Tyco International: Leadership Crisis (Essay Sample)

1. A summary of the corruption case
The Tyco International corruption case was one of the most famous scandals experienced in the early 2000s. Under the leadership of the company's CEO, L. Dennis Kozlowski, Tyco international made a profit of $ 48.7% between 1998 and 2002 (K, 2018). However, at the beginning of the year 2002, the company was faced with a series of corruption scandals that rocked the top management team of Tyco International. The company's CEO, CFO, and the board of directors were involved in cases of money theft, fraud, falsifying documents, and grand larceny. With the crisis, the company realized a loss of over $ 400 million. This loss affected the company and the shareholders, thus leading to discussions on conduct issues and corporate governance.
2. Why is this a case of abuse of leadership power, unethical behavior, and corruption?
Initially, Tyco international flourished under Kozlowski's leadership, which was aggressive. However, the company suffered a corruption case characterized by abuse of power by top management leaders like the CEO and CFO, who practiced criminal actions and misconduct. Their leadership positions gave them access to readily available information, which enabled them to gain insider information and further sell its stock, thus creating a loss of over $ 430 million. Besides, when interviewed, CEO Dennis Kozlowski claimed to be economical, thereby misleading the public since there were several wasteful expenses cases in the company's Manhattan offices (Lütge & Uhl, 2021). In this regard, lying to the public was unethical; Additionally, CEO Dennis Kozlowski single-handedly restructured Tyco international and selected Schwartz to lead in a CFO position.
Although Schwartz was fully aware of the CEO's illegal actions and misconduct, he did not question him or report him to the authorities. Withholding such important information is indeed unethical. Moreover, Kozlowski was sentenced for stealing money and selling the company's stock, while the CFO was sentenced for falsifying documents. Also, some board members were accused of grand theft, while others were found to have stolen over 26 million dollars from the company (Tyco, n.d.). On the same note, some board members responsible for taking actions against ethical misconduct withheld useful information and invested in other companies. Ideally, these are cases of immorality and misconduct, proving that the top management leaders of Tyco International were corrupt, unethical, and abused their leadership power.
3. Discuss why leaders are held to a high moral standard.
Leadership is an essential factor in any company that wishes to achieve its goals of profit maximization and consumer satisfaction. Ideally, leaders are elected to help instill the proper code of conduct and ethics in the employees. Installing ethics improves reasoning and decision-making and reflects on the company's internal values among its employees. Thus, leaders are held to high moral standards because they instill ethics to enable proper functionality in the employees.
4. What changes were put in place to address ethical conduct?
Kozlowski resigned as the CEO of Tyco International and was replaced by Edward Breen as the new CEO, while Eric Pillmore was the elected vice-chair of the corporate governance (Tyco, n.d.). Under the leadership of Edward, Tyco International replaced some of its head staff. Additionally, the company implemented an organizational ethics program and developed a guide for ethical conduct in the workplace. Moreover, the newly elected leaders undertook talks regarding ethics and moral behavior in the company, and data tracking from the ethical initiatives reported the employee ethics awareness to be 100%. Finally, in this scope, Tyco International was incorporated into the World Economic Forum Against Corruption Initiative (WEFACIS). As of the year 2010, Tyco International reported an improvement in reputation for better ethical conduct.