HRM Analysis for Johnson & Johnson - Term Paper Example

Running Heading: HRM Analysis of Johnson & Johnson HRM Analysis of Johnson & Johnson THESIS STATEMENT: “HRM analysis for Johnson & Johnson to better align HR practices to the key business initiatives of the company” This research paper represents the HRM analysis for Johnson & Johnson, which includes the analysis of Johnson & Johnson’s work design, staffing, reward system, training and development, and performance measurement systems. The purpose of this research paper is to give recommendations to better align Johnson & Johnson’s HR practices to the key business initiatives of the company. INTRODUCTION OF JOHNSON & JOHNSON: Johnson & Johnson is a global American pharmaceutical, consumer health care goods and medical devices manufacturer, founded in 1886 (Johnson & Johnson, 2011). Headquartered in New Brunswick, New Jersey, United States, the corporation has approximately 115,000 employees at more than 250 subsidiary companies with operations in over 57 countries and its products are sold in over 175 countries (Alsop, 1999). It’s well known products are Johnson’s baby products, clean & clear facial wash, Neutrogena skin and beauty products, band-aid brand line of bandages, Tylenol medications and Acuvue contact lenses. In all of their product lines, Johnson & Johnson’s operating companies compete with companies both small and large, and both global and local, located throughout the world. HISTORY: Johnson & Johnson was founded more than 120 years ago in 1886 by three brothers Robert Wood, James Wood and Edward Mead Johnson in New Brunswick, New Jersey, United States (Gant, 2001). It was founded on a revolutionary idea that doctors and nurses should use sterile sutures, dressings and bandages to treat peoples’ wounds. Since then, Johnson & Johnson brought the world new ideas and products that have transformed human health and well being. Johnson & Johnson ventured into consumer products in 1920 (Gant, 2001), later it also began to deal with pharmaceuticals and women’s sanitary products. Johnson & Johnson’s recent diversification of business lines include bio-pharmaceuticals, orthopedic devices and internet publishing (Gant, 2001). STRATEGY: Johnson & Johnson’s strategy involves: Focus on four growth enablers-products, pipelines, global presence and people that enable accelerated growth. Approach to bring innovative ideas, products and services to advance health and well–being of people. Approach to identify medical needs and access the best science (internally and externally), to deliver differentiated medicines that will address the most important unmet medical needs in the world today. Disciplined management approach to increase efficiency in order to invest in its pipelines and new product launches. MARKET POSITION: Johnson & Johnson is the world’s largest medical device company, the world’s 5th largest biologics company and world’s 8th largest pharmaceutical company (Espicom, 2011). Johnson’s Medical devices businesses hold the No 1 or 2 market positions in the majority of their markets, and Medical devices business generated US$24.6 billion in sales in 2010 (representing 40% of sales) (Espicom, 2011). Johnson & Johnson’s common stock is a constituent of the Dow Jones Industrial Average and the company is listed among the Fortune 500 companies1. Johnson & Johnson consistently ranks at the top of Harris Interactive’s National Corporation Reputation Survey and on the 2010 Forbes 2000 List it is ranked # 47 (Forbes, 2011). Tables given below show the financial and market position of Johnson & Johnson: JOHNSON & JOHNSON (On the Forbes Global 2000)  Sales Rank 101 Profits Rank 20 Assets Rank 207 Market Value 14 (Source: Forbes, 2011) JOHNSON & JOHNSON (FINANCIALS)  Sales $64.419 BILLION Profits $11.396 BILLION Assets $112.114 BILLION (Source: Forbes, 2011) TECHNOLOGY CONSIDERATIONS: Enlight Biosciences is a Boston-based biotech firm advancing new technologies used in the discovery and development of drugs. It has gained a commitment from Johnson & Johnson to invest up to $13 million in its programs (McBride, 2009). Johnson & Johnson is the latest drug maker to form a partnership with Enlight (McBride, 2009). Enlight aims to concentrate on a crucial need among pharma companies to develop technologies in such fields as drug formulation, molecular imaging and drug synthesis. Johnson & Johnson and its peers are struggling to discover new drugs to replace revenues from older products that face strong competition from generic drugs. Pharma partners of Enlight get to choose the programs in which they invest, where as Enlight tracks down the technologies worthy of their investment from multiple academic and industry sources. Johnson & Johnson hopes to collaborate with other partners of Enlight to identify technologies that could help Johnson & Johnson to overcome R&D hurdles. JOB PRICING AND COMPENSATION PACKAGE: Average Johnson & Johnson job salaries can vary greatly due to industry, company, location, experience and benefits. Average salary for Johnson & Johnson jobs is $49,000 and this salary is calculated using the average salary for all jobs with the term Johnson & Johnson anywhere in the job listing (Simply Hired, 2011). Table given below shows the average salary for different job positions at Johnson & Johnson: Mechanical engineer $63,000 General Engineer $74,000 Logistics management specialist $60,000 Human resources specialist $56,000 IT specialist $65,000 Heavy mobile equipment repairer $36,000 Budget analyst $55,000 Unit administrator $35,000 Human resources assistant $31,000 Secretary $33,000 Supply technician $32,000 Medical support assistant $28,000 (Source: Simply Hired, 2011) WORK PROCESSES: Analysis of Johnson & Johnson’s current and targeted work processes is given below: Johnson & Johnson’s executive committee is the principal management group accountable for the operations and allocation of the resources of the company. This committee is also responsible for overseeing and coordinating the activities of the Consumer, Pharmaceuticals and Medical Devices business segments. Every subsidiary within the business segments is run by citizens of the country where it is located, with some exceptions. Johnson & Johnson uses decentralized management approach where employees are encouraged to be entrepreneurial with the understanding that they will benefit from focusing on customer needs and providing solutions to their needs. Johnson & Johnson seeks to turn insight into new innovative products and at times whole new businesses. Johnson & Johnson’s objective is to capitalize on scientific breakthroughs, marketing insights and manufacturing expertise easily across the full range of their businesses. Raw materials essential or necessary to Johnson & Johnson’s operating companies’ businesses are generally readily available from multiple sources. LABOR LAW AND PRACTICES: Johnson & Johnson’s labor law and practices includes the following important points (Johnson & Johnson, 2011b): No person under the age of sixteen be employed and that those individuals under the age of eighteen work no more than 48 hours work week Avoid unsafe working conditions by giving sufficient rest periods during the workday and honor agreed upon days off from work and maximum working hours Not use bonded, forced, indentured or involuntary prison labor Pay wages for all hours worked; clearly communicate the wages that employees are to be paid to them in advance of beginning of work and communicate to all employees if overtime is required and the wages should be paid for such overtime Respect the rights of workers to make informed decisions free of coercion, threat of reprisal or illegal interference concerning their desire to join or not to join organizations Respect the rights of workers to bargain collectively without illegal or unlawful interference Not discriminate or show favoritism against or harass an individual on the basis of color, race, gender, religion, pregnancy, HIV status, national, age, origin, sexual orientation, disability, marital status, veteran’s status or political affiliation. Not treat or threaten to treat an individual brutally or harshly. Harsh, inhumanely or brutal treatment includes sexual harassment or abuse, coercion, verbal abuse or corporal punishment HRM ANALYSIS FOR JOHNSON & JOHNSON: Work Design: Decentralization: Johnson & Johnson’s structure is based upon the principle of decentralized management. A decentralized organizational setup is a setup whereby the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy. The highly decentralized structure facilitates value based behaviors related to creativity, innovation, flexibility and even diversity (Dreher & Dougherty, 2002). The friendly company environment of the 250 operating promotes the entrepreneurial spirit of Johnson & Johnson employees. Employees at Johnson & Johnson feel cooperative towards each other and are highly encouraged to take intelligent risks. Downside of Decentralized Management Approach: The downside of decentralized management approach is that it makes planning and coordination very difficult. It is not suitable for large and complex organization that has to control work activities among many subunits. Too much decentralization may lead an organization to lose control of its decision making process (Dreher & Dougherty, 2002). Recommendations: The ideal situation is a balance between centralization and decentralization so that middle and lower mangers who are at the scene of the action are allowed to make significant decisions, and top managers’ primary responsibility becomes managing long-term strategic decision making. The result is a good balance between long-term strategy making and storm-term flexibility and innovation as middle or lower level managers respond quickly to problems and changes in the environment as they occur. Balance between centralization and decentralization makes planning and coordination easy (Dyer & Holder, 1987). Staffing: Cultural Fit: Johnson & Johnson’s staffing process can be summarized as follows: Potential candidates who have the “cultural fit” with the company are recruited (Xavier, 2003) During the hiring process, orientation program helps to define newcomers the Johnson & Johnson’s cultural terms that includes Credo values, Credo issues, Credo survey and Standards of Leadership And retention automatically follows as a positive outcome of matching the expectations and values between the employees and Johnson & Johnson. Importance of recruiting for cultural fit staffing process is: It reduces absenteeism and turnover It increases employee satisfaction and morale; motivated employees contribute positively to their organization’s bottom line success and seek ways to improve processes, products & services. It leads to better performance and productivity. Recommendation: Although Cultural fit staffing process is advantageous for the organization but in addition to a homogenous organization if Johnson & Johnson throw in a couple of highly qualified oddballs, the diversity and working through different ideas will strengthen its products and services (Dreher & Dougherty, 2002). Reward System: Performance – Contingent Pay: In Performance-contingent pay, pay is contingent on the performance or outcomes produced. Performance-contingent pay tends to vary along three dimensions (Dreher & Dougherty, 2002): 1. The organizational unit by which performance is measured for reward purposes i.e., individual, group or organization basis 2. The way performance is measured that is the subjective measures used in supervisors’ ratings or objective measures of productivity, costs or profits 3. And what rewards are given for good performance that is salary increase, stock or cash bonuses In Johnson & Johnson “Performance based individual pay plan” is used for giving rewards to employees (Xavier, 2003). In the start of the year, employees’ objectives are established. A mid-year, assessment determines an employee’s performance status and at the end of the year the final evaluation is completed. The reward, which is variable compensation, differs according to salary, stock award, stock options and bonuses. Downside of Performance Based Individual Pay Plan: From employee’s perspective, the least acceptable pay plans are individual bonus programs. Employees dislike such plans because (Dreher & Dougherty, 2002): They encourage competition among individuals They are difficult to administer fairly They should be used where there is little required cooperation among employees Recommendation: So Johnson & Johnson should use Performance-based group or organization pay plan. Organization and group bonus plans are the best performance-based pay systems because: They are based on objective measures of performance and individual salary-increase plans They promote cooperation They should be used where there is high task interdependence among workers Training and Development: Skill Orientation: Johnson & Johnson’s orientation to training focus on the development of skills that generalize to a variety of situations. Johnson & Johnson develops a specific methodology called i-Lead to prepare future leaders (Xavier, 2003). The i-Lead process provides a guide for employees so that each one along with his immediate superior can establish a customized development plan. Shaping future leaders’ skills is a main element to maintaining and reinforcing corporate values. (source: Xavier, 2003) Training – Orientation Method: Johnson & Johnson companies encourage employees at all levels to develop their leadership skills and career. To supplement on-the job development, they provide extensive and globally accessible training & development through options such as e-learning, traditional classroom training and blended learning. Career Path: Johnson & Johnson offer clearly defined career paths and formal advice on career planning and development that is Johnson & Johnson extensively use career development workshops for its employees. Johnson & Johnson provides a unique environment for career development. Personal, customized development plans and personal coaching from seniors help employees have a clear understanding of their impacts and contributions to the success of the company. Succession Planning: Johnson & Johnson uses effective succession planning process. It involves: Development of replacement charts Portray middle-to-upper level management positions that may become vacant in the near future Teams of managers meet on a regular basis to identify replacements; these managers discuss their junior colleagues on an individual basis and lists information about individuals who might qualify to fill the position. Performance Measurement System: Measurement Type: In Johnson & Johnson “Result-Goal oriented measurement systems” are used that is employees are expected to achieve desired business results and are rewarded for doing so (Xavier, 2003). Result-goal oriented measurement systems are the measurement systems based on employee achievements and accomplishments. Recommendations: However achieving business objectives is not enough, how employees achieve their goals is also important. Employees should be awarded by achieving results in ways that exemplify and do not compromise the corporate values. So in addition to result-goal oriented measurement systems, Johnson & Johnson should also use “Process-oriented measurement systems”. Process-oriented measurement systems are the systems that rate the way work is completed. Process-oriented measurement systems provide employees with feedback about work with the intent of improving performance through process improvements (Dreher & Dougherty, 2002). Measurement Source: In Johnson & Johnson, performance measurement source is “Immediate Superior” (Xavier, 2003). Performance evaluations at the lower and middle levels are conducted by an employee’s immediate boss. Drawback: Many bosses feel unqualified to evaluate the unique contributions of each of their employees. Employee’s immediate superior may not be the most reliable judge of that employee’s performance. Recommendation: Johnson & Johnson should use the most reliable performance measurement source that is “360-Degree Evaluations”. It provides performance feedback from the full circle of daily contacts that an employee has, ranging from mailroom personnel to customers to bosses to peers. The primary objective of 360-degree performance evaluation is to pool feedback from all the employee’s customers that is top management, manager, subordinates, co-workers, other department representatives, suppliers and clients (Dreher & Dougherty, 2002). CONCLUSION: In conclusion it can be said that, this research paper presents the detailed HRM analysis for Johnson & Johnson. Recommendations given in this research paper can b very useful for Johnson & Johnson to better align HR practices to the key business initiatives of the company. Recommendations for HR practices can be concluded as follows: Work design based upon a balance between centralization and decentralization management approach. Reward system based upon performance-based organization or group pay plan rather than individual pay plan Goal-oriented and process oriented performance measurement systems should be used for measuring the performance of employees 360-degree performance evaluations should be used instead of immediate superior performance evaluations. REFERENCES Alsop, R. (1999). Johnson & Johnson (Think Babies!) Turns up Tops. Wall Street Journal, B1. Dreher, G., & Dougherty, T. (2002). Human resource strategy: A behavioral perspective for the general manager. Boston, MA: McGraw-Hill/Irwin Dyer, L., & Holder, G. (1987). Toward a Strategic Perspective of Human Resource Management. CAHRS Working Paper Series, Paper 451. Retrieved November 5, 2011, from Espicom. (2011). Johnson & Johnson. Retrieved November 5, 2011, from Forbes. (2011). Johnson & Johnson at a glance. Retrieved November 5, 2011, from Gant, T. (2001). Johnson & Johnson. International Directory of Company Histories, 36, Farmington Hills: St. James press. Johnson & Johnson. (2011a). Our Company. Retrieved November 5, 2011, from Johnson & Johnson. (2011b). Human Rights Policy and Standards. Retrieved November 5, 2011, from McBride, R. (2009). Enlight Biosciences and Industry Giant Johnson & Johnson Forge Partnership. Retrieved November 5, 2011, from Simply Hired. (2011). Average Johnson & Johnson Salaries. Retrieved November 5, 2011, from Xavier, F. (2003). Human Resource Practices in corporate culture communication: a case study of Johnson & Johnson. Masters Theses and Doctoral Dissertations, paper 4. Retrieved November 5, 2011, from Read More