The news that Johnson & Johnson’s longtime CEO Bill Weldon is stepping down as of April 1 has the business world buzzing: Is the 63-year-old Weldon’s departure and the appointment of Alex Gorsky as the new CEO a normal succession like the healthcare giant says, or is it due to a string of product recalls that have plagued the company since 2009?
Jim Lukaszewski, head of crisis communications consultancy Lukaszewski Group, is betting on the latter. “This is part of a pattern we’ve seen at major companies that have major problems,” he says. “The easiest action a company can take is to remove the CEO.”
And Johnson & Johnson is having major problems, with its reputation and financials pummeled by more than two dozen recalls, some so serious that Congress is investigating J&J’s handling of the crises. J&J shares plunged from $72 in 2009 to $48 after the recalls began, and have hovered in the $60 range since. Weldon has tried to assure investors and the public that the company’s problems were under control, but last week J&J had more bad news, announcing that it would recall about half a million bottles of infant Tylenol due to defective bottle tops.
Lukaszewski says the level of tolerance for keeping CEOs during ongoing crises is getting lower and lower. “CEOs are paid big to get the job, paid big to do the job and paid big to leave the job,” he says. In addition, Johnson & Johnson is under even more scrutiny because of the acclaim it achieved in handling the Tylenol crisis and recall in 1982. “It’s tough to live up to urban legends like that,” says Lukaszewski.
Still, Johnson & Johnson is a well-regarded brand. It ranks seventh in Harris Interactive’s most respected companies list for 2011—though down from second the previous year. And it has Gorsky stepping in as the new CEO. What will his first move be? “He has to assure people that these recalls will never happen again,” says Lukaszewski.
That will be a tough message to back up, given Johnson & Johnson’s recent recall track record.
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