1. How would the changes undertaken at Tyco affect the three steps of the workforce planning process covered in the lecture?
2. Laurie Siegel, senior vice president of human resources for the struggling conglomerate Tyco International, knew exactly what she had to do. When youre in a hole, you dont need a PowerPoint presentation to tell you which way is up, Siegel says. You just head up. And you know youre doing the right thing. Siegel has been making the long climb toward the surface for 14 months. Difficult, high-pressure jobs are her specialty, and shes obviously enjoying this one, but even she isnt certain that the company will make it out of the hole dug by previous management. Tyco, which employs approximately 260,000 staff, manufactures and sells everything from needles to circuit breakers, burglar alarms to duct tape. But to most of the world, its name is a synonym for corporate corruption. With the help of a board of directors and compliant subordinates, Kozlowski and his CFO, Mark Swartz, allegedly turned Tyco into their own private ATM. In 1999, Kozlowskis official yearly compensation was $170 million, but in mid-2002, New York State authorities accused the pair of supplementing their paychecks with $600 million in self-awarded bonuses, misappropriated funds and tainted stock sales. A suddenly energized Tyco board demanded and got Kozlowskis resignation. Several months later, Siegel got an unsolicited call from a headhunter who was recruiting for Tyco.I think Tyco is just a loose collection of ordinary businesses assembled to produce the illusion of real growth and might as well be dismantled, says an analyst for Morningstar Inc.
3. Siegel, a 48-year-old straight arrow, has a long-held belief in the power of tough but ethical competition. The Tyco scandal was a failure of corporate governance and of the strategic role of human resources, two of Siegels passions. Recalling a conversation she had with Breen (CEO and Chairman) about what her responsibilities would be, she says that her new boss put it something like this: You have a mess to clean up. Clean it up. Build a system with an independent board, with a real compensation committee, so that what we know happened before will never happen again. Help us be an operationally excellent company. And make us a company that attracts and develops excellent talent. Laurie said to me that she really liked Ed Breen, says a partner at Mercer Consulting in Los Angeles. That it [Tyco] was the top human resources job anywhere. That this was what shed been aspiring to her whole career. To take a new situation and make improvements to it, chart a new course. Set her own agenda. Connect with the people in the company and give them hope and security and confidence that theyll have a place to work tomorrow. When Jane Kennedy, vice president of staffing and one of Siegels first hires, arrived for work, Tyco had no corporate intranet, or even a company-wide e-mail system or phone book. There was no department of intellectual property, environmental safety or college recruiting. No labour attorneys. No CIO. Of course, I didnt have an assistant, Kennedy says. I had to grab Lauries assistant when she had a minute or two to spare. Upon taking office, Breen, a no-nonsense former CEO of Motorola, fired the entire board of directors. He then dismissed the entire headquarters staff of 125 people. He recruited a new, completely independent board of directors and hired a CFO, an ombudsman and a vice president of corporate governance who reports directly to the board.

4. While Breen has been dealing with investors, analysts and the media, reducing expenses and closing 200 of Tycos 2,000 facilities, Siegel has been working 12-hour days. Breen told her that her first priority was to set up corporate-governance and compensation systems and controls, then to transition to really driving the talent machine. For much of her time, she has handled both tasks simultaneously.

   During her first days, Siegel worked closely with the board and head of corporate governance to draft a strict company code of ethics. She then arranged to have it taught simultaneously at a special ethics training day in May to every Tyco employee. In the first few months, she also advised the compensation committee on how to replace Tycos old salary and bonus policy, which rewarded acquisition-based company growth. The new system is based on measurable company performance. Bonuses and restricted-stock grants are linked to objective measurements, including each business units earnings before interest and taxes, and Tyco Internationals overall performance.

   Top officers are required to hold company stock worth 3 to 10 times their yearly base salary. Severance pay is limited to two times an individuals yearly salary plus bonus. Post-handshake perks like consulting contracts and free transportation in company aircraft have been abolished.

   In the bad old days, Siegel says, Tyco hadnt really been run as a corporation. Its growth was driven by acquisitions rather than increased sales or cost-cutting. It was really organized as an M&A house, an investment firm that did deals, she says. Another peculiarity was that Tyco management considered itself so special that it never bothered to compare its practices to those of other companies deemed successful by the outside world. There was an arrogance, she says. And because of that, they never looked around and asked, Well, what do great companies do for talent development? But now the tables have turned.

   Siegel says that she makes a point of recruiting and hiring executives of successful multi-industry companies. Despite the damage to Tycos reputation and the new compensation policy, shes had no problem attracting good people. She looked for honesty, competitive fire and an attribute she calls managerial courage. We need people who will speak up.

   Recent hires have included alumni of GE, Dell, Siemens, Raytheon and Merck. Siegel also has reached down into the ranks of the old Tyco for talent. For several years Hal Johnson was in charge of leadership development at ADT, Tycos Florida-based security systems company. He was never able to convince anyone that similar programs should be implemented Tyco-wide. Two weeks after meeting Siegel, he was appointed Tycos vice president for leadership development.

   Since her arrival, Siegel has made more than 65 mission critical hires, not including the 100 auditors she recruited to conduct a crash company-wide audit. She still interviews three or four people a day, and consults with Breen and CFO David FitzPatrick at least once daily. I would say that we have conversations about the business, we have conversations about people, we have conversations about how we think about life, how we think about how the company is doing. Were a very action-oriented group. We use each other to help reflect. And to make sure were on the right track.