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A leader plays very important role in the success of the organization. Good leader has vision and
he can take the organization forward, a not so good leader finds himself unable to influence the
employees and lacks vision. He may cause the failure of the organization. There are various
leadership theories biz. Charismatic, participative, visionary , transformational etc. All these
theories agree that a good leader has exceptional quality to influence his followers
(subordinates). A leader has extraordinary effect on followers and followers become committed
to the leader. So, if leader is taking his followers towards the organizational goal, it is positive
for the organization.
Some leaders are born with the traits, which make them a leader, on the other hand some leaders
develop these qualities. Any particular educational qualification is not required to be a good
leader. A good leader has power to motivate the followers to contribute individually and hence
collectively to the organization. Leader helps the followers (employees) to achieve the goals and
objectives set for the organization.
A participative leader includes the employees in decision making process. He encourages the
employees to share their ideas and views which is considered in decision making process. It
makes the decision making like a team work and employees feel themselves a part of the
decision making team. So, any decision taken seems as it is the decision taken by the employee
himself. So, participative style of leadership motivates the employees to contribute more and
increases the belongingness. The leader has vision to foresee the future of the organization. He
motivates the employees accordingly. How effective a leader is, is reflected in the performance
of the team he is leading. He has influence among employees and he leads from front. By sharing
that vision with other followers, and allowing them to take part in achieving that vision, all
individuals will benefit from the successful results (Bateman, & Snell, 2007).
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Any organization’s long term goal is more than just making profit. Organization needs to
manage its resources including human resource, efficiently to achieve the set long term goal.
Leader plays very crucial role in achieving the goal. He can lead the organization to success or
failure. Not all leaders follow same style of leadership. But all leadership styles try to achieve
same goal, i.e. to help the employees to contribute more individually as well as collectively, and
take the organization forward. Organizational culture plays major role in the success of an
organization. A successful leader helps in creating healthy organizational culture which allows
individual as well as organization to grow and sustain the growth. The failure of the leader is
reflected in the weak organizational culture which may result in the failure of the organization.
Other important factor which decides the success or failure of an organization is management
and organizational structure. Management is responsible for long term planning and setting up
the goal of the organization. They have the control of the organization. Top management
executes Planning function of management as per POLC model. Other activities of the
organization are directed to achieve the goal set in planning phase. If top management fails in
setting right long term goal of the organization, all other activities will also be directed in wrong
direction and hence, organization may not sustain for long.
Organization’s structure and hierarchy delegates power(authority) and responsibilities. It dictates
who will do what and who has got what level of authority. Organization’s structure tells who is
in charge of taking what decision and who is responsible for a specific act and decision. A
successful organization should have clearly defined delegation of authority so that if something
goes wrong, management can track the responsible person and know the reason why it went
wrong. Sometimes organization deliberately create the organization structure in such a way that
any mischief can not be determined easily. This kind of decision shows the lack of vision of the
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management. In short term organization may be benefited from such organizational structure, but
in long term kit may be fatal for the organization’s very existence.
TYCO International
Tyco International is a diversified global manufacturing and service provider company, having
stake in electronics and telecommunication, security, healthcare, flow control etc. Tyco was
founded in 1960 by Arthur J. Rosenburg. In 1962.
Tyco has been victim of many scandals. It has been acquiring so many businesses and in year
2002 it posted extensive loss. In an effort to cut losses, Tyco divested Tyco capital business
through IPO. Tyco healthcare segment also divested its Surgical Dynamics. As a result, in 2002,
turnover rose to $35 billion but company incurred a loss of $9 million, including asset
impairment write-down of $3 billion. In addition to the financial woes, Tyco faced another
massive scandal in 2002- Its former chairman and CEO, L. Dennis Kozlowski was charged for
excesses.
In 2002, Edward D. Breen was appointed CEO of Tyco for three years. In 2004 Annual Report,
then CEO Edward D. Breen said- "Thanks to our customers and our dedicated employees, we
had a very good year in 2004. Our success was based on a simple strategy: to make operational
excellence a core competency, to build a platform for sustainable organic growth, to invest in
our people, and to hold ourselves to the highest ethical standards... To that end, I am extremely
pleased to report that our sustained progress throughout the year resulted in Tyco meeting or
exceeding all of our financial goals." (Allen, & Hartman, 2008).
As the CEO said in Annual report in 2004, Tyco was pursuing organic growth strategy. In
organic growth, company seeks to grow by increasing revenue of existing business rather than
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acquiring other companies. This was a part of long term plan of Tyco. Tactical plans are made
for shorter period to implement the long term plan successfully and achieve the long term goal
set by the management.
To achieve the company’s long term plan of organic growth, Kyndall, a unit of Tyco Healthcare,
ventured into producing “Next generation hypodermic needles” in 2004. This product was a
great success. Kyndall produced 210 million units of needles in single year.
Tyco started working on reviving its corporate image and enhance consumer awareness. In order
to build brand value, Tyco launched a global print campaign ion 2004 – “Tyco a vital part of
your world.” Tyco started reviewing its core business and sold rest of the businesses. As a part
of this strategy, Tyco sold TGN in 2004 (which was almost entirely written off by that time). In
total, Tyco divested 21 businesses and liquidated 4 non-core businesses.
In line of the strategic plan and tactical plan, Tyco’s operational plan was also showing same
trend. Operational plan specifies the process and procedures that lower level managers and
employees will follow. It is carried out on daily basis. A good operational plan involves
management, employees, customers and vendors. In an effort to revive its image, Tyco had set
very good operational plan as well. M/A-COM is a unit of Tyco Electronics. "The products are
specially designed and manufactured at M/A-COM' s facility in Lowell, Massachusetts (USA)
where they undergo extensive qualification programs to satisfy Boeing and NASA requirements.
Further, they are subject to rigid manufacturing controls and in-process inspections, in addition
to extensive acceptance test procedures." (Tyco Out of This World, 2004, 3).
What caused the failure of such a giant is something which should be analyzed properly. It was
the failure of management and leadership. All wrong decisions, lack of control, absence of any
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internal control system, organizational structure with flaw and weak organizational culture
caused the failure of the giant Tyco International. Its former chairman and CEO, L. Dennis
Kozlowski and senior managements faced prosecution for "larceny and conspiracy, falsifying
business records and violating business law." (Tyco Worldwide, 2004, 1). They were accused of
misappropriating money and assets from the company for personal use totaling in the range of
$210 million dollars. This kind of incident indicates how weak organizational culture was
prevailing in Tyco. The leader himself was involved in unethical and illegal activities. A leader
can cause success or failure of the organization. In case of Tyco, leader was the caused of the
failure. Later, CEO and senior management had to resign and law indicted them.
Securities and Exchange Commission (SEC) , FASB and other regulatory bodies have been
taking steps to protect the interest of shareholders. They have laid down many standards
company has to follow. SEC also requires the companies to disclose its financial statements and
other financial information. The disclosure of information brings transparency in the system and
shareholders (and other stakeholders) gets an idea what is happening inside the company.
Regulatory bodies also require the companies to comply with GAAP guidelines which helps in
preventing unethical accounting practices. Ethics is much more than complying with the law.
By 2002, many corporate scandals happened and that forced regulatory bodies to come out with
law which could prevent the malpractices in the organizations. In 2002, Sarbanes-Oxley Act
came into force which brought transparency into the system and forced the organizations to
follow ethical accounting practice.
In 2003, Pillmore, senior vice president of corporate governance said CEO Dennis Kozlowski
and CFO Mark Swartz failed to disclose millions of dollars of low interest and interest-free loans
they received from Tyco. To cover their theft, they
entered into secret contracts, further
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damaging the company's integrity. The executive's unethical behavior resulted in huge debt and
decoration of the value of shareholders. Tyco reached at the verge of bankruptcy.
What happened in Tyco can be called failure of leadership and failure of management in
checking unethical practice. All organizations have ethics code in place but it is merely a
guideline. Organization should monitor how actively ethical code is followed. Moreover, a
leader should take initiative and motivate and inspire the employees to follow the ethical
practices so that slowly it becomes a part of the process and organizational culture.
References
Bateman, T., & Snell, S. (2007). “Management: The New Competitive Landscape”. 7th Edition.
McGraw-Hill.
Lowenstein R. ()2004). “The company they kept” Retrieved on August 28th , 2009 from :
http://www.nytimes.com/2004/02/01/magazine/01RIGAS.html?8br
“Tyco Executives highlights ethics problems” (2003, October 31). Retrieved on August 28th ,
2009 from :http://www.collegiatetimes.com/stories/2346