Over View of Management Essay

1027 WordsMar 23, 20095 Pages
Overview of Management: Downfall of Tyco International Overview of Management: Downfall of Tyco International Organizational Behavior/LDR 531   The Downfall of Tyco International This paper will describe the downfall of Tyco International and how specific organizational behavior theories could have predicted the failure. My paper will also compare and contrast the contributions of leadership, management, and organizational structures to the organizational failure of TYCO. According to the Tyco Fraud Information Center, an internal investigation concluded that there were accounting errors, but that there was no systematic fraud problem at Tyco. So, what did happen? Tyco's former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel Mark Belnick were accused of giving themselves interest-free or very low interest loans (sometimes disguised 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. The Key Employees Loan Program is basically when the company is the beneficiary of the plan and therefore pays the insurance policy premiums. Key person insurance is needed if the sudden loss of a key executive would have a large negative effect on the company's operations. The payout provided from the death of the executive essentially buys the company time to find a new person or to implement other strategies to save the business, also known as Key Man Insurance, Key Woman Insurance, or Business Life Insurance. TYCO employees were also accused of selling their company stock without telling investors, which is a requirement under SEC rules. Koslowski, Swartz, and Belnick stole $600 million dollars from Tyco International through their unapproved bonuses, loans, and extravagant "company" spending. As many as 40 Tyco executives took loans that

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