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A Matter of Ethics

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A Matter of Ethics
John Hilger
Ashford University
Personal and Organizational Ethics
PHI 445
Stephen Carter
February 07, 2014

A Matter of Ethics
Business ethics is something that all companies and organizations need to be mindful of. It isn’t something that just the large and powerful for-profit organizations need to worry about, but it is something that not for-profit organizations have to be cautious as well. I plan to show how two large well known institutions failed to live up to these.
Penn State is one of the more widely recognized leaders in higher education. It first came into existence in 1855, when the Commonwealth chartered it as one of the nation’s first colleges of agricultural science. And it’s goal was to apply scientific principles to farming.
Penn State’s main campus is located in the small city of State College; State College is a quintessential college town with small eateries and quirky little shops that line the streets. There are a total of 24 locations of the campus throughout the Pennsylvania area.
Penn State’s tax exempt status is the same as most not for profit state schools and the company is 501c3. Through my research I was unable to find out the date that it was granted or if there was an umbrella organization.
According to Penn State’s Alumni Insider from their December 2009 Issue, there are 44,000 full-time and part-time employees at all of the locations.
One of the biggest obstacles that any and all institutions of higher learning faces is from the myriad of other choices that people have to choose from, from other state schools, private schools and maybe the newest and biggest threat, online schools. Some of the things that make Penn State standout are that they too now offer online classes and maybe even more important than that is how they are ranked amongst other universities. According to Designintelligence 2014 they ranked their Landscape Architecture program No. 1 in the U.S. and its graduate program was ranked 7th.
Times Higher Education World University Rankings 2013-14
Penn State has been named one of the top universities in the world, ranking 49th, up 12 positions from 2012-13 and considered in the top 1 percent of higher education institutions worldwide.("," 2014, para. 2)
These are just a few things that Penn State has done to become and stay one of the better universities in the U.S. The issue that Penn State faced and still faces was national news and it first came public in 2011. One of the Penn States longtime assistant football coaches, Jerry Sandusky sexually assaulted at least eight underage boys and some of the officials attempts to cover up the incidents. Jerry Sandusky was a longtime friend and assistant for then head coach Joe Paterno. After an extensive investigation commissioned by Penn States board and conducted by former FBI director Louis Freeh, then school president Graham Spanier, former athletic director Tim Curley and former head coach Joe Paterno, had known about the allegations as early as 1998, and they were all complicit in failing to disclose this information. Because of all of this coming to light, Penn State has been fined $60 million dollars, a four year post season ban for their football program and they had to vacate all victories from 1998-2011 and they were subsequently fined another $13 million by the Big Ten Conference. Since all of the allegation have come out Penn State has responded in several ways to start to repair its image. One of the first things that it has done was to remove the image of Jerry Sandusky from a mural near the university. They fired head coach Joe Paterno, who was pretty much an institution in college football and at Penn State, Graham Spanier, the school president at the time was forced to resign along with athletic director Tim Curley. They have also strengthened policies and programs involving minors. The for-profit organization that I wanted to focus on is Tyco. Tyco Laboratories began operations in 1960 and they performed experimental work the for the U.S. government. The company went public in 1964 and the company quickly expanded, most of this expansion was done by acquisition to take full advantage of the commercial applications of its work. In the 1970’s Tycos business boomed and by 1974 was listed on the New York Stock Exchange and by the end of the decade, Tyco was a very large and diverse corporation. But their greatest successes came from their acquisitions of such companies as Simplex Technology, Grinnell Fire Protection Systems, Armin Plastics and the Ludlow Corporation. Tyco’s mission is to advance safety and security by finding smarter ways to save lives, improve businesses, and protect where people live and work. Tyco was first headquartered in Massachusetts, but is now headquartered in Switzerland. With 10+ billion in revenues, Tyco is the world’s largest pure-play fire protection and security company ("Investor Relations," 2014, para. 1) and employs over 69,000 people worldwide. When Tyco was at its strongest was when Dennis Kozlowski was the president and CEO. Kozlowski joined Tyco in 1975 as an assistant controller and by 1987 became a board member and within two years he had become president and chief operating officer. By 1992 Dennis Kozlowski was named chief executive officer (CEO) and chairman of the board the next year. Kozlowski diversified the company, and branched into healthcare. And Tyco eventually became the second largest producer of medical devices in the United States. He took a company that in 1995 their net profits were about $200 million to $2.6 billion, and the stock price rose from $7 a share to well over $51 a share. (Mojonnier, n.d.) And once Kozlowski resigned as CEO, the stock price plummeted. Not necessarily because he was such a great CEO, but Tyco’s foundations were not built on solid ground but sand and when the winds blew, it toppled over. ("Investor Relations," 2014) The scandal that rocked Tyco was created by Dennis Kozlowski and their finance chief, Mark Schwartz. The whole thing began to unfold when the Securities and Exchange Commission began probing into a restatement of the company’s stock price. In January 2002 questionable accounting practices had come to light. “Tyco had forgiven a $19 million, no-interest loan to Kozlowski in 1998 and had paid the CEO's income taxes on the loan. It was found that he company's stock price had been overrated, and that the CEO and CFO had sold 100 million dollars' worth of shares, and then stated to the public that he was holding them, which was a misrepresentation and misled the investors.” (Eric, 2012, figure c). In regards to Penn State I think they are doing just about everything that they can to bounce back from the shame that was brought upon the university. They quickly got rid of everyone that had knowledge of and was hiding the allegations, have strengthened policies and programs involving minors. For Tyco, the company was far too interested in greed. They were too interested in maximizing profits. “At a minimum, top management must articulate the strategies that are required to achieve corporate financial goals. And, more importantly, the CEO must exercise virtuous character traits in order to lead the many stakeholders who are dependent on the corporation for their wellbeing.” (Eric, 2012, para. 5) In the end it was poor business ethics, the biggest being greed that was the undoing of both of these great institutions. Penn State needed to worry less about the perception of the fall out and needed to do what was right to fix the situation. And in regards to Tyco, it definitely was greed that kept them from wanting to see what the CEO and CFO were doing to the company. Both institutions are starting to rebound from these tragedies that they have been forced to live through, but if they were more ethical from the get go and realized that all truths come out eventually, they could have saved their institutions a lot of shame and anguish.

References
Eric, J. (2012). Tyco scandal business case analysis. Retrieved from http://voices.yahoo.com/tyco-scandal-business-case-analysis-11330744.html
Mojonnier, T. (n.d.). A candidate for the business hall of shame. Retrieved from http://businesstheory.com/a-candidate-for-the-business-hall-of-shame/
Rankings. (2014). Retrieved February 7, 2014, from http://www.psu.edu/this-is-penn-state/rankings
Tyco. (2014). Retrieved February 6, 2014, from http://investors.tyco.com/phoenix.zhtml?c=112348&p=irol-irhome
Maniam, B., & Teetz, H. (2005). CURRENT REALITIES OF ETHICAL ISSUES IN CORPORATE AMERICA: HOW DOES ETHICS EFFECT THE FINANCIAL ARENA. Journal of Legal, Ethical and Regulatory Issues, 8(1), 83-98. Retrieved from http://search.proquest.com/docview/216237308?accountid=32521
Santa clara U: Five most crucial ethical issues in america identified in business ethics outlook 2006-07. (2006, Oct 27). Business Wire. Retrieved from http://search.proquest.com/docview/445146008?accountid=32521
Couch, S., & Dodd, S. (2005). Doing the right thing: Ethical issues in higher education. Journal of Family and Consumer Sciences, 97(3), 20-26. Retrieved from http://search.proquest.com/docview/218152089?accountid=32521
Argandoña, A. (2009). Ethical management systems for not-for-profit organizations. Zeitschrift Für Wirtschafts- Und Unternehmensethik, 10(1), 132-146. Retrieved from http://search.proquest.com/docview/225264750?accountid=32521
Johnson, E. M., & Laviano, A. (1991, Jan). Telemarketing and fundraising: Ethical and legal issues. Nonprofit World, 9, 34. Retrieved from http://search.proquest.com/docview/221254243?accountid=32521
Hogling, A. (1994, Jan). Ethical decision-making for boards. Nonprofit World, 12, 12. Retrieved from http://search.proquest.com/docview/221340686?accountid=32521
Hamilton, J. B., & Slatten, L. A. D. (2013). A nonprofit's practical guide to resolving ethical questions. Journal of Applied Management and Entrepreneurship, 18(2), 39-58. Retrieved from http://search.proquest.com/docview/1371387840?accountid=32521
Ries, R. F. (2004). Need for greater oversight. The Practical Accountant, , 1. Retrieved from http://search.proquest.com/docview/208240897?accountid=32521
Mason, D. E. (1992, Mar). Keepers of the springs: Why ethics make good sense for nonprofits (part 1). Nonprofit World, 10, 25. Retrieved from http://search.proquest.com/docview/221256032?accountid=32521
Mason, D. E. (1992, Jul). Ethics and the nonprofit leader. Nonprofit World, 10, 30. Retrieved from http://search.proquest.com/docview/221332933?accountid=32521

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