Human Resources Management

Facing Business Challenges at Johnson & Johnson

Does a healthier work force translate into healthier profits? This was one of the key issues facing Johnson & Johnson CEO Ralph S. Larsen and his predecessor, James E. Burke, as they considered the challenge of managing the company's human resources and keeping employees satisfied and productive. Johnson & Johnson operates throughout the world, employing more than 70,000 people to research, manufacture, and market health-care products in dozens of countries.

Employee health was a major concern for several reasons. Company studies showed that over 30 percent of Johnson & Johnson's employees were smokers, and one internal report revealed that smokers had a 45 percent greater rate of absenteeism than nonsmokers. Smokers also contributed disproportionately to the company's medical expenses (30 percent higher than nonsmokers), an ominous statistic at a time when health-care costs were rising at nearly twice the rate of inflation.

Another problem confronting J&J was how changing demographics were affecting employees. Employees increasingly fell into one of three groups: They were part of two-career couples with children; they were responsible for an aging parent; or they were single mothers or fathers. A survey of 10,000 J&J employees revealed that they were frustrated by their inability to meet all their obligations, both to their families and to their employer.

Many stated that they had difficulty finding day care, es­pecially sick-child care and infant care, and almost 20 per­cent responded that they could not afford day care even if they could locate a suitable provider.

Although these employees felt torn between family pressures and employment roles, they found little help at work. Most stated that their managers were unsym­pathetic about the dilemma. Balancing their work and family obligations took its toll on employees, who reported higher levels of stress, greater absenteeism, and lower job satisfaction.

For guidance on these issues, the CEOs turned to Johnson & Johnson's operating document, the corporate credo written by Robert Wood Johnson, son of a found­ing Johnson brother and chairman of the company for 25 years. Johnson ranked the company's obligation to its em­ployees ahead of its responsibility to its shareholders and second only to its commitment to its customers. This credo would serve as a blueprint for successful human re­sources management.

So how could J&J top managers promote health in the workplace? How could they help J&J employees bal­ance family and career obligations? What programs could be established to meet the personal and professional needs of their employees more effectively? What effect would such programs have on the company's bottom line?

Meeting Business Challenges at Johnson & Johnson

Ralph Larsen and James Burke understood that effective human resources management was the key to the satisfied and highly productive work force so necessary to Johnson & Johnson's fu­ture success. The first step toward improving productivity was to help employees meet their dual responsibilities to family and job. To start, the company opened child-care centers at its cor­porate headquarters in New Brunswick, New Jersey, and its nearby Somerset office. Child-care costs at these centers are lim­ited to 10 percent of an employee's disposable income. Then J&J expanded its child-care program to include home care. The company contracts with child-care providers to offer employ­ees reduced rates on home-based child care. It also gives the providers advanced training and access to the resources in its on-site child-care facilities, such as books and toys.

Under its Balancing Work and Family Program, J&J helps employees locate resources and referrals for child care and el­der care. It also goes beyond the bare legal minimum, allowing employees to take family-care leave of up to one year after the arrival of a newborn or adopted child and letting employees arrange a flexible work schedule to attend to an ailing family member. Moreover, employees in some locations can set flexi­ble schedules that allow them to better meet their family obli­gations and still do excellent work.

In addition, Johnson & Johnson managers participated in training to sensitize them to work and family issues. To un­derscore the company's commitment to family care, human resources managers added a new sentence to the company credo: "We must be mindful of ways to help our employees with their family responsibilities." This commitment to help­ing employees better manage family pressures boosted pro­ductivity by reducing absenteeism, tardiness, and stress. In ad­dition, the company's commitment to work/family policies helped attract and keep qualified employees in a tightening la­bor market.

Productivity was also enhanced by a wellness program. Live for Life was designed to emphasize steps employees can take to maintain and improve their health. The program sets four goals for employees: They should quit smoking, eat more fruit and fewer fatty foods, exercise regularly, and buckle their seat belts. At J&J headquarters, employees can work out in a gym, select "healthy heart" foods in the cafeteria, and check their weight in rest rooms. To encourage participation, employees are eligible to win prizes for meeting their goals. Over 35 J&J loca­tions now have fitness centers and wellness programs, and 75 percent of the work force participates.

The results have been impressive. Smoking among em­ployees has been reduced to less than 20 percent, a decline of more than one-third. Live for Life costs J&J $225 a year for each employee, but lower absenteeism and reduced health costs have saved $378 per employee.

Live for Life was so successful that J&J formed a new com­pany, Johnson & Johnson Health Management, to market the Live for Life program. The new company assists with fitness center design and management, and it orchestrates health­ promotion campaigns in such areas as smoking cessation, nutrition, and stress management. Live for Life is available at 60 leading corporations and medical centers that together employ more than 850,000 people.

Johnson and Johnson maintains other progressive bene­fits policies as well, including medical, dental, and life insurance and a generous 401(k) retirement plan. By making such gener­ous attempts to help employees balance their work and family lives, Ralph Larsen is demonstrating that Johnson & Johnson employees truly are the company's most valuable asset.