Read the case “How We’re Fixing Up Tyco” on pp. 235 of your textbook. Understand

Question

Read the case “How We’re Fixing Up Tyco” on pp. 235 of your textbook. Understanding Business Ethics, Peter Stanwick and Sarah Stanwick, Thousand Oaks, CA: SAGE Publications, Inc. (2016) ISBN 978-1-5063-0323-9. CHAPTER 12 1What would be the easiest and hardest part about trying to change the ethical values at Tyco? 2How effective do you think vignettes are as an ethical training tool? How We’re Fixing Up Tyco1 The new senior vice president of corporate governance at Tyco, Eric Pillmore, had a big problem. How was he going to try to repair the tarnished image of the diversified conglomerate Tyco? A major difference between the Tyco scandal and the WorldCom and Enron scandals was that Tyco had strong financial performance from its divisions. Although the other scandals falsified financial statements to give the appearance of financial strength, Tyco was still profitable during the scandal. Realizing that to re-create its image, Tyco needed to start with a clean slate, Tyco changed all the board members who were part of the Kozlowski era to try to separate the company from $6,000 shower curtains. Tyco went through a two-stage process in which the board evaluated all the activities of the former top executives as well as reviewed all the financial statements for each business unit within the company. The board established Pillmore’s job of vice president of corporate governance, which reported directly to the board of directors. Tyco officials also realized that they would have to start from scratch to develop a new code of ethics. To reestablish credibility with its stakeholders, Tyco had to incorporate its new value system in a formal document. Tyco officials examined the code of ethics and corporate governance practices at General Electric, Johnson & Johnson, and Coca-Cola as a starting point for rewriting Tyco’s code of ethics. From that foundation, Tyco established the Guide to Ethical Conduct, which applied to all employees at Tyco. The guide covered such ethical areas as sexual harassment, potential conflicts of interest, compliance rules, and what is considered to be fraudulent behavior of the employees. As a complement to the guide, Tyco also developed ethical vignette videos to highlight potentially unethical behavior in different situations. In the summer of 2003, the guide and access to the vignettes were given to every employee at Tyco. (The complete Tyco case is presented later in the textbook.)

Explanation / Answer

The easiest part about trying to change the ethical values was the formulation of the document about code of conduct and code of ethics after reviewing the documents of main companies like Coca-Cola, Johnson& Johnson, and General Electric and develops training videos to create awareness among the employees about fraudulent behaviours, sexual harassment, conflicts of interests.

The hardest part was to rejuvenate the credibility among the stakeholders as per the new documented value system by inculcating the ethical values in the employees. The implementation and ensuring the compliance without any prejudice all over the organisation was a mammoth task. The old board members were removed in order to change the culture Tyco had to start from zero to accomplish the ethical values among the employees of the company by rigorous trainings , periodic monitoring and ensuring effectiveness of the trainings.

The Vignettes are very effective in ethical training as the brain captures and memorises data in form of images and it is very easy to correlate with the real time incidents and the plot shown in training videos . Thus the response towards ethical incident reporting would be facilitated and videos would embed on the mind of the employees as per the case studies

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