Tylenol Tampering

One of the most significant examples of business ethics and corporate crisis management involved the actions of Johnson & Johnson (J&J) during the Tylenol tampering crisis. In the fall of 1982, a subsidiary of United States–based J&J, McNeil Consumer Products, [Page 2129]learned that seven people in Chicago had died from taking Extra-Strength Tylenol capsules that had been laced with cyanide. The management was convinced that the tampering did not occur at its plants, meaning that it must have taken place once the product had reached Illinois. J&J faced a dilemma, how best to handle the crisis without damaging the reputation of the company, when the company had quickly established that it could not be held liable for the tampering.

Reports on the firm's decisionmaking process during the crisis indicate that the company placed the safety of its customers first, before considering profit implications. A nationwide voluntary recall took place, involving approximately 31 million bottles of Tylenol, representing more than $100 million in sales. Consumers were told not to use any type of Tylenol product until the cause of the tampering had been established. Production and advertising of Tylenol ceased. The company offered to exchange all Tylenol capsules that had been purchased for Tylenol tablets. Relations were quickly established with the Chicago police, the FBI, and the Food and Drug Administration (FDA). A toll-free crisis phone line was set up for concerned consumers. Senior executives, including CEO James Burke, were readily accessible to the media. As part of a longer-term response, the company reintroduced Tylenol capsules with new tripleseal tamper-resistant packaging. Despite the firm having its market share drop from 33% to 18%, it wasn't too long before the company was able to recover its position. Following a second tampering incident in 1986, J&J made the decision to offer Tylenol in a caplet form, as opposed to a capsule form. No one was ever convicted of the tampering incidents and subsequent deaths.

Probably the most significant aspect of how J&J handled the crisis was the apparent corporate culture that existed at the time. According to J&J executives, turning to the firm's credo enabled them firm to make the right early decisions that led to the comeback phase. The credo, initially written in 1943, stated that the firm had obligations to society beyond merely profit maximization or enhancing shareholder value.

As a direct consequence of the Tylenol murders, U.S. Congress approved in 1983 a new “Tylenol Bill” that made maliciously tampering with consumer products a federal offense. In 1989, the FDA set national requirements for all over-the-counter products to be tamper-resistant.

Unlike many other firms, which often fail to react quickly on discovering potential danger to their stakeholders, J&J is remembered as a company that possessed an ethical corporate culture enabling the firm to handle the Tylenol tampering crisis quickly, openly, and honestly. By doing so, J&J was able to protect and enhance its corporate reputation into the future.