When the new CEO of Tyco, Ed Breen, started his first day, the company was $28 billion in debt, $11.3 billion of which is due next year, with $2.5 billion due in just four months. Over the preceding eight years, the previous CEO, Dennis Kozlowski, spent $63 billion acquiring 1,000 companies and turning Tyco into a massive conglomerate that makes thousand of products in five general areas: health care, electronics, fire and security systems, plastics, and engineered products. Unfortunately, he overpaid by 52 percent on average. So, with huge debt payments looming and little cash flow, many thought Tyco would file for bankruptcy. Another problem was the expensive office suite, with one of the best views in New York City overlooking Central Park. Kozlowski spent lavishly to adorn the office with thick Persian carpets and expensive marble floors, an executive kitchen where the corporate chef could prepare gourmet meals, a massive boardroom with a mural completely covering one of the walls reminiscent of a medieval castle, and an expansive office for the CEO with its own separate kitchen “the size of a New York one-bedroom apartment.” And then there were the problems of greed and fraud. According to the criminal charges brought against him, Kozlowski used over $400 million of Tyco funds for personal expenditures. Steven Cutler, chief of enforcement for the Securities and Exchange Commission, said that the total amount was “staggering,”as was the fact that Kozlowski was able to hide his spending for seven years by using two corporate accounts. Breen did many things to correct these problems. He sold Tycom, a division of Tyco that was losing $1 billion annually. Then he changed the way Tyco paid its vendors and gave more responsibility to Tyco’s internal sales reps to generate business and work directly with customers. Breen also refused to sell to customers who didn’t pay their bills. And he hired a reputable attorney to verify that Tyco’s business was sound. All of those actions stabilized Tyco’s business and shored up its reputation with investors and customers. In addition to operational problems, Breen had to address cultural problems within the Tyco organization. Breen decided to replace the entire board of directors and proposed this controversial move to the board of directors himself. He ultimately convinced 5 of the 10 board members to vote to fire themselves. In the end, all but two board members immediately resigned from the board. Breen then turned his attention to his managers, firing 290 of Tyco’s 300 senior managers. Breen explains why, “There was a lot of behavior in that corporate office that wasn't acceptable, and it probably was deeper than a few people who were on trial. I didn't know who knew what [in terms of the fraud that had taken place], who should have known what, and who should have raised their hand, and I was never going to be able to figure that out fast. So I wasn't going to take any chances.” As a ____, new Tyco CEO Ed Breen was able to make Tyco's stakeholders feel they were a vital part of the organization and helped them see how their jobs fit with the organization's vision. A. transactional leader B. trait leader C. directive leader D. transformational leader E. empathetic leader
When the new CEO of Tyco, Ed Breen, started his first day, the company was $28 billion in debt, $11.3 billion of which is due next year, with $2.5 billion due in just four months. Over the preceding eight years, the previous CEO, Dennis Kozlowski, spent $63 billion acquiring 1,000 companies and turning Tyco into a massive conglomerate that makes thousand of products in five general areas: health care, electronics, fire and security systems, plastics, and engineered products. Unfortunately, he overpaid by 52 percent on average. So, with huge debt payments looming and little cash flow, many thought Tyco would file for bankruptcy.
Another problem was the expensive office suite, with one of the best views in New York City overlooking Central Park. Kozlowski spent lavishly to adorn the office with thick Persian carpets and expensive marble floors, an executive kitchen where the corporate chef could prepare gourmet meals, a massive boardroom with a mural completely covering one of the walls reminiscent of a medieval castle, and an expansive office for the CEO with its own separate kitchen “the size of a New York one-bedroom apartment.”
And then there were the problems of greed and fraud. According to the criminal charges brought against him, Kozlowski used over $400 million of Tyco funds for personal expenditures. Steven Cutler, chief of enforcement for the Securities and Exchange Commission, said that the total amount was “staggering,”as was the fact that Kozlowski was able to hide his spending for seven years by using two corporate accounts.
Breen did many things to correct these problems. He sold Tycom, a division of Tyco that was losing $1 billion annually. Then he changed the way Tyco paid its vendors and gave more responsibility to Tyco’s internal sales reps to generate business and work directly with customers. Breen also refused to sell to customers who didn’t pay their bills. And he hired a reputable attorney to verify that Tyco’s business was sound. All of those actions stabilized Tyco’s business and shored up its reputation with investors and customers.
In addition to operational problems, Breen had to address cultural problems within the Tyco organization. Breen decided to replace the entire board of directors and proposed this controversial move to the board of directors himself. He ultimately convinced 5 of the 10 board members to vote to fire themselves. In the end, all but two board members immediately resigned from the board. Breen then turned his attention to his managers, firing 290 of Tyco’s 300 senior managers. Breen explains why, “There was a lot of behavior in that corporate office that wasn't acceptable, and it probably was deeper than a few people who were on trial. I didn't know who knew what [in terms of the fraud that had taken place], who should have known what, and who should have raised their hand, and I was never going to be able to figure that out fast. So I wasn't going to take any chances.”
As a ____, new Tyco CEO Ed Breen was able to make Tyco's stakeholders feel they were a vital part of the organization and helped them see how their jobs fit with the organization's vision.
| A. |
transactional leader |
|
| B. |
trait leader |
|
| C. |
directive leader |
|
| D. |
transformational leader |
|
| E. |
empathetic leader |
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