This paper will examine the failure suffered by Tyco International Ltd where leadership, management, and organizational structures were compromised. Let us start with the aftermath. According to MSNBC (2005), “Kozlowski and Swartz were accused of giving themselves more than $150 million in illegal bonuses and forgiving loans to themselves, besides manipulating the company’s stock price” (Corporate Scandals, para 14). Clearly, a scandal had hit Tyco International Ltd. Not only did former top executives slip themselves extra money, but they also toyed around with the stock prices.
These actions had made the powerful men very wealthy. They also affected the lives of other individuals. During the trial, Kozlowski and Swartz pointed out that unlike WorldCom and Enron, Tyco continued to thrive as a company after the scandal (MSNBC, 2005). While this may have been a valid point, we cannot dismiss the fact that stealing, fraud, and self-indulgence had been present in the company. Now we will examine how the management, leadership, and organizational structure of Tyco International Ltd contributed to this failure.
Robbins and Judge (2007) explain how managers coordinate social units of an organization in order to achieve common goals. Management performs several functions in a company that may include: planning, organizing, leading, and controlling (Robbins & Judge, 2007). As mentioned above, these functions are performed within social units to achieve common goals set by the company. Should deviation occur, it becomes the manager’s responsibility to get the employees back on track. The management at Tyco International Ltd strayed off course. Instead of performing tasks for the greater good of all members of the company, top xecutives allowed self-interest to govern decision-making. While managerial functions may have remained in place, the goals of these functions became malicious.
Top executives began to plan, organize, lead and control in a fashion that was not in the best interest of all company members. An important managerial function is leading. “When managers motivate employees, direct the activities of others, select the most effective communication channels, or resolve conflicts among members, they’re engaging in leading” (Robbins & Judge, 2007, p. ). Tyco experienced a lack of honest leadership. While some of the normal leadership was maintained to ensure the overall success of the company, there were areas that were intentionally pointed in the wrong direction. The corrupt executives started to make decisions that resulted in large sums of money directed their way. Stock price adjustment and illegal bonuses represented leadership that was no longer in the best interest of the company. These leaders chose to use power in a self-gratifying way.
As a result, Kozlowski and Swartz entered a case that “exposed the executive’s extravagant lifestyle after they pilfered some $600 million from the company including a $2 million toga party for Kozlowski’s wife on a Mediterranean island and an $18 million Manhattan apartment with a $6,000 shower curtain” (MSNBC, 2005). These men were making decisions that did not reflect the company’s overall goal for success. The unlawful actions represented the misuse of leadership. Tyco International Ltd experienced a disruption in organizational behavior as a result of this scandal.
Organizational behavior is concerned with actions of people and how these specific actions and behaviors affect the overall performance of the company (Robbins & Judge, 2007). Kozlowski and Swartz exhibited corrupt behavior and illegal actions for their benefit. Their actions caused a scandal that changed the way that the public and company members viewed Tyco International Ltd. Unethical practices led to fraud, stealing, and eventually perjury (MSNBC, 2005). Overall, these men undermined the values and standards of the company.
They were prosecuted and Tyco International Ltd was able to move forward. Today, Tyco International Ltd has an ethical standard in place. According to Verschoor (2006), “Against a dismal backdrop of corrupted ethics and failed governance, Ed Breen, Tyco chairman and CEO, began the process of ethical reform when he joined the company in the middle of 2002” (p. 15). Tyco now has four core values that include: integrity, excellence, teamwork, and accountability. These values are listed and explained in the 40-page booklet titled The Tyco Guide to Ethical Conduct: Doing the Right Thing (Verschoor, 2006).
Employees are urged to report any unethical actions and must remain compliant with all standards. Unlike other businesses faced with scandal, Tyco survived. Managers realized the need for installing strict rules and standards that would require enforcement. As a result, the organizational behavior of Tyco became more stable. New standards make it more difficult for unethical behavior to slip by and cause scandal. Tyco International Ltd turned a negative situation into a learning experience.
MSNBC. (2005). Ex-Tyco executives get up to 25 years in prison. Retrieved from http://www.msnbc.msn.com/id/9399803/ns/business-corporate_scandals Robbins, S. P., & Judge, T. A. (2007). Organizational Behavior (12th ed.). Upper Saddle River, NJ: Prentice Hall. Verschoor, C. C. (2006, April). Tyco: An Ethical Metamorphosis. Strategic Finance, 87(10), 15-16.