Leadership corruption and organizational failure at Tyco International

Failure at Tyco

Examining a Business Failure

Analyzing the Failure at Tyco International

This essay is to analyze the situation of Tyco International and how it failed. Tyco provides, security solutions, flow control and fire protection. We would analyze the failure using Organizational behavior. We would consider trait theories, behavioral theories and Fiedler contingency model to discuss Tyco's situation. We would also conclude as to how leadership, management and organizational structures supported the downfall of Tyco International.

Explanation of Failure

The behavior of Kozlowski and the failure of the company can be explained by using theories of organizational behavior. The trait theories can be used to predict or explain a person's behavior; Kozlowski. The personality of the leader counts a lot. If a person is aggressive and ambitious then he will do anything to achieve his goals, even corruption. Judge, Bono, Illes and Gerhardt (2002) explain that extraversion is the most important trait of the leader. Therefore, Kozlowski had many links and contacts. He had corrupt practices himself. Kozlowski also paid his accomplices illegally from the funds of Tyco. This resulted in the downfall of Tyco. The board of directors of Tyco should have noticed the ambitious nature of Kozlowski and the sudden rise in profits after Kozlowski's recruit. There had to be something wrong if the directors had considered the trait theories of organizational behavior. The person in charge, Kozlowski, could be alleged of corruption due to the sudden changes in financial situation of Tyco. The trait theories also explain this corrupt behavior of Kozlowski. Kozlowski was an ambitious man and to achieve his dreams he crossed all limits. He became corrupt and used the funds of Tyco for his own benefits for his own vested interests.

Fiedler's contingency model can also be used to explain the failure at Tyco International. Fiedler (1967) identified positional power as a part of leader's effectiveness. Kozlowski used his leadership in the same way. According to Fiedler (1967) positional powers included the power to hire, fire, discipline, promote, and give salary increases to employees. Kozlowski was accountable to no one. Therefore he practiced his power negatively. Kozlowski was in a position to cheat Tyco international, so he did it.

Generally speaking, Kozlowski was the one responsible for the scandal. He had his accomplices but without Kozlowski, they would not have dared to cheat. We can also consider the theory of Ethical Decision criteria to explain Kozlowski's behavior. Cavanagh, Moberg, and Valasquez (1981) argue that individual use three decision criteria's in making ethical choices. The first criterion is the criteria of utilitarianism. It states that decisions are considered explicitly on the basis of their aftermath. Kozlowski ignored this fact when he practiced unjustly. He was unable to provide maximum benefits to the maximum amount of people. The second criteria is the criteria of focusing on rights. These criteria states that we should protect fundamental rights of other individual as well as ours. Kozlowski failed to follow this too as he stole the money of Tyco's shareholders. The third criterion is to focus on justice. Kozlowski did not follow this principle and involved himself in unjust practices.

We can conclude that Dennis Kozlowski was not alone is this mega scandal. All of the top management was involved with him allegedly; Kozlowski could not have accomplished it without the help of his accomplices in crime. These accomplices were none other than some of the employees as stated by Galvani et al. (2002).

Therefore the organizational structure of Tyco aided Kozlowski in his scheme. Daft (2004) stated that there are six key elements that managers need to address when they are creating an organization's key organizational structure; work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. Work specialization refers to the degree to which activities in the organization are subdivided into tasks. Departmentalization is the criteria by which different jobs are made into a group. Chain of command is the line of authority that extends from the boss to the lowest echelon. Span of control is how many employees one manager has under his command. Centralization and decentralization refers to the delegation of authority. Formalization is the standardized criteria for jobs. All these elements worked together with the leadership and management structure of Tyco to result in its downfall. Tyco follows a vertical management structure therefore employees were under the command of Kozlowski. Kozlowski allegedly with the help of top management managed to take the profits beyond 30 million dollars but doubled the long-term debts to over 10 billion dollars. The span of control of Kozlowski allowed him to carry out his scheme. The management structure was vertical as well therefore CEO Kozlowski was not accountable to anyone except the board of directors of Tyco. Therefore, Kozlowski was able to conceal the corruption from the board of directors with the help of his employees as stated by Galvani et al. (2002).

Conclusion

The failure of Tyco international was due to fraud on a mega scale and corruption. All the corruption started after Dennis Kozlowski joined Tyco as CEO in 1992. Although Kozlowski was the CEO when the fraud occurred, by using the theories mentioned above, we can state that Kozlowski was not the only one responsible for what happened to Tyco International.