Barbara J.

 Elbertson
Director General Management Talent Development

November 4, 2006
 For Discussion

■ About Johnson & Johnson

■ Our Culture, Our Credo
■ Employee Engagement-Employee Motivation
■ Q&A
 A Company With a Rich History
Founded in 1886 by Robert Wood Johnson
in New Brunswick, NJ

Robert Wood

James Wood

First Johnson & Johnson Facility

Edward Mead
 World’s Most Comprehensive and
Broadly Based Health Care Company
■ 115,700 Employees
■ 230 Operating companies in 57 countries
■ Selling products in 175 countries
■ Highly decentralized
Consumer & Personal Care Medical Devices & Diagnostics

Pharmaceuticals OTC’s and Nutritionals

 Balanced Portfolio
2005 Sales: $50.5 Billion

Medical Devices
& Diagnostics Consumer
37.8%
18.0%

44.2%

Pharmaceuticals
 2005 Sales by Geographic Area
Total Sales: $50.5 Billion

Asia, Pacific, Africa

$6.8 Billion
W. Hemisphere
$3.1 Billion
14%
6%

Europe 24% 56%

$12.2 Billion

U.S.
$28.4 Billion
 Historical Performance
■ 73 Consecutive years of Sales increases
■ 21 Consecutive years of double digit Earnings
increases(1)
■ 43 Consecutive years of Dividend increases
Reported Operational Net
Year Sales Sales Income(1)
100 +10.5% +11.0% +10.9%
50 +11.1 +11.7 +14.2
20 +10.9 +10.8 +15.3
10 +10.5 +11.3 +15.9
5 +11.6 +10.3 +16.0
1 +6.7 +6.0 +13.3
(1) Proforma excluding In-process R&D, net taxes on repatriated cash under the AJC Act and other charges and credits
 Performance Driven by Four
Enduring Strategic Principles

Broadly based Decentralized A Culture of Foundation

in Human Management Managing Built On
Health Care Philosophy For the Ethics and
Long-term The Credo
 Leadership and Growth Imperatives

Broadly based Decentralized A Culture of Foundation

in Human Management Managing Built On
Health Care Philosophy For the Ethics and
Long-term The Credo

• Leadership
Leadership & Growth
Leadership • Competitiveness
• Talent Management • Superior Growth
• Global Leadership Profile
 Leadership

“The most important responsibility all of us have is

to develop the leaders of the future. It’s the
greatest challenge we have, and the most
important legacy that we can leave behind.”

William C. Weldon
Chairman and Chief Executive Officer
 Talent Management-
A Critical Business Imperative

Mission

To develop and retain a diverse and robust pipeline of

Extraordinary Leaders capable of meeting current,
emerging, and future challenges
 Business Strategy

Talent Management Process

Rewarding/
Acquiring Assessing Developing
Compensating
Talent Talent Talent
Talent
Recruiting Performance Critical Job Performance
Selection Management Experiences
360 Assessment Driven
On-boarding Skills Enhancement
Succession and Compensation
Leadership Education Leadership
Development Coaching
Awards
Planning

Leadership Accountability

Diversity…Productivity…Results
 Integrity and Credo-based Actions
 Strategic Thinking
 Big Picture Orientation with Attention to Detail
 Organization & Talent Development
 Intellectual Curiosity
 Collaboration and Teaming
 Sense of Urgency
 Prudent Risk-taking
 Self-awareness and Adaptability
 Results and Performance Driven
 Long-Term Growth Strategy

■ Strong internal R&D capability

■ Strategic alliances
■ Selected acquisitions
 Four Enduring Strategic Principles
Enabling Leadership & Growth

Broadly based Decentralized A Culture of Foundation Built

in Human Management
Philosophy
Managing For
the Long-term
On Ethics and
The Credo
Health Care

Leadership
Leadership&
& Growth
Growth

Johnson & Johnson

C&PC MD&D PHARM CORP.

Consumer & Personal Care

Science in the
Service of Consumers
Medical Devices & Diagnostics
 Worldwide MD&D Market
$U.S. Billions 2004-2008
0 5 10 15 20 25 30 35 CAGR

In-Vitro Diagnostics 28.7

6.9%
Orthopaedics 21.1
13.3%
Cardiovascular 19
16.0%
Imaging** 16.2
5.1%**
Patient Monitoring 8.8
3.2%
Ophthalmology 8.7
7.0%
Surgical Instruments 8.4
$ 180 Billion Market*
’04 – ‘08 CAGR: 9%** 7.5%
Dialysis 6.8
5.5%
Wound Care 6.4
5.5%
Respiratory 4.7 = J&J Participation
9.0%
Needles & Syringes 4.2
10.0%
Neurology 2.7
15.0%

Source: McKinsey 2004 (Dorlands) *Estimate based on Frost & Sullivan, Freedonia
Pharmaceuticals
 Therapeutic Growth Engines

■ Sustainable leadership in current

markets
– CNS
– Pain management
– Immune-Mediated Inflammatory
Diseases (I.M.I.D.)
– Anemia
■ Four new global growth engines
– Virology
– Oncology
– Anti-Bacterials
– Cardiovascular Disease
Enabling Leadership & Growth

Broadly based Decentralized

Decentralized A Culture of Foundation Built
Management Managing For On Ethics and
in Human
Health Care
Management
Philosophy the Long-term The Credo
Philosophy

Leadership
Leadership&
& Growth
Growth

Principles of Decentralization

• Empowerment • Accountability
• Entrepreneurship • Collaboration

Standardization
 Enabling Leadership & Growth

Broadly based Decentralized AA Culture

Culture of ofFoundation Built
in Human Management Managing
Managing For ForOn Ethics and
Health Care Philosophy the Long-term The Credo
The Long-term

Leadership & Growth

Enabled
By

External
Environment

Organizational & Strategy

Competitiveness Talent Planning Superior growth

Business
Planning
Enabling Leadership & Growth

Broadly based Decentralized A Culture of Foundation Built Built

Foundation
in Human Management Managing For On Ethics and
Health Care Philosophy the Long-term On
TheEthics
Credo and
Our Credo

Leadership & Growth

Our Credo
■ Written by General
Robert Wood Johnson,
Jr. in the 1940s
– Visionary business
leader
■ Among the first to speak
openly of a company’s
responsibility
– Responsibilities far
beyond the
requirements of its
stockholders
– Committed company to
adhere to a set of
responsibilities
 Our Credo

Four Tenets
■ Customers
■ Employees
■ Community
■ Shareholders
 Our Credo
■ Reflects our profound
inclination to put the needs of
others first
■ Guides us in all our actions
– Reinforces our deep
conviction to
meet customers’ and
patients’ needs
– Global community of
caring employees
– Help rebuild destroyed
communities
– Positions us to meet
shareholder expectations
■ Evidenced by what each of us
do every day of the year – at
work, at home, in our
communities

Citizenship
• Obey laws/regulations
• Protect the environment
• respect from
Support worthy causes
Credo Values
Trustworthiness
• Strive for a good, ethical solution
• Align behavior with stated values
• Avoid misrepresentation –
be honest
Respect
• Keep promises
• Do not exploit, demean
• Be worthy of stakeholder loyalty or discriminate
• Our actions should earn
stakeholders

Responsibility
• Recognize interests
Caring of all stakeholders
• Be concerned about the • Be personally
well-being of others accountable
affected by our actions • Consider impact
long-term and
Fairness beyond your area
• Be fair in dealings with customers, of responsibility
suppliers, communities, employees
and competitors
• Be unbiased/objective
• See things through the eyes of others
 Credo-Based Decision Process

Test your Act with

provisional courage
Search for
Recognize decision
a good solution Accept the
the moral discomfort
challenge Ask yourself:
• Does it pass the Acknowledge
Address threshold issues any downside
“Tell All” test?
Is there a Use more than one
conflict between ethical approach • Could you explain
two “goods?” it to those affected,
• Weigh conflicting to your family,
interests against your peers?
Proactively Credo values
address the issue placing emphasis • Will it harm the
on core values Company’s reputation
Avoid if reported in the media?
• Assess motives/
rationalizations
intent
• Assess impact of Talk with others:
Gather pertinent
facts alternatives on •
Use your management,
stakeholders others at corporate as a
sounding board
In conflict, think
long-term
A critical component in retaining talent

Employee Engagement, or the extent to which

employees are willing and able to contribute to
company success
The top ten drivers of ENGAGEMENT are about the
things that enable employees to make a difference
Towers Perrin Talent Report 2003

Pay Benefits Our study provides a talent

management mantra that
says...
To attract me, you’ve got
to get the basics right
(pay, benefits, career,
people)…
Top 10
Engagement But to really engage
Drivers me, leadership has
to show interest in
me, you’ve got to
Learning and Work give me challenge
Development Environment and authority, and
 Challenging work  Senior management interest in the company has to
 Customer orientation employee well-being focus on success
 Career advancement  Decision-making authority (customers)
opportunities  Reputation of the company
 Senior management vision  Collaboration with co-workers
 Resources to get the job done
 Input on decision making
When it comes to RETENTION, the rewards that matter
most are about advancement, keeping good people and
the work environment Towers Perrin Talent Report 2003

Pay Benefits
Our study provides a talent
management mantra that
 Providing competitive base  Overall satisfaction with
says...
pay benefits needed in day-to-
day life To attract me, you’ve got
to get the basics right
(pay, benefits, career,
people)…

Top 10 To retain me, you’ve

Retention got to help me
Drivers advance, keep the
Learning and Work good people, and
Development Environment provide the right
work environment…
 Career advancement  Overall work environment
opportunities  Resources to get the job
 Retaining high caliber people done
NOTE: Italics indicate
 Developing skills of  Manager provides clear goals organizational performance
employees  Manager inspires enthusiasm on these areas that overlap
 Challenging work with engagement drivers…
The Johnson & Johnson Worldwide Credo Survey is a reflection of each
associates thoughts and ideas regarding their Company and their work.

Measures the Impact of Leadership

Behavior
On
Organizational Beliefs
Outcomes
Assessed
Credo Values/ethical
conduct
Company Innovation
High Performance
Job Demands
Valuing People
Customer Focus
 Credo Survey Process

Participation Interpretation
100% Web Based Turning data into information
Translated Into 50 Normative Comparisons
Languages Global, Regional, Functional,
Business Unit
All Johnson & Johnson
Employees

Communication Improvement
Employee Feedback Action Planning / Accountability
Linked With Each Report
Sessions
Supervisory Review and Approval
Acknowledged Areas of Knowledge Sharing Resource
Status Tracking
Strength

Identified Areas of
When it comes to retention, the rewards that matter
most are about advancement, keeping good people and
the work environment Towers Perrin Talent Report 2003

Pay Benefits
Our study provides a talent
management mantra that
 Providing competitive base  Overall satisfaction with
says...
pay benefits needed in day-to-
day life To attract me, you’ve got
to get the basics right
(pay, benefits, career,
people)…

Top 10 To retain me, you’ve

Retention got to help me
Drivers advance, keep the
Learning and Work good people, and
Development Environment provide the right
work environment…
 Career advancement  Overall work environment
opportunities  Resources to get the job
 Retaining high caliber people done
NOTE: Italics indicate
 Developing skills of  Manager provides clear goals organizational performance
employees  Manager inspires enthusiasm on these areas that overlap
 Challenging work with engagement drivers…
 Developing Targeting the “Right”
Talent Development at the “Right” Time
Keys to Building a Deep Bench of Talent

t
en
• Robust processes in:

Ex
em
• Assessment EC/CGCs

ec
ag
Incumbents

u
an
• Assignment Management

tiv
• Programs and processes

e&
ce
• Performance Management identified through the

Le
nin an
Pipeline for EC Organizational & Talent
• Recruiting

ad
m
& GOCs Planning Process

g
Pl rfor

ers
• Rigorous, action oriented • Tailored and customized by
Pe

hip
an
talent review process
Pipeline for: Global
GOC as required by the

De
business demands
ion

• Line accountability - Presidents Regional

ve
- IVPs
ss

Local
es

lo
• Deployed consistently and - MDs
ce

pm
nc

strategically aligned with GOC

c
rie

en
Su

and J&J business

pe

t
imperatives
Ex

“Further Out”/Emerging Talent

&
les
Ro

Shared Talent Mindset & Behaviors

• A pervasive Credo-based philosophy and culture
• Critical combination of programs and processes tailored to meet the needs of
growing and developing leaders
• A belief that talent impacts business results
• Performance bar is continually raised
Now that your know more about J&J…

What do you believe drives

organizational behavior in this company?
 Learnings

■ It’s about the industry we are privileged to work in

■ It’s about our decentralization
■ It’s about Credo values
■ It’s about talent acquisition, engagement and
retention
■ It’s about leaving a legacy, securing the company
for the future
■ It’s about Leadership
Thank You

Q&A