Best Practices in Ethics Recovery: Tyco

In 2002, Tyco began rebuilding their ethical reputation- thanks to the leadership of their new CEO, Edward Breen.

Posted by Joe Gerard in Corruption, Ethics, Ethics & Compliance on March 11th, 2010

In 2002, Tyco began rebuilding their ethical reputation- thanks to the leadership of their new CEO, Edward Breen. Prior to the Breen era at Tyco, former CEO Dennis Kozlowski and former CFO Mark Swartz were part of a major scandal that made headlines around the globe, and were eventually found guilty of stealing hundreds of millions of dollars from Tyco. According to the BusinessWeek article “The Best Managers of 2004“, when Breen took the reins at Tyco, “many people thought the disgraced conglomerate was headed for bankruptcy, just like Enron. In 2004, Breen proved them dead wrong.

Tyco has taken a number of steps to get back on an ethical path, beginning with personnel changes at the top.
Under his leadership, Tyco has more than survived the scandalous conduct of former executives and now has a bright future.” In 2009, Breen was listed as #63 on Ethisphere’s list of the 100 Most Influential People in Business Ethics. In 2004, Tyco was recognized with an award- the “Outstanding Improvement in Board Governance” award, from the Centre for Corporate Change.  According to “Johnson and Johnson and Tyco Win Ethics Awards” article in “Ethical Corporation“, Tyco was given the award for “making drastic changes, including replacing board members and hiring an executive vice-president for corporate governance, in the wake of the recent management scandal at the company.”

How Did They Do It?

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The transition to an ethical workplace at Tyco began with the hiring of Breen as the new CEO, and the hiring of Eric Pillmore, the first ever SVP Corporate Governance. The first major change made was replacement of the old board of directors and 290 of the 300 corporate employees, which took place in early 2003. Pillmore left Tyco in 2007. Pillmore had established 3 principles that have been integrated into the governance at Tyco that he believes are fundamental keys to success in ethics. The three elements are found in the StarTribune article “Tyco exec makes the rounds spreading the word on corporate ethics” and are summarized below:

1. Presence of strong leaders- Those who see themselves as stewards of the company and mentors for its future leaders. Pillmore stated, “I think mentorship is huge, and I don’t think there’s enough emphasis on it.”

2. Web of accountability- Pillmore discusses that simply thinking you’re an ethical person isn’t enough. You need to surround yourself with people who will challenge you and ask good questions in order to help you make ethical decisions all the time. You need to remember that you are accountable for your actions, and if you are making decisions for a company, your level of accountability significantly increases.

3. Behaviour tracking process- “At Tyco, this means including company values in all managerial and leader assessments. It also means trying to reach all 240,000 employees worldwide with a statement of ethics, and letting them know that the company really does want to hear about problems.”

Tyco has published the “Tyco Guide to Ethical Conduct.” In the document, Breen informs employees that they are responsible for bringing issues forward and understanding the company’s core values. The document is easy to read and understand, and is thorough in the information outlined within it. One of the things I think is most useful for Tyco employees in this guide book is the use of examples. Real life situations have been used in order to assist in the understanding of what is/isn’t acceptable at Tyco. I suggest clicking on the link above and taking a look through their ethics guide, as it’s a great benchmarking tool.

Righting the Wrongs

Tyco established a confidential hotline, the ConcernLINE, for employees to ask questions or raise concerns, as well as an Ombudsman. Employees have been given all of the contact information for these types of services in the “Guide to Ethical Conduct” and are encouraged to bring concerns forward. Published under “Corporate Governance” on their company website it states that, “Tyco is committed to the highest standards of integrity, which begins with making sure that everyone across the Tyco organization understands the company’s core values— integrity, excellence, teamwork, and accountability.” Tyco publishes a quarterly report that’s based on the issues and complaints that employees bring forward- omitting personal employee information such as names of course.

The publication also includes the the company’s findings on disciplinary action (if taken). Pillmore mentioned that this report is one of the most popular ones for employees, as they can see first hand what the company is doing to correct problems and see what other issues are taking place within the company. Pillmore also traveled around the world and tried to speak with as many employees as possible, because he says that “facing them on a regular basis keeps you from being a bureaucrat.” Tyco has established the “Supplier Diversity” program, which “is committed to contributing to a sustainable competitive advantage in the markets we serve by integrating minority, women, veteran owned, disable-owned and HUBZone businesses into our strategic sourcing process and providing these businesses with a solid foundation for building capacity to capture significant growth opportunities. Our goal is to increase the number of diverse suppliers, increase the amount we spend with them, and include them in our sourcing initiatives.”

The one area that Tyco is working on improving is the interview process and using that as a control mechanism to ensure that those entering the company fit in with the culture and ethics at Tyco. Pillmore stated “the thing still lacking is how we transfer this to the front end- to keep bad guys from getting in.”

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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