Tyco International: Leadership Crisis

By Katia Savenko Updated January 03, 2022

For unit 7’s assignment, we investigate the case about workplace corruption, discuss causes and invigoration plan.

Brief summary of the corruption case.

“In 2005, Kozlowski and Swartz both were found guilty on twenty-two of twenty-three counts of grand larceny, conspiracy, and falsifying business records and violating business law” (Daniels, n.d.).

The investigation uncovered the sequence of troubling relationships among directors of the firm’s board and Kozlowski. For instance, the board of directors revealed that one of the members received commission without informing them in 2002. Thus, the case brings to light numerous expense abuses. 

The key figure is Dennis Kozlowski, who has worked for the company since 1975. During this time, Kozlowski changed his leadership style a few times. He started his career as a transactional leader, then shifted to charismatic leadership, and ended up leading autocratically.

Why is this a case of abuse of leadership power, unethical behavior, and corruption?

Dennis Kozlowski and Mark H. Swartz violated the code of ethics regarding anti-bribery and corruption (Code of ethics, 2019). The case is considered an abuse of leadership power for multiple financial frauds. When the autocratic leader accumulates power in the company, the corporate structure becomes imbalanced, which leads to the board of directors members’ unethical behavior.

Why leaders are held to a high moral standard.

“Successful leaders prioritize their moral compass” (Biddle-Buffalo, 2018). ​​A strong sense of morality is a crux for leadership as it facilitates high performance, engagement, accountability, and trust in the workplace. As we learned in previous units, such traits as trust, openness, and motivation are the foundation of business success.

What changes were put in place to address ethical conduct? 

After the scandal, Tyco takes the following steps in reinforcing the company’s ethical standards to overcome the difficulties:

I. Election of a new board of directors by shareholders, assing an independent person for the board chair position, future executive severance agreement development.

II. Implementation of a corporate ethics program to revamp the ethical culture of the company by highlighting three elements:

  1. Solid and ethical corporate leadership:
    – statement report to include employees in the process for the opportunity to contribute to the ethical program;
    – website launch to provide information on common ethical issues in business.

  1. Accountability:
    – building trust and openness within the company;
    – ombudsman assignment to mediate conflicts between management and employees.

  1. Behavior tracking processes:
    – periodical survey to identify the employees and operations areas of weakness;
    – tracking system to collect data from ethics initiatives to measure their success.

“In the era of always-on transformation,” there are no hopeless situations, provided that the companies change course, analyze errors, and reorganize the structure with the implementing new components (Hemerling, 2016). In this case, the renewal of the managerial staff, the development of a code of ethics with a “highly inclusive approach to leadership” helped Tyco restore its reputation for ethical conduct – a terrific example of how a company turns a mistake into a virtue (Hemerling, 2016).


Biddle-Buffalo, M. (2018, October 25). Successful leaders prioritize their moral compass. Futurity.

Code of ethics and professional conduct. (2019, May 13). Betterteam.

Daniels Fund Ethics Initiative. (n.d.). The University of New Mexico.

Hemerling, J. (2016, May). 5 ways to lead in an era of constant change. [Video]. TED.

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