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Scoundrels: Trials and Tribulations of Unethical Business LeadersSuzanne Celmer-HarterBrian ChancellorBeth DeschPhillip HinsonJacqueline HoekemaLDR 601-OAOctober 19, 2014Dr. John W. Fick, FACHEScoundrels: Trials and Tribulations of Unethical Business LeadersUnethical behavior in leadership is just as prevalent in the present as it has been in the past. Scandalous publicity of high ranking leaders within large corporations is splattered all over newspaper publications and television. Unfortunately, these unethical behaviors of company leaders have had enormous negative impacts on the companies in which they occurred. Some companies have been driven into bankruptcy while some unethical actions have led to layoffs of hundreds of workers. Others inappropriate indiscretions have led to a loss of trust in investments, and discouragement of young careerists looking into the business world for a future.What happened to these unethical leaders? How were they disciplined for their unethical, immoral, or illegal decisions? The answer is a broad spectrum of punishments based on the severity of the unethical behavior. For instance, some unethical behaviors have led to negative press, embarrassment and loss of employment, while others have resulted in criminal prosecutions. For those that were prosecuted, imprisonment was imminent. In addition to imprisonment, others were required to pay restitution to their constituents. For those whose investigations were unfounded or difficult to prove the allegations, only public humiliation and embarrassment followed. No matter which discipline was decided, the stigma and reality of the accusation forever remains with that leader. Unethical leadership comes in many forms and is addressed in many ways. However, one thing is certain; there are consequences for their poor judgment and unethical decisions. Let us see how the following four leaders, and the companies they worked for, were affected by their poor judgment. We will also identify the consequences for their unethical behaviors.Patricia DunnPatricia C. Dunn was born March 27, 1953. She graduated from the University of California-Berkeley in 1975 with a BA in Journalism. She took a two-week temporary assignment as a typist at Wells Fargo and turned it into a permanent position. She paved the way in business for women to climb the corporate ladder by moving through the ranks from typist to CEO of Barclays Global Investors, which had bought Wells Fargo. In 2002, she left Barclays to fight breast cancer and melanoma. She was on the board of directors for Hewlett Packard (HP) from 1998-2006. At HP, she was responsible for hiring and ultimately firing of Carly Fiorina as chief executive. Ms. Fiorina arranged the purchase of Compaq Computers for $19 billion and was let go when stocks fell after the newly combined companies did not secure a market share for home computer sales. Ms. Dunn replaced Ms. Fiorina with Mark Hurd as chief executive and herself as chairwoman of the board. (Robertson, 2011) In 2005, a media leak about HP became public. It was reported that an “anonymous person spoke to a technology news website about a confidential board retreat” (Robertson, 2011, para. 17). As chairwoman of the board, Ms. Dunn wanted to find the identity of that anonymous source. During her tenure, she reportedly approved the company’s plan of investigating private phone records of board members, journalists and HP employees to find the source without knowledge or consent of the other members of the board. The information obtained from the investigation was presented to the board of directors in May 2006. (Haas Now, 2011) The informant was asked to resign, but the Attorney General of the State of California decided to pursue the method of investigation as a legal matter. In the midst of the state’s investigation, Ms. Dunn resigned from the board at HP in September 2006. (Patricia Dunn resigns from HP board, 2006) Although she accepted responsibility, she always maintained her innocence claiming she had no knowledge of the spying techniques used by private investigators and believed that the information was “obtained through legal methods” (Patricia Cecile Dunn-Jahnke, 2014, para. 5).In October 2006, just as she was beginning treatment for ovarian cancer, she and four other defendants were charged by the Attorney General “with four counts each of conspiracy, fraud, identity theft and illegally using computer data” (Robertson, 2011, para. 8). The criminal charges against Ms. Dunn were eventually dropped because of her poor health and the fact that prosecutors said that she had little involvement in “pretexting- a shady tactic in which detectives use other people’s Social Security numbers to fool telephone companies into divulging detailed call logs” (Associated Press, 2007, para. 5). The judge ruled that her conduct was not criminal, but a “betrayal of trust and honor” (Robertson, 2011, para. 10). Her actions were deemed unethical and violated Hewett-Packard’s code of conduct. Ms. Dunn’s actions were in a gray area of the law. Although her actions were not determined to be illegal, they were unethical. The issue of the media leak should have been brought up to the board before the investigation began, and a decision as how to proceed should have been made by the full board of directors. The method of determining the leak should have been reviewed prior to the actual investigation. The divulging of privacy records of individuals should not have occurred. Ms. Dunn should have realized that her poor, unethical decisions would have had significant consequences. After her departure from HP, she did not return to the corporate world but used her remaining time and talents on philanthropic activities. She served on UC Berkeley’s Haas-School of Business board that advised the dean. (Haas Now, 2011) She also was an active member of the board and executive committee of the Larkin Street Youth Center in San Francisco where she fundraised and did strategic planning to obtain private sector support of youth programs that provided “housing, medical, social and educational services to at risk homeless and runaway youth” (Garroutte, 2011, para. 2).Patricia C. Dunn died from ovarian cancer on December 4, 2011 at the age of 58 years. She was survived by her husband William Jahnke, former CEO of Wells Fargo Investment Advisors, three children and ten grandchildren. (Patricia Cecile Dunn-Jahnke, 2014) Steven JobsSteven Paul Jobs was born February 24, 1955 in San Francisco, California. He was adopted by Clara and Paul Jobs, and was given the name Steven Paul Jobs. In 1961, the family moved to Mountain View, California. It was around that time that Mountain Valley was becoming known as Silicon Valley. Silicon Valley got its name from all of the electronic devices being manufactured and worked on in that area and silicon is a substance used in that manufacturing process. He graduated from high school in 1972 and attended Reed College in Oregon before dropping out. Shortly after dropping out, he joined a small group of guys called the Homebrew Computer Club where he met Steve Wozniak. At the time, Steve Wozniak was working on building a home computer and Steve Jobs liked the idea of it so much that they created a small company called Apple Computer Company. The name came from the fun Steve Jobs used to have while working in the summers as an apple picker. (Wilson, 2011) The year 1985 started a new chapter for Jobs as he left Apple and started his company known as NeXT. NeXT never caught on and in 1986; Jobs purchased Pixar from filmmaker George Lucas. Pixar became a huge success with the release of animation films such as the Toy Story series, Cars, and Monsters, Inc. just to name a few. (Wilson, 2011) The year 1991 was a significant year for Jobs as he married Laurene Powell, and the two had a son shortly thereafter. While NeXT was creating new software and not cutting into the market share of the other computer companies, Apple bought out NeXT in 1996 for $429 million and Jobs was hired back as a part time consultant. It was at that time that Apple began to take off with the launch of several new items including The Apple Store, iMac, iBook and Macintosh only web based Apps. It was then in 2000 that Jobs became the permanent CEO of Apple. In 2001, the launch of the iPod was a beginning of a revolution for Apple and became the dominance of digital markets. (Steven Paul Jobs, 2014)It was during 2003 that Steve Jobs would have to put all of his business success behind him and face his most challenging adversary. He was diagnosed with a rare form of pancreatic cancer that could have been successfully treated with a surgical procedure. Jobs refused to have the surgery, and was set on beating it with natural and holistic medicine. It was not until a year later that he decided to have the surgery and remove the cancer. Jobs, once again, beat his opponent, and was back on top. Then in 2007, the iPhone was introduced and ever since, Apple has been very successful in selling them. (Steven Paul Jobs, 2014) Not long after the launch of the iPhone, the Wall Street Journal brought to light the issue of backdating of options. “Backdating is an illegal accounting process consisting of picking a date in the past; when a stock's value was lower, to assign the exercise price of options. It basically involves faking the documentation and lying to investors” (Moisescot, 2006, para. 1). An internal Apple investigation revealed that more than 6000 illegal grants had taken place, and Steve Jobs was directly involved in two of those grants. Jobs wanted to compensate his top executives, and since the board had not granted the options in a timely fashion, Jobs agreed to backdate the options so the executives would make more money. The second case had Jobs backdating options for himself even though he never cashed them in and ended up losing money he could have earned if he had just stayed the course. Due to Jobs and Apple’s cooperation with SEC, neither was ever punished or sued, and charges were dropped. Once again, Steve Jobs came out on top when facing another huge challenge in life. (Moisescot, 2006) In 2008, Steve Jobs’ health was once again at the forefront as he had noticeably lost weight and did not look healthy. It would eventually be told that in 2009, he had a liver transplant and was recovering just fine. In mid-2011, the public learned that Jobs was once again sick. Eventually, it all caught up to him on October 5, 2011 as Jobs passed away from pancreatic cancer surrounded by his family in his home. (Steven Paul Jobs, 2014)Since the death of Steve Jobs, there has been much controversy and debate about the ethics, decisions and lifestyle that he lived. Jobs made it through the backdating scandal unscathed, but had been accused of running a company in an autocratic, egotistical, and unethical way. He was also accused of knowing that many of the company’s Chinese based facilities were run like labor camps and at one point were having such a high rate of on the job suicides that they had to install safety nets to save the employees who tried to jump to their imminent death. He was often observed illegally parking in handicap spots, verbally abusing staff and employees, and using his power and authority to get whatever he wanted. Later in his life, he finally publically accepted his biological daughter, but was often talked about for denying paternity for many years in order to keep from paying child support. In the end, Steve Jobs unethical decisions never hurt his business profile, and with his death one will never know, but his early demise just may have been a sign of what happens when people choose to live that type of unethical lifestyle.Dennis KozlowskiBorn Leo Dennis Kozlowski, Dennis Kozlowski was born in Newark, New Jersey on November 16, 1946. He graduated from Seton Hall University in 1968. He started working at Tyco in 1975 and quickly rose through the ranks. In 1989, he was promoted to president and chief operational officer. Then, in 1992, he was named as the CEO of Tyco where he was credited with multiple mergers and acquisitions, as well as Tyco’s growth through the late 1990s. (Dennis Kozlowski, 2014)While Tyco’s profits grew substantially from 1997 to 2001, 48.7% to be exact, so did Kozlowski’s compensation. The amount he was paid for compensation grew just as quick as the profits of the company, which drew attention to his leading ways. In 1997, his compensation was a simple $8.8 million, in 1998 it grew to $67 million, and by 1999, it skyrocketed to an out of control $170 million. Along with his ever-increasing compensation, he took advantage of Tyco in many other ways. (Dennis Kozlowski, 2014)He “allegedly” had Tyco pay for, redecorate, and furnish an apartment in New York City for $30 million. (Dennis Kozlowski, 2014, para. 3) He also let Tyco pay the bill for his wife’s 40th birthday party, which tallied up to $1 million. (Dennis Kozlowski, 2014) There was also a highly publicized shower curtain that was apparently worth $6000. (McCoy, 2012) With these eye-catching bills, it was just a matter of time before he was caught.In 2002, Kozlowski left Tyco due to the growing scandal, although whether he left on his own accord or was fired, is dependent on who was asked. In 2005, he was convicted and found guilty on twenty-two counts of grand larceny and conspiracy. He was sentenced and served over eight years in prison. He was released on January 17, 2014. (Knott, 2014) When asked what drove him to do what he did, he replied, “It was greed, pure and simple” (Freifeld, 2013, para. 2).His case is a classic one of temptation, power, and greed, all of which a person of leadership and influence should not be influenced by these temptations. In reflection of what he did he stated, "I had a strong sense of entitlement at that time, and I had a sense of greed, and in doing so I stole money from Tyco. I'm very sorry I did that” (McCoy, 2012, para. 7). If only he used common sense and proper judgment, he would have avoided this whole mess. Interestingly enough, in an interview upon his release, he claimed, “I plan to dabble in the investment business and raise some capital” (Knott, 2014, para. 5). It is debatable if he learned from his mistakes.Martha StewartMartha Stewart, America’s homemaking guru, was born Martha Kostyra on August 3, 1941 to a middle-class family from New Jersey. She learned all her domestic skills from family members and baking from her neighbors. As a child, she was a hard working student and received a partial scholarship to Barnard College in New York City, where she studied European and Architectural history. During that time, she modeled to pay expenses. In 1961, Martha married Andrew Stewart and continued to model until her daughter was born in 1965. Martha worked as a stockbroker until they moved to Connecticut. There she started a successful catering business which by 1986, was a million dollar enterprise. (Martha Stewart biography-Academy of Achievement, 2010)In 1990, she began her magazine Martha Stewart Living. It was followed by a television show, cooking and entertaining books, and by 2001, the Ladies Home Journal named her the third most powerful woman in America. (Martha Stewart biography-Academy of Achievement, 2010) As CEO of her company, Martha Stewart Living Omnimedia (MSLO), her financial worth was approximately $500 million. In October 2002, Martha was accused of insider trading for selling her shares of stocks she knew would be falling the next day. Her friend, Samuel Waksal’s company, ImClone was not going to get the FDA approval it needed to market the colon cancer drug it was developing. Waksal tipped off Martha, and she sold her stock the next day, saving $45,673. She was not convicted on insider trading, but in 2004 she was found guilty of misleading federal investigators and obstructing an investigation. She received a $30,000 fine and a five-month prison sentence. (Doups3, 2009)Martha emerged from prison in March 2005, a softer, more humble person. At the announcement of her return, MSLO stock rebounded from $11- $36, tripling Stewart’s personal worth. For the next two years, Martha remained under supervised release of which five months included monitoring with an ankle bracelet. Before long Martha lost her meek demeanor and returned to her former self, the tough business woman. Because the company was “de-Martha-ing” the business by branching out and acquiring other publications, Martha in a forceful fashion, appointed her own man, Charles Koppelman, chairman of the board. (Wallace, 2011, para. 13) Under Koppelman, the stock dropped to a low of $1.73 in early 2009. While her company's stock was dropping and the business was losing revenue, Martha increased her earnings from $2 million to $10 million plus extravagant living expenses. (Wallace, 2011)Martha Stewart lost sight of reality and became disconnected to the marketplace she had ruled in her earlier years. She displayed selfish, greedy, controlling, stubborn and blaming characteristics; not very becoming for the queen of etiquette. (Wallace, 2011)Today Martha Stewart is 73 years old and still working more than 40 hours a week. The New York Times reported, “…she’ll be carried from her portable kitchen to her coffin. She’s not even close to the concept of retirement. The flaw is she’s not a manager. She’s a brand icon. She’s a visionary. But she’s not a CEO” (Stewart, 2012, para. 20). "Martha's story teaches us that while being unethical may bring short term gains; it always brings long term losses” (Doups3, 2009, para. 7). “We should thank Martha for teaching us not only how to make our homes look cleaner, but also that being ethical pays off in the long haul” (Doup3, 2009, para. 10).ConclusionIn reality, the unethical behaviors exhibited by some business leaders have caused the business world to look into incorporating social responsibility into their organizational culture. “Corporate social responsibility” is defined as business leaders possessing the obligation to society beyond the company. (DuBrin, 2010, p. 178) It is the culture now being ingrained in many companies. Companies’ goodness and morality rest upon the impact of the business leaders they employ and the ethical or unethical decisions they make. It is unfortunate that one bad apple can take down an entire corporation.Whether it is conspiracy, espionage, embezzlement, fraud or obstruction of justice, the consequences that follow the unethical behaviors of the individual business leader will never be forgotten. Loss of integrity, position, and trust are several negative implications of unethical behavior. Learning a strong lesson in business ethics and life has to be viewed as a positive. However, the intangible consequences, no matter how severe, can be long lasting. Imprisonment sounds harsh, but it is just the beginning. Time spent in jail is finite, whereas people, employers, and society never forget the unethical behaviors of those they once looked up to and respected.References BIBLIOGRAPHY \l 1033 Associated Press. (2007, March 14). Charges dropped against ex-HP chairwoman. Retrieved September 20, 2014, from NBCNews: Kozlowski. (2014). Retrieved September 28, 2014, from Biography: . (2009, May 8). 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