coleman, 2018; Nigel & Nikala, 2009)

Figure 1. Carroll’s four-part model of corporate social responsibility.

For example, TOM – shoe brand mission is to donate a pair of shoes for children in need for every pair of shoes sold. Moreover, their profits go to providing drinking water and medical treatments as well as job opportunities for the developing countries (Digital Marketing Institute, 2019)

Furthermore, Johnson and Johnson’s CSR focus on the environmental sustainability but following the scandal from the media, regarding the opioid drug addiction crisis, it fails to offer a “right, just and fair” product for the society. The company’s misleading campaign where scientific findings were manipulated, doctors’ perceptions changed and collusion with other companies i.e Purdue Pharma, affected an estimated 1.7million people in the U.S, also contributing to 6,000 deaths in Oklahoma alone since 2000 (The Guardian, 2019; Paramore, 2017).

Hunter, Oklahoma’s general attorney stated that Johnson and Johnson financial interests prevailed the society interests and hurt people. Moreover, it did not just change the medical culture and influenced doctors, but also had an impact on the researchers, regulators and politicians (The Guardian, 2019). These can show at what extend the values and ethics of the companies are not followed, consequently affecting the stakeholder’s position.

1.2 Stakeholders

Freeman’s stakeholders’ approach (1984) states that stakeholders “can affect or is affected by the achievements of the organization’s objectives. For a better understanding of this responsibility, Evan and Freeman (1993) suggests two principles: principle of corporate rights and principle of corporate effect that supports the ethical responsibilities of a company.

On the other hand, Friedman (1970) criticize Corporate Social Responsibility stating that the companies’ social responsibility is to maximize profits for shareholders and not considering the ethical implications. The model of stakeholder democracy agrees with Freeman, adding that stakeholders are given the opportunity to influence and control business decisions, their welfare and rights (Matten & Crane, 2005).

Considering the impact of the stakeholders’ approach, a stakeholder list was created to have a clearer image of the impact and influence of each of them. Each of these stakeholders will be affected by the opioid drug addiction crisis and all the other issues that are correlated with it addressing their impact and influence, especially on the patients and doctors. Consequently, the values of the organisation are not followed and stakeholders’ position is threatened,

Figure 2. List of stakeholders.

1.3 Impact of ethical choices on other companies

There is a considerable number of big companies that made mistakes in the past. Deliveroo, the company that sells and delivers ready-made meals to houses or offices, requested to change legislation for the self-employed people. This included paying below the minimum wage per hour as the law says and no holiday. They were accused of “gaming the system” which draw attention to the Unions which fought for employees’ rights. Deliveroo already lost the first round in high court employment challenge leaving them with a bad reputation (The guardian, 2016).

On the other hand, there are plenty of good ethical companies that has a strong CSR with effect in different areas of activity. Salesforce.com is a CRM platform that brings companies and customers together at various levels (Salesforce, 2019). For many years, it has been awarded for its good practice and philanthropy especially for their employees. They are offered best salary and hourly rates, six days off per year for charitable work. Moreover, donations of millions of dollars towards education helped them build a strong reputation and a strong desire to work for the company (Carroll, 1991; Shields, 2019).

1.4 Recommendations

Johnson and Johnson should review its CSR regarding marketing and selling of drugs as the company has an extensive power within the society and a major contribution to our society, namely the health sector, and its malpractice generated massive harm on patients. As data shows there is a worrying number of people addicted to the opioid drugs in specific areas from the U.S continuously growing outside it (The Guardian, 2019; Crane & Matten).

Therefore, Johnson and Johnson should adopt transparency in communicating with doctors and ethical practices in terms of building relationships. Fair communication, appropriate valid sources and medical findings for doctors would manage the company achieve a more ethical campaign in promoting their drugs. (Parramore, 2017).

Additionally, should maintain closer relationships with patients while delivering an appropriate advertising on TV, online and other search engines, but without changing perception of their own bodies and symptoms, creating an image of the perfect solution for every pains and aches (BBC, 2019; Mansoor, 2019).

Moreover, Johnson and Johnson should change their strategy in relation to ethics and profitability. Ethics could be considered a constraint on profitability and sometimes acting in the right way can reduce profits, but the reputation of an ethical company can be a major source of competitive advantage (McMurrian & Matulich, 2016).

Johnson and Johnson should adopt high ethical standards, as this could contribute to profitability, by creating a strong bond with its stakeholders, reducing the cost of transactions, contributing to a positive internal working environment for the employees and maintaining the social capital (Climent & Climent, 2018; McMurrian & Matulich, 2016, The Guardian, 2019).

Part 1B Demonstration of two ethical theories

In a business context, situations and decisions could turn to be more complex and challenging for the companies’ that has acted unethically. Therefore, ethical theories come to offer a systematic, rational and coherent arguments to the problems that could be presented and explained to the stakeholders, offering them with some guidelines in decision-making (Johnson, 2019) This offers a more in-depth understanding of the issues at Johnson and Johnson, what cause it and how values were ignored while for a better application Ethics of Rights and Justice and Utilitarianism will be applied.

Utilitarianism

Utilitarianism is a consequential theory addressing both right and wrong, advantages and disadvantages of alternatives when taking significant decisions within a company. The theory focuses on the social outcomes within a community, pleading for the decision that “do greatest good for the greatest number” (Crane &Matten, 2016, Johnson, 2019).

To apply this theory “to the greatest number” is essential to consider its stakeholders, namely patients as they are to a greater extent affected by the opioid drug addiction crisis, analyse their utility in terms of pain and pleasure and asses the ethical implications of Johnson and Johnson actions.

In terms of promoting the drug by Johnson and Jonson as an effective product for chronic pain, the pleasure means: good profits for the company, more work for employees, less pain for patients, more tax for the government and alternative painkillers for the community. On the other hand, the pains could be a slightly low addiction to the opioid drug/death, bad conscience and possible bad reputation in the future, government needs to spend more to mitigate the effects. In terms of not promoting it, company assumes less risk, patients could use alternative drugs for releasing the pain but consequently the company losses revenue, people can suffer more from the pain (BBC, 2019; The guardian, 2019; Mansoor, 2019)

Analysing these facts in terms of pain and pleasure, no addiction/death caused by this drug, the mitigation of the effects of the drugs and misleading information, the management at Johnson and Johnson should not continue the promotion of the drug as it has been done until now (BBC, 2019). Despite the fact that the theory’s limitation consists in subjectivity (not being based on quantifiable reasons), the judgement in terms of morality is done on how beneficial or not the decision might be, obviously shows that the pain exceeded the pleasure. The pains are more harmful as it addresses people’s health that is threatened at a massive scale on the long run (Parramore, 2019; Crane & Matten, 2016).

Following the arguments mentioned above, Johnson and Johnson’s actions led to additional issues causing a huge scandal in the media, manipulating scientific findings, misleading the doctors, patients and society in general. Despite all these, company’s position seems to be firm, considering benefits only, but it should revise its position in terms of good and right. They should change their marketing position, taking in consideration the pain and pleasure (Oliver, 2016; The Guardian, 2019).

Ethics of rights and justice

Ethics of rights and justice is a non-consequentialist theory which focuses on individuals’ rights including rights of life, freedom, property but also speech, conscience and privacy.  Currently, people speak more about their human rights based on a certain consensus about the nature of human dignity. Therefore, human rights must be protected and respected. Covering these aspects, this is the background that helps discussing the business ethics on a practical level (Crane &Matten, 2016).

Considering the main issues discussed above in the case of Johnson and Johnson, we can apply the theory of Rights and Justice ethical theory. The opioid addiction crisis is a result of a more consistent strategy where patients’ and doctors’ rights to fair information was denied (Oliver, 2016) Moreover, this problem could be analysed from a human rights and dignity perspective, as on one hand doctors should have access to the whole correct information about the drug before prescribing them, while on the other hand the patients should be aware of any consequences of the opioid drug they are taking. Misleading information and false scientific findings hide the truth to its stakeholders cancels all the advantages of the drug itself. Patients and doctors should have been treated fairly, offering both advantages and disadvantage to use the opioid. (Oliver, 2016; Sterckx, 2005)

Consequently, justice must be addressed as the company should have taken into account the demands and needs of the community and shareholders when selling the opioid drug as it had a major impact on their lives. Patients may have access to these drugs as they are on the market, but there should be a limitation and good, fair information in regards with. The promotion of the opioid drug is deceiving, as everyone tended to think that takes away the pain at no cost (Crane &Matten, 2016).

Furthermore, the government and regulation bodies can tighten their position in regards to prescribed medication and tackle the medical finding from biased information, while providing accurate information to its direct beneficiaries (The Guardian, 2017).

Both theories presented help to develop ethical competence in applying them to our case, being able to take a decision in this regard. As the case at Johnson and Johnson seems complex with interrelated ethical issues, combining insights from more than one ethical theory can help coming up with a better conclusion.

Part 2 Ethical Leadership Management

Johnson (2019) states that leadership is the exercise of influence in a group context, and leaders according to that exercise greater influence and have more responsibilities for the organisational outcomes. Furthermore, Treviño et al (2000) asserts that ethical leadership means to be a moral person and a moral manager at the same time, the two pillars that help a good manager to set the tone and control actions in regards to morals in the areas of management (Crane & Matten, 2016).

2.1 Ethical Leadership – Moral person versus Moral Manager

Being an ethical person represent the basis of the ethical leadership, and to build up that reputation means having certain traits, behaviour and take decisions based on moral principles which must be based on authenticity. When it comes to traits, a moral person is honest, trustworthy; shows consistency, credibility and predictability in managing relations with others (Treviño et all, 2000) Moreover, behaviours include doing the right things, concern about other people and treat them well while being open and communicative. These behaviours help employees feel more comfortable when they are sharing information, bad or good or when they raise problems. Additionally, decision making is essential as they can be objective and fair with a broader understanding of society and community (Crane & Matten, 2016; Narvaez & Lapsley, 2013).

Figure 3. Ethical Leadership.

Linking the traits and behaviours of a moral person with those of a moral manager completes the image of ethical leadership. Therefore, a moral manager could increase the prominence of ethics and values in different ways ways: become a role mode through visible actions, while communicating about ethics and values and have a reward and discipline system in place (Treviño et all, 2000).

Figure 4. Ethical leadership diagram.

Besides this an ethical leadership is also associated with job satisfaction, commitment, behavioural outcomes, and firm performance. Employees are treated equally, feel empowered and motivated to work (Kim & Brymer, 2011)

2.2 Unethical Leadership – Destructive behaviours

Contrasting with the ideas above there are also examples of leaders with destructive behaviours with develop a reputation for unethical leadership. Kellerman (2004) states that there are seven types of bad leaders that lead to ineffectiveness and unethical issues: incompetent leaders described as they do not have motivation or ability for effective actions, lacking emotional intelligence, rigid leaders are not open to new ideas, information, or changing conditions, intemperate leaders that lack self-control, destructive impulses, callous leaders are unkind and uncaring ignoring employees needs, corrupt leaders are those that cheat and lie, that do not have a fair attitudes towards people, insular leaders that focus on their welfare and other drawn by a clear boundary and the evil leaders are those that use their power to inflict physical or psychological harm.

Additionally, Treviño et all (2000) discusses about the hypocritical leaders that speak about ethics but does not follow the principles and ethically neutral leaders who think that ethics is not important to them. All these destructive behaviours lead to instability within the company, creating toxic working environments.

Figure 5. Hypocritical leader and Neutral Leader Diagram.

2.3 Codes of practice and compliance approaches

However, the attention to ethics, social responsibility and sustainability has increased lately enhancing organisational values and developing method of compliance. Moreover, compliance approaches such as codes of practice are based on prevention, detection and punishment of those who don’t abide the law. When the employees know the law, they can stand up better for their rights, keep them confident in their integrity and be more productive (Crane & Matten, 2016, Treviño and Brown, 2004).

On the contrary, Roberts (2014) explains that there is also a considerable dependence on compliance ethics being more challenging for employees to hold companies’ leaders responsible for actions that fall outside the scope of compliance-based ethics laws and regulations.

2.4 Own reflection and experience

Reflecting on the ideas presented and analysed, in my own work domain, there is a strong link between a moral person and a moral manager. Traits, behaviours, roles and values, help leaders to develop their reputation for ethical leadership. Employees are working more productively, are open to discussions and have a real contribution to the wellbeing of the company and their person and professional development. A good leader articulates and personify the values and standards of the company and then inspire and motivates employees do the same (Crane & Matten, 2016).

In summary, it requires that a manager must know the dimension of being a moral person and then become a role model for the others, inspiring ethical conduct and communicate ethical values since is the ultimate objective that good companies strive to find and keep in their employees.

Reference

Part 1A

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Part 1B

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Part 2

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