...Abstract This paper is an analysis of a real world case as it relates to the learning about managing misbehavior. The Case 8.1, “The (Mis) Behavior of Successful CEOs Leads to Their Departures,” requires answers to the following questions: • “To what degree do you believe the behaviors of the featured CEOs constituted "misbehavior" and that reactions of the boards were correct?” (Ivancevich, J.M., Konopaske, R., & Matteson, M.T., 2014). • “If you were on a board of directors, what factors would you consider in the selection of a CEO to limit the potential of this type of misbehavior?” (Ivancevich, et al, 2014). • All three of the CEOs in the case were given large severance packages. What message does this send to future CEOs of these companies? If you were on the board of directors, would you endorse such severance packages? What is the cost of not granting a competitive severance package? (Ivancevich, et al, 2014). The (Mis) Behavior of Successful CEOs To what degree do you believe the behaviors of the featured CEOs constituted "misbehavior" and that reactions of the boards were correct? Harry Stonecipher The reaction of the Boeing’s board of directors against his “misbehavior” is a sign of a senior management that has no tolerance for any misstep especially on a period where the company is trying to regain its previously-tainted leadership (on account of another case of misbehavior). I believe that Stonecipher’s affair should not happen had he thought of his position as a position...
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...As a diversified company Tyco International Ltd. Comprise of five sections: ADT Worldwide, Electrical and Metal Products, Fire Protection Services, Flow Control, and Safety Products” (NYSE, 2009). Though the company got enormous earnings from their acquisitions, the Securities Exchange ran an enquiry on Tyco International Ltd. ensuing in the resignation of then CEO Dennis Kozlowski in the wake of the allegation of misusing millions of company funds for private use. Furthermore the then CFO Mark Swartz was also charged with the distortion of fiscal report to inflate stock prices and subsequently trading the stock for more $500 million dollars. With the resignation of Kolzowski, Ed Breen became the new CEO; he promptly restructured the board of directors and the senior level executives of Tyco International Ltd. Organizational behavior theories such as administrative misdeeds and the absence of managerial responsibility may perhaps illustrate why the then CEO ( Kozlowski) and the then CFO( Swartz) decided to take the course of unscrupulous and unlawful path. Organizational Misbehavior Organizational misbehavior can be defined as “any intentional act by an organizational member within the organizational context that violates organizational and/or societal norms” (Vardi & Wiener, 1996). The consequence of the...
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...page 227 (1) What forces were in play in the misbehavior of the three CEO's? I think both normative and instrumental forces are associated with the misbehavior of the three CEO’s. A normative force describes the person’s expectations of how he or she is supposed to behave. An instrumental force is the individual’s personal interests or beliefs. All of these CEO’s were aware (if they didn’t spearhead) the employee code of conduct and policies so they are aware of what is perceived as appropriate behavior in the workplace (normative). However, these CEO’s were influenced to misbehave by their own instrumental forces. (2) What should the board of directors have in mind in the selection and periodic review of the CEO? In the selection, a candidates core values and beliefs should be of strong determination. They should also be evaluated on their past experiences, not just from a professional perspective but also personal. The CEO is the face of the company and needs to be able to lead by example and make strong, confident decisions that he truly belives is in the best interest of the organization. During a periodic review, their behavior toward others should be evaluated in addition to their success (or failure) within that period. Boards always have the organization’s best interest in their mind, especially because they are usually invested in the company in one way or another. The Board should analyze the CEO as a whole, but also realize he is human, and forgive...
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...Elton Johnson Organizational Behavior The (Mis) Behavior of Successful CEOs Leads to Their Departures 1. The reaction of the Boeing’s board of directors against his “misbehavior” is a sign of a senior management that has no tolerance for any misstep especially on a period where the company is trying to regain its previously-tainted leadership (on account of another case of misbehavior). I believe that Stonecipher’s affair should not happen had he thought of his position as a position of pure trust and confidence. That affair was understandably an issue of poor judgment impairing his ability to lead Boeing back to industry leadership after recent company turmoil. The reaction of the board was correct. Mark Hurd clearly violated policy when he misfiled his expense report. Although this situation may seem small and he intended to repay the expense, it shows his intention to mislead the company and what he is willing to do to cover up his mistakes. The reaction of the board was correct. Fraternization in the workplace should not be tolerated, it gives the assumption and perception that the individual is or will be shown favoritism. I the case of Brain Dunn, although he gave gifts and it was not within the misuse of company funds, the CEO should be held to a higher standard and should hold himself to a higher standard which he did by resigning and showing that he understood what he did was wrong. The reaction of the board was correct. 2. To limit the type of behavior...
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...The CEO of Terrapin Textiles Ltd. was impressed by Janet W., an enthusiastic MBA graduate with creative ideas. He was not concerned by her lack of management experience and entrusted her to represent him and make major decisions in his absence. Other senior managers and employees observed unethical and questionable behavior from Janet. She appeared to limit communication between them and the CEO, was manipulative, and had little interest in the business. The victims of Janet’s behavior found themselves in a catch-22 situation. They knew Janet’s behavior was unethical, but feared they would face retaliation for addressing it. Whistle blowing is only perceived as positive when it is handled effectively and results in corrective action (Near & Miceli, 1995, p. 679). Janet’s secretary approached HR about her concerns, but was asked to sign a statement or discuss it with the CEO. HR’s approach to the situation put pressure and responsibility on the secretary to correct Janet’s behavior. It is likely she feared for her job because she was not confident HR and the CEO would resolve the manner in her favor. “Rather than framing interpersonal mistreatment in organizations as a private problem for individuals to resolve, we should hold organizations responsible for managing misbehavior within” (Cortina and Magley, 2003, p. x). HR needs a better method for addressing employee concerns about unethical behavior. Janet’s secretary may have felt more comfortable officially...
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...general, the role and duties of corporate directors are to manage company affairs, holding the board of directors meeting, and selecting the managing director or CEO to operate the company. Yet, in real world, the directors will abuse their power to exclude minority of directors, or make selfish decision with their own sakes of interests in the expense of company interests. For example, managing directors will maximize their director fees without the paying of dividends, or excluding the minority of directors by voting. Because of that, the legal system allows shareholders to take “derivative actions” to balance the power of directors. Derivative actions are the effective tools to solve this problem. However, it is not well proven in the real world. The purpose of protection and effect on company of derivative actions in practice will be discussed. Derivative Actions There are two types of derivative actions, common law derivative actions and statutory ones. For common law derivative action, it is taken based on case laws such as Foss and Harbottle case. In this case, two shareholders, Richard Foss and Edward Starkie Turton claimed the board of directors decided to misuse the land in Manchester of company which made company wasted many on the mortgage. Then, they sued the five directors because of their misbehavior, on behalf of company to claim the remedy. Finally, the case is dismissed. Thus, there are proper plaintiff rules and majority rules applied before common law derivative...
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...the employees offer the best they could to the customers. It is mention that is a duty driven ethics because it makes sure that the employee know what is expected from them and with all it also understood what they are to expect from their superiors. The code of ethics are base rules and guidelines that enables the company to have a standards and to maintain a well functional dynamics that allows all the different areas accessible and to keep thing more of a black and white than having many grey areas. The code of ethics as guideline helps the employer to be able to stand before his employees and direct them neither in manner that allows them to understand that the company stands for many things and will not tolerate nor with stand misbehavior. Example would be, if the company says that they do not support personal space invasion that means that they will be there to make sure that all the employees understand up hiring or if the clause or guideline is implemented after begin hired, that they will penalize any one that is reported with sexual harassment. It is in our understanding that the code of ethics for...
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...James McNerney Jr. decided that Boeing Co.'s (BA) top managers needed a loud wake-up call, the new chief executive chose the obvious place to sound the alarm: the company's annual executive retreat on Jan. 4 and 5. A year earlier, the event had been held at the posh Mission Hills Country Club in Palm Springs, Calif., and nobody apparently had a better time than McNerney's predecessor, Harry Stonecipher. After a day devoted largely to socializing and playing golf, the former CEO, surrounded by Boeing's elite, closed down the bar and then fired up a cigar. It was at the same event that the married Stonecipher began a relationship with a female vice-president at Boeing -- a misjudgment that ultimately paved the way for his humiliating ouster on Mar. 6, and for McNerney's appointment as CEO on July 5. Stonecipher could not be reached for comment. The "Palm Springs fling," as it became known at Boeing, marked an all-time low for the company. It followed a three-year binge of widely publicized corporate misbehavior highlighted by the jailing of Boeing's former chief financial officer for holding illegal job negotiations with a senior Pentagon official, the indictment of a manager for allegedly stealing some 25,000 pages of proprietary documents from his former employer, Lockheed Martin Corp. (LMT), and the judicial finding that Boeing had abused attorney-client privilege to help cover up internal studies showing that female employees were paid less than men. Scandals involving multiple...
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...clearly seen that politicians thrive in India irrespective of rising inflation and slowing economy. Emerging countries will account for a large chunk of the world’s growth. These countries promise new and unexplored markets to the world with their rising levels of consumption and cheap labor. However, markets such as India pose unique risks for the businesses and hence impact its economy. Business risks are provoked because of influence of government in transactions which are expected to be purely commercial in the developed countries. State plays a very important role in planning of its economy and if the resources are used by the politicians for their “business” then economy is bound to fall flat. Financial crises are attributed to misbehavior of some kind, greed, fraud and cronyism. As is widely known, political influence is very essential to start a business in India. This is a key concern for the Indian markets. Corruption has serious repercussions on India’s businesses and political environment. Every time a scandal occurs it damages the credibility of the government. The following are the implications of corruption on India’s economy and markets: Corruption reduces competition and efficiency in the Indian economy. India ranked 134th out of 183 countries in the World Bank's Ease of Doing Business Index in 2011, a ranking lower than both China (79th) and Brazil (127th). Businesses face constraints in starting a business, dealing with construction permits and enforcing contracts ...
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...Describe the key characteristics of a whistleblower Person or any employee who reports the illegal activities occurring in an organization or who has insider knowledge of immoral, or illegitimate practices taking place in a business either through witnessing the behavior or being told about it. Such practices can include illegality, frauds, mismanagement or abuse of power. Whistleblowers can use different channels to report wrongdoings, including internal channels (i.e., within their organization, such as directly reporting misbehavior and incidents to their immediate supervisor, union representative, or human resources department) or external means (i.e., going outside their organization to, for example, a third party ombudsman, an external hotline, or an applicable government regulatory agency related to the type of wrongdoing behavior. Internal whistleblowing mechanisms for public companies must comply with the provisions of the Sarbanes-Oxley Act of 2002 (SOX). Two of the many corporate governance provisions of SOX place whistleblower-friendly requirements on issuers. SOX section 301 requires the audit committee of every issuer to establish procedures for the receipt, retention, and treatment of complaints regarding accounting, internal control, or auditing matters, and to maintain the anonymity of employee complaints regarding accounting and auditing matters (i.e., the establishment of a whistleblower hotline). SOX section 806 provides protection for employees who blow...
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...MATTEL TOYS RECALL CASE STUDY Product recall: On August 14, 2007, the U.S. Consumer Product Safety Commission (CPSC) in cooperation with Mattel announced five different recalls of Mattel's toys. On September 4, Mattel announced three more recalls. Some were due to the use of lead paint, while others were due to small magnets coming loose. On August 2, 2007, Mattel's Fisher-‐Price subsidiary recalled almost one million Chinese-‐made toys, including the famous cartoon brands amongst kids:Dora the Explorer and Sesame Street toys, because of potential hazards from parts of the toys which were colored using lead-‐based paint that may have exceeded the US Federal limit of 600 parts per million. Q1. What should the country do to polish its image? -‐First, the central government must ensure that manufacturing quality standards and health and safety laws are tightened and enforced nationwide. Western multinationals...
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...Royal Dutch/Shell case write up Introduction Royal Dutch/Shell Group of Companies was formed through and alliance of Royal Dutch Petroleum company and Shell Transport Trading company in 1907. Even though the two companies remain separate, the matrix structure of Royal Dutch/Shell Group of Companies had helped the company survive the oil price collapse and some other crisis. By 1990, Royal Dutch/Shell’s revenues exceeded the industry leader Exxon’s, making it the largest oil company in the world. However, In the 1990s and early 2000s, the company’s reserve replacement ratio has dropped from above 100 percent to almost below 100 percent, which indicates that the company was having trouble with replacing the oils it produced each year with new reserves. In order to boost up its reserve placement ratio and offset other series of problems, Royal Dutch/Shell Group Companies changed its operating structures. In January 2004, the company announced that it would reduce its estimate of proved oil reserves by 4 billion barrels, or 20 percents. Six months later, by the time the restatement was completed, the company had reduced its reserves for 3 additional times. Royal Dutch/Shell’s reputation was hugely affected as it had been suited by several security boards. Shareholders were outrageous as well. Causations of the reserve restatement Firstly, the complex operating structure of Royal Dutch/Shell had a huge negative impact on Royal Dutch/Shell’s performances and it directly led...
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...discussed: (1) The role of leader behavior and organizational/leadership styles in shaping the corporate organizational culture of an organization, and (2) The extent to which this culture renders the organization and its members (including the top executives) prone to ethical misbehavior. The four companies selected for this case analysis are: Enron Corporation, WorldCom, Inc., Tyco International, Ltd., and HealthSouth Corporation. Each case is considered individually. The basic elements in the scandal are outlined and the principal aspects of each organization’s corporate culture discussed, with special emphasis on the influence of leadership styles and leadership behavior/practices on organizational culture. The four cases are then compared and contrasted in the light of the existing evidence on the relation between corporate culture and ethical misbehavior. PRELUDE “We were doing something special. Magical. It wasn’t a job – it was a mission. We were changing the world. We were doing God’s work.” – Jeffrey Skilling, former Enron COO, President and CEO in the immediate aftermath of Enron’s bankruptcy filing* “I don’t want to just be rich. I want to be World Class rich!” – Kenneth Lay, former Chair & CEO, Enron Corporation** “I’ve thought about this a lot, and all that matters is money.” – Jeffrey Skilling, explaining his theory of motivation to another Enron manager***1 INTRODUCTION In the mid-1990s, when Chief Executive...
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...Financial Theories Overview Edward E. Edgar University of Phoenix Financial Theories Overview The following is an overview of 10 different financial theories prevalent today. The overview will include a brief description of the theory, an example of the theory, and other attributes of the theory. There will also be a conclusion to sum up a general understanding of the theories and their applications. Efficiency theory Efficiency theory has been around since the 60s and, is an extension of the efficiency theory of a capitalist society. Generally the theory is that scant resources are distributed by the owner in an efficient manner. The owner choses the best outcome for his or her investment and regulates resources and products accordingly. This is extended to the stock market in the 60s and has been a prevalent theory since. The theory as applied to the stock market says that all information of the market is fully reflected in the price of the stock and efficiently assimilated (Fama, 1970). Examples Generally stock returns are compared to overall market returns. A mutual fund company will compare their returns to the general stock market return and state they are a certain percentage above or below the market standard returns. Most will try to say they have beaten the market average. This is true for most investing firms and, is used as a selling point for the company or mutual fund. Attributes If this theory was to be taken to the extreme one would have to say that...
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...today’s society is fast becoming an oxymoron. This is because so many of today’s young people are being raised with a sense of entitlement, ease, and luxury. Many of them don’t see the correlation between responsibility and success. And, as a result, when life’s misfortunes arise—and they always will—their first knee-jerk reaction is to blame other people or circumstances for their own personal woes. This, in turn, only compounds the problem by making the person feel as if they are a victim: powerless, helpless, and unable to change themselves or control any future condition. Consider the words of Steven Reiss, Ph.D. (2010), “We live in an era where few people are held responsible for their misbehavior. From elementary school children who don't do homework to oil company CEOs who engage in criminal behavior, the consequences often seem to fall on the system rather than on the people who actually misbehaved.” Common sense tells us that if you do not make a child accountable for the homework he neglects to do, he will not feel the need to change his behavior anytime soon. Additionally, if parents do not give their children simple chores around the house, or make them accountable for misdeeds, those children eventually become lazy, unmotivated, and ungrateful....
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