Ethics and Business
By Craig S. Galati
In the fall of 1982, Johnson & Johnson voluntarily pulled one of its best selling products, Tylenol, from store shelves because seven people in the Chicago area had died after taking cyanide-laced Extra Strength Tylenol capsules. It was determined that the product had been tampered with after it left the manufacturing facility, and although Johnson & Johnson was not to blame for any of the deaths, it immediately took steps to remove the product and to send messages through the media not to use the product. This move by Johnson & Johnson was one of the largest voluntary recalls of a product in history, involving approximately 31 million bottles of its product.
But Johnson & Johnson did not stop there. It offered to exchange all Tylenol capsules that had been purchased for Tylenol tablets. Although this proposition cost Tylenol millions of dollars, one executive was quoted as saying that it was the right thing to do. In addition, Johnson & Johnson offered a $100,000 reward to help catch the murderer, and immediately suspended all Tylenol advertising.
Johnson & Johnson was not forced to do these things. Many people cite the Tylenol example as one of the greatest public relations efforts in history — and it was. But the original recall was based on safety concerns for the general public rather than concerns for the company and its profits.
Contrast this with the recent events involving the Endoscopy Center of Southern Nevada in Las Vegas. More than 50,000 patients of the clinic were potentially exposed to Hepatitis B, C and HIV from March 2004 to January 2008. The Southern Nevada Health District identified at least six confirmed cases of hepatitis C that stemmed from procedures performed at the clinic on the same day.
How did this happen? To cut costs, nurses and doctors at the Endoscopy
Center reused single dose vials of medication on multiple patients. It is believed that this practice tainted the medication and that tainted medicine was passed on to other unsuspecting patients. To save about $2 per patient, the Endoscopy Center placed at least 50,000 people at risk of contracting a serious disease.
But it’s worse than that. The Endoscopy Center did not step up to the plate when the problems began to surface. It did not suspend all procedures until the situation was fully understood and corrected. Instead, it issued a public apology and vowed not to do it again. The City of Las Vegas eventually closed the clinic.
Since then several nurses have come forward to tell how they were instructed to cut corners, even though they knew they risked contaminating patients with life-threatening communicable diseases. Also, since the center’s closing it has been found that surgical instruments were not properly cleaned, and that some procedures were performed in less-than-appropriate environmental conditions. It is hard to believe that the moral and ethical obligations of health professionals could be ignored to this extent. A doctor formerly associated with the clinic said profits were placed higher than the obligation for public health and safety.
Today, Johnson & Johnson is a thriving company and Tylenol remains a leading brand. Most people born after 1982 have never even heard of the Tylenol crisis. Johnson & Johnson did the right thing and it is successful today. It led the way in developing the strict anti-tampering packaging that helps protect consumers today. I have no fear of taking Tylenol even though I clearly remember the Tylenol crisis.
Let’s hope that The Endoscopy Center never opens again.
I’d like to hear from you:
• Can you remember a time when your company’s ethics were challenged? How did your company handle the situation?
• Can you identify a situation when you observed a company acting in the “right way”?
• Do you believe that corporations can act ethically and still succeed?
Next time we will explore these questions. Until then …
Craig
June 9th, 2008 at 10:19 am
The worlds of Business and Ethics are difficult to blend. Organizations such as XXX, have negative results because the people on board cannot tell the difference between right and wrong. Due to scope, these consequences usually take longer to materialize, but is the result the same? You can find a ton of articles and books about business ethics about businesses “losing their way,” e.g., WorldCom, Tyco, Enron. You can also sign up for seminars where they preach to “do the right thing.” They paint the world in stark black and white. These resources ask one-dimensional ethical questions, such as, “Should you take kickbacks from suppliers?” For me, ethics in the workplace is varying shades of gray. You have to rely on moral law, that is, does it ‘feel’ wrong? It’s easy to say, “There is right, and there is wrong.” In my management book, Wingtips with Spurs, I address these issue in detail. All major corporations have their written code of conduct. Each one is pretty much just a copy of the others and is a major dust bunny. The next time you walk into someone’s office, ask to see the company code of conduct. Good luck on finding someone who will produce it within five minutes. The moral law is much easier to find and digest. It resides in each of us. Michael L. Gooch, SPHR www.michaellgooch.com
June 24th, 2008 at 2:04 pm
Thanks Michael. I agree with you. If we had a higher degree of morals in most corporations, we would not need codes of conduct, ethics commissions, etc.