Failure at Tyco Examining a Business Failure

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.

The Failure at Tyco International

Tyco International is a diverse manufacturing company that operates globally. It is incorporated in Switzerland but has operational headquarters in New Jersey, U.S.A. Tyco offers its customers with fire protection, security solutions and flow control.

Tyco was a very profitable company under the leadership of L. Dennis Kozlowski, the chairman and Chief Executive Officer of Tyco International. Kozlowski served Tyco from July 1992 till June 2002 when the directors asked for his resignation. Kozlowski was charged with massive scandals and corruption on a large scale. Galvani et al. (2002) charged Kozlowski with extreme levels of corruption that included, awarding unauthorized special bonuses to him as well as 40 other employees, misappropriating 100 million dollars to him and millions of dollars to others as well. The list of the charges made by Boies, Schiller & Flexner LLP was endless. These accusations were clear as the company had begun to face decline. However, Kozlowski was to be taken to court and given a trial.

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).