The first part of this essay will discuss the case of Dennis Kozlowski, the CEO of Tyco International; in his case, I will discuss his spending habits. The second company I will discuss is Kevin Johnson. He is the CEO of Starbucks; he took part in a racist and discriminatory act that led to two black men being arrested at his hotel in Philadelphia. Each case has a difference in ethical leadership and how they handled it.
Kozlowski rose to fame in 1992 after being promoted from an auditor role in 1975; he was responsible for much of the company’s success (McCombs school of business, 2021). The company began to struggle as the economy began to decline. He exposed his extravagant lifestyle and very lavish spending. He was accused of taking company assets and receiving bonuses that were not authorized to him. He was also accused of stealing 600 million in assets and paying 30 million dollars for apartments in New York City. He also paid a finding fee to hire an unapproved board member. All information was found because it was created on company accounts.
This study shows that Kozlowski’s key trait is his willingness to take risks. The company grew, and he made strategic investments which led to the expansion of Tyco International. The company’s growth shows his intelligence and bravery. His honesty is another ethically controversial characteristic. This study shows us that he is hardworking and honest. This is true when you consider he confirmed the expenditures because they were recorded in his books and accounts of the company. Most people would have falsified the documents, lied about it, and tried to steal from the company; this happens in most embezzlement cases. All transactions and evidence in his case were taken directly from the company’s records and accounts, which portrays him as honest. What got him convicted is that despite having records, his actions were still portrayed as illegal or unethical. As CEO, he is expected to protect and maximize the company’s returns. His other character trait was that he tended to make decisions without proper oversight or asking for permission, which can indicate selfishness. His selfishness in financing his lifestyle led him to use his position as an unauthorized bonus and use the company to buy assets that would later be traced back to him. This type of engagement encourages self-interest and costs the company and the interest of others.
Kozlowski’s virtues could have been viewed from an Aristotelian perspective of virtue. Aristotle said people don’t need to attach an end to justify the means. It is essential to see the action as good and then practice it if it is beneficial through long-term practices. His honesty was a sign of virtuous behavior and actions. Overall his personality can be deemed as self-interest. This is because he seemed to care more about himself and his lifestyle than anything else, even if that meant using company resources as CEO to pay for his lifestyle. He is more guilty of practicing his lifestyle choices than he is of virtues in this case.
Kevin Johnson – this case involves two black men sitting in a Philadelphia Starbucks, not spending money but just in the Starbucks. They were asked to leave and were later arrested (Tangdall. 2018). Another customer sat there and recorded the incident, which went viral. The CEO of Starbucks took responsibility and fired the manager. He also changed the companies’ policies and restored how people viewed Starbucks. Johnson actions were regarded as one of the most ethical leaders in handling unethical situations involving racism and discrimination that led to the arrest of the two black men. Johnson took the primary approach to handle this manner rationally because he determined that his steps would lead to a long-term solution.
The six steps to approach this decision involved careful analysis of the situation and creating a solution that would help create a new Starbucks culture that is non-discriminatory. The first example is defining the problem (Uzonwannt, 2016). It is essential first to identify the problem to find appropriate solutions. Johnson identified the problem within the company policies after the video went viral; he said that the store manager acted according to his authority but was a mistake. He also owned it as a business. This approach is where the company accepts responsibility and acknowledges that the manager was wrong.
The company’s culture allowed flexible policies to increase the manager’s autonomy. No policy would guide managers on what to do if someone sat there without ordering or what to do if they became disruptive. The second step is identifying the criteria for evaluating possible solutions (Uzonwanne, 2016). Johnson was not the only one who made the decision; he stressed the importance of including the victims and the local community in creating policies promoting inclusion and preventing similar situations from happening again. A plan needed to be developed not just to solve the problem but to maintain the company’s reputation. His actions indicated that he had to apologize to the public and the victims he met in person. He then engaged with the victims and then fired the manager. This was an essential foundation for the future of the company’s policy against discrimination. We must also consider the alternatives and determine which one works best. Starbucks could have chosen to remain silent. Apologize and fix its reputation using only an apology or go into greater detail to address the problem so that it will make victims feel safe and secure.
The company chose to implement the ethical guidelines and make them a part of future companies’ policies. This was the best option; it went on to win an award for the most ethical company of the year following the incident. This shows that leadership is committed to fixing the problem by taking ownership and engaging all parties to change the company’s culture. It is vital to ensure that the new culture does not create problems such as this in the future. This also shows that the company respects its clients who buy Starbucks products and services. It is necessary to follow strict guidelines when making these types of decisions. It shows Johnson’s attributes to provide such ethical leadership in solving issues of racism and discrimination. A leader who is ethically sound can make an organization more morally responsible for its clients and the environment in which it operates.
These two cases show leadership in two very different ways how handled each of these cases. The approaches are taken to discuss improved ethical leadership and accountability when making managerial decisions and demonstrate the difference in their leadership qualities. Johnson is compassionate and selfless, while Kozlowski focuses on what will make him the most money. Even though he is being honest about how that goes about, he is manipulating company records. His actions are designed to enrich himself and sustain his lavish lifestyle. This became a problem for many people within the company. Many people felt that he was not concerned with the company’s values or the needs of others in the company. His main goal was to expand the company and not give it to his shareholders or customers but to allow him to have a better lifestyle by using his leadership position. Johnson was quite different. He is a selfless leader who cares deeply for his clients, employees, and company shareholders. As CEO, Johnson could have fired the manager, but took the time to go, the victim himself, and apologize. He also took responsibility for the company and ensured that the structures were now in place to prevent things like this from happening in its establishment in the future. To ensure that workers learn the new policies and how clients should be treated, he even shut down 8000 branches. This shows improvement. His actions signify a selfless person, which is the exact opposite of Kozlowski’s self-centered attitude.
Johnson can be described as a transformational leader in terms of leadership styles. On the other hand, Kozlowski could be described as a transactional leader. Johnson is looking to change the culture of his company. After what happened, he is successful and continues to follow the matter to the end. He is a leader who inspires others to follow his example. This is why his response and actions were praised. Kozlowski’s main concern was to make profits for his company and himself. He has no relationships with any of the employees or stakeholders. His primary focus is on making the company successful, and he continues to live his extravagant, highly transactional lifestyle. After the financial hardship and complaints start, the transactional relationship with the company ends. He then steps aside from company management, leading to further investigations revealing his interests and unethical uses of the company resources for his benefit.
They also have different views on leadership and ethical approaches. Johnson believes being virtuous is essential; this helps him show empathy for the victims and invest in making sure an incident like this one does not happen again. Kozlowski, on the other hand, believes in the consequentialist approach. He is determined to make the company a success regardless of how or what he gets from his position as the company’s leader. His not guilty plea is a demonstration of this. The company’s accounting books record all of the financial transactions, bonuses, and transfers of assets to Kozlowski. There was no intent to conceal or embezzle. It does not support his transactional or ethical approach to leadership, even though it is on the company’s books.
Tyco’s CEO is a new appointment, which makes it challenging to observe ethical behavior, particularly among its leaders. Based on previous experiences, no clear guidelines or standards are being implemented or followed at the company. Top managers are responsible for their decisions and actions. This situation shows that the company has no clear framework for ethical guidelines. The company must admit that there is a problem in encouraging everyone to be ethical. It can create loopholes allowing others to engage in unethical acts like Kozlowski. Once they have identified the problem and the gap, it is crucial to involve all stakeholders, including the board, employees, and shareholders. This will allow them to provide input on the measures they should take to prevent such conduct. This will allow for the development of an ethical policy that defines acceptable behavior and ethical standards. Engaging them and allowing feedback to build a strong working relationship with employees is crucial to make them feel like part of the company. Next, the company will need to restructure its compensation and benefits. It is not enough to only give yourself bonuses as the leader. A comprehensive compensation plan should be created so that each steak holder and team member can contribute to the company’s success. When the board approves bonus payments, it should share them equally with all employees who contribute to the company’s success. This will make employees feel like part of the success process, and they will be motivated. It will also increase productivity and performance.
Tyco’s ethical behavior is dependent on communication and engagement. This is because most employees feel distant from their managers. Establishing a communication channel that allows them to share information and plan activities like team building to improve each employee’s ethical responsibility is vital. Management can also benefit from a feedback system that allows employees to voice their concerns anonymously or publicly. The communication channels will be restructured in this instance to facilitate free and transparent communications where employees can get timely information to prove their actions. All offices will also be given copies of the company’s ethical guidelines and standards. This should be displayed in every department and communicated to all employees.
Some employees may feel like they cannot do anything because of the pressure of their superiors. People will sometimes conform to the majority’s decisions or take actions they don’t want to because they have to obey authority. Ash’s experiment, where they asked confederates to give a wrong answer to get the rest of the subjects to agree, showed that many subjects supported the majority’s answers despite their doubts. However, the correct answer was given when the majority of the control group was removed. Some members could conform to others even if they didn’t speak out about their unethical actions Kozlowski out of fear of being ruled. Mailgram also conducted an electric shock experiment with students and teachers. Teachers asked questions, and the teacher gave an incremental dose of shocks for each wrong answer. Fearing authority, teachers participated in the experiment even though they were uncomfortable administering the high voltage shock to students who gave incorrect answers. This was because they believed the shocks were natural. (Kaposi, 2020) This experiment shows that authority pressure can force one to follow directions, as was the case with most employees who were afraid of their superiors.
References
Kaposi, D. (2020) Saving a victim from him: The rhetoric of the learner’s Presence and absence in Milligram experiments.
McCombs school of business. (2021). Dennis Kozlowski – Living large – ethics unwrapped
Steinbauer, R., Renn, R, Taylor, R & Njorge, P (2013) Ethical leadership: Followers moral judgment and accountability: The role of followers’ perceived accountability
Tangdall, S (2018). The practice of ethical leadership and the CEO of Starbucks
Uzonwanne, F. (2016) Rational Model for decision making. Global encyclopedia of public administration, public policy, and governance.
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