Shake-up at top for J&J, as Weldon exits CEO post

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The most recent Johnson & Johnson recall may officially be CEO William Weldon's last. Alex Gorsky will become CEO as of April 26, the company said, and Weldon will stay on as chairman of the board of directors, following what the healthcare products giant is calling a "succession decision."

Among Gorsky's direct reports will be the executive he beat out for the top job, Sheri McCoy, who will continue to lead the pharmaceuticals and consumer groups, and maintain responsibility for IT, as well as vice chairmanship of the executive committee.

Critics say the change is long overdue, and the company Gorsky inherits—one beset by recalls in recent years of J&J consumer products, hip implants and contact lenses—is far different from the one that was handed to Weldon. “Weldon's legacy will be marred by the fact that he presided with little apparent sense of the urgency over an extraordinary decline in the J&J brand,” Michael Santoro, a professor of business ethics, told MM&M by e-mail.

Based in the pharma giant's backyard, the Rutgers Business School professor could be referring to any of a number of reasons for that tarnished image -- last week's recall of Infants' Tylenol, the January 27 Aveeno Baby Calming Comfort lotion recall, or the December 21, 2011, Motrin recall, to name a few. These were preceded by recalls of the Eprex anemia drug, epilepsy drug Topamax and DePuy Orthopaedics' hip replacements. Other corporate woes include the FDA seizure of three factories, allegations of improper marketing of the antipsychotic drug Risperdal, and the 2009 “phantom recall” of the pain reliever Motrin in which the company paid people to clear the shelves by purchasing the products to avoid an official recall. A memo that was anonymously sent to Oregon state regulators and was later passed onto Congress included directions that these “shoppers” should “act like regular customers,” CNN reported in 2010.

Santoro lays the blame for these tactics at the feet of Weldon. Although a recent image survey suggested that the years of recalls have not gutted its image among consumers, Santoro said the CEO  has effectively unwound the goodwill the company has relied on since its founding with a foot-dragging approach to handling corporate crises. In 2011, the FDA took over the factories as part of a consent decree, suggesting management problems running as high up as the outgoing chief executive and J&J's board of directors.

In contrast, Santoro cites the era of former CEO James Burke, who presided during the deadly 1982 Tylenol crisis. The seven people killed by tainted Tylenol could have spelled the end of the iconic brand, yet Burke and J&J turned it into a triumph by taking responsibility for the third-party tampering, pulling the product from stores and halting all advertising. Their message: don't purchase the pill until it's safe.

“The way Burke and J&J handled the [Tylenol] crisis showed the public it was a special company that could be trusted. That is the company that Weldon inherited,” Santoro said.

It is not the company Weldon is ceding to Gorsky.

In an interview with David Vinjamuri pre-dating the Weldon announcement, the former J&J employee told MM&M that the company's unwillingness to shake up the C-suite and make significant changes made it a “poster child for bad corporate management” and that the famous J&J Credo, so evident during the Burke era, “isn't really there any more.”

Can Gorsky reclaim some of that luster? Santoro notes that Weldon's legacy requires more than an employee reshuffle. “What he will hand over to his successor is a company that has lost its way and that is no longer special in the eyes of customers."
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