Examining a Business Failure – Tyco

Examining a Business Failure Tyco Examining a Business Failure Tyco Introduction This paper will describe how specific presidencyal behavior theories could crap predicted the failure Tyco International (Tyco). This paper will discuss the contributions of leadinghip, management, and organizational structures to the organizational failure of Tyco. Organizational Behavior Organizational behavior is a field of study, centre that it is a distinct area of expertise with a common body of knowledge.Organizational behavior studies three determinants of behavior in organizations individuals, groups, and structure. In addition, organizational behavior applies the knowledge accomplished about individuals, groups, and the effect of structure on behavior in order to make organizations work more effectively. Organizational behavior is concerned with the study of what spate do in an organization and how their behavior affects the organizations performance (Robbins & Judge, 2007).In the case of Tyco, the organizational behavior of the company in 2002 was un estimable in nature. Tycos actor CEO Dennis Koslowski, former CFO Mark Swartz, and former Gen successionl Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans (sometimes mask as bonuses) that were never approved by the Tyco board or repaid. Some of these loans were part of a Key Employee Loan program the company offered. They were accused of interchange their company stock without telling investors, which is a requirement under SEC rules.Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco through their unapproved bonuses, loans, and extravagant company spending. Rumors of a $6,000 shower curtain, $2,000 fight can, and a $2 million dollar birthday party for Koslowskis wife in Italy are just a few examples of the misuse of company funds. As many as 40 Tyco executives took loans that were later forgiven as part of Tycos loan-forgiveness program, although it was said that many did not know they were doing anything wrong.Hush money was also paid to those the company feared would so-and-so out Kozlowski. Essentially, they concealed their illegal actions by keeping them out of the accounting books and away from the eyes of shareholders and board members (http//money. howstuffworks. com/cooking-books9. htm). In an organizational world characterized by cutbacks, expectations of change magnitude worker productivity, and tough competition in the market view, it is not surprising that many employees feel pressured to cut corners, break rules, and engage in other forms of questionable practices.What constitutes genuine ethical behavior has never been clearly defined. Employees see people all around them engaging in unethical practices. (Robbins Judge, 2007). Leadership Failure The senior managers at Tyco failed as leaders. They forgot that leadership was about serving others and not themselves. But it was also a failure of those who followe d the leaders such as the corporate attorneys who failed in their concern to keep the leaders in check. Tyco lawyers wanted to please their bosses instead they should have stepped in when corporate corruption was evident. Most of the people who became infamous for their misdeeds helip were not malign people, said William Lytton (general counsel for Tyco in 2002). As Lytton sees it, they lost sight of the cultural boundaries, blinded by their own career advancement goals. That is where the role of the corporate lawyer becomes critical. While it might prove difficult to stop bad things from happening, Sometimes, you do need to just say no (http//www. vermontlaw. edu/x7845. xml). Management FailureTycos top executives do by their responsibilities to the laws governing corporate management ignored responsibilities to their investors and ignored responsibilities to their employees. The planning and management strategies of these executives seem to have been more focused on personal gain than on the best interests of the company and its shareholders. As a result of their greed and fraudulent activities, the top executives at Tyco were indicted and convicted of fraud charges for improper accounting practices as well as unauthorized use of company funds for personal gain.One viewpoint on leadership is that it occurs only when people are influenced to do what is ethical and beneficial for the organization and themselves. This definition of leadership does not include influence attempts that are irrelevant or detrimental to followers, such as a leaders attempts to gain personal benefits at the followers expense (Yukl, 2006). In the case of Tyco, when Ed Breen took over as CEO, he fired 290 of the 300 managers who were employed at Tyco during the Kozlowski era along with the other senior managers.He wanted to bring in new management and employees who would help build Tycos reputation up and create an ethical firm that consumers and shareholders could trust again. Or ganizational Failure While the organization was not solely to blame for Tycos failure, Tyco could have taken preventive measures which would have avoided this point entirely, such as o created codes of ethics to guide employees through ethical dilemmas o implemented policies for enforcing those codes create a corporate governance department and film experienced professionals to ensure compliance with federal and state regulations are adhered to o offer seminars, workshops, and similar training programs to try to improve ethical behaviors Todays manager needs to create an ethically healthy climate for his or her employees, where they can do their work productively and confront a minimal stratum of ambiguity regarding what constitutes right and wrong behaviors.In upcoming chapters, well discuss the kinds of actions managers can take to create an ethically healthy climate and help employees sort through ethically ambiguous situations. Well also present ethical-dilemma exercises at t he end of each chapter that will allow you to think through ethical issues and assess how you would handle those (Robbins Judge, 2007). Summary In 2002, Tyco was controlled by unethical businessmen more interested in personal gain than creating a successful company that shareholders, employees and consumers could trust, respect and benefit from.They failed as leaders and managers and as a result, made the organization as a whole suffer. They acquired businesses quickly, falsified accounting records, took out personal loans, withheld information from the public as well as shareholders, and caused the market share of the company to drop dramatically. All of this unethical business activity could have been avoided had an official corporate governance department been in place and a company code of ethics policy implemented.References Robbins, S. P. Judge, T. A. (2007). Organizational Behavior, Twelfth Edition Prentice Hall. Obringer, L. (1998-2009). How Cooking the Books Works. http// money. howstuffworks. com/ cooking-books9. htm HowStuffWorks, Inc. Staff Report (2008). Lessons of Tyco Just Say no(prenominal) http//www. vermontlaw. edu/x7845. xml Vermont Law School. Yukl, G. (2006) Leadership in Organizations, Sixth Edition Pearson Prentice Hall. ming