Unit 7 Written Assignment, University of the People
In 1960, Arthur J. Rosenberg founded Tyco, Incorporated, which was later named Tyco International. Over the next four decades, Tyco experienced a roller-coaster ride with investments and divestments. In 2002, Tyco was embroiled in a corruption scandal, with money diverted to fund the lavish lifestyle of its chief executive Dennis Kozlowski.
Read the business case – Tyco International: Leadership Crisis - found in the Daniels Fund Ethics Institute - https://danielsethics.mgt.unm.edu/pdf/Tyco%20Case.pdf. Then, answer the following questions in essay format:
Provide a brief summary of the corruption case.
Why is this a case of abuse of leadership power, unethical behavior, and corruption?
Discuss why leaders are held to a high moral standard.
Grade: 70/90 (377 words)
- A brief summary of the corruption case.
This is the corruption case of Tyco International which was revealed in 2002. The former CEO L. Dennis Kozlowski and CFO Mark H. Swartz were charged with more than thirty counts. Such as misconduct, including grand larceny, enterprise corruption, and falsifying business records. Examples in more details, misappropriating more than $170 million from the company, stealing more than $430 million through fraudulent stock sales, and concealing shareholders' information. (n.d. ,2011)
- Why is this a case of abuse of leadership power, unethical behavior, and corruption?
The executives are responsible for preventing unethical or inappropriate situations or issues. However, Tyco's executives had inappropriate relationships among the board's members, so this case is an abuse of leadership power, unethical behavior, and corruption. Other board members received an immense amount of money appropriately from the CEO, Kozlowski. (n.d. ,2011)
- Discuss why leaders are held to a high moral standard.
The leaders of an organization have to meet a compliance obligation for three reasons. The first reason is for protecting the business, employees, and organization. If the leaders' moral standard is low, companies can become disrupted. (n.d., 2019) Second, high ethical standards can improve decision making at a business and make it easier for employees to be autonomous. Third, the morality of leaders can affect employees' motivation. As Herzberg's Motivator-Hygiene Theory, organizational policies or quality of supervision affect job dissatisfaction, so if the leaders show low morality, decreasing employees' motivation. (Hunt et al., 2010)
- What changes were put in place to address ethical conduct?
In the Tyco International case, after Kozlowski's resignation, Edward Breen became a new CEO. He put new methods for ethical conduct. Here are some examples.
- Launched a review of the company's accounting and corporate governance practices to determine whether any other fraud had occurred.
- Reorganized the company and recovered some of the funds taken by Kozlowski.
- Shareholders elected a new board of directors.
- Implemented a corporate ethics program and replaced 90 percent of the headquarters staff.
- Created the Tyco Guide to Ethical Conduct. The guide is 32 pages long and is available in a variety of languages for global employees.
- Published a confidential hotline so that employees could report misconduct without fear of retaliation.
Daniel Funds Ethics Institute. (2011). Tyco International: Leadership crisis. The University of Mississippi. https://danielsethics.mgt.unm.edu/pdf/Tyco%20Case.pdf
Code of ethics and professional conduct. (2019). Betterteam. https://www.betterteam.com/code-of- ethics-and-professional-conduct
Hunt, J., Osborn, R., Schermerhorn, J. & Uhl-Bien, M (2010) Organizational Behavior, 11th Edition. New York: John Wiley and Sons.