“Can this Reputation Be Saved?”
The Standard's practical guide
to reputation management.

This month:

Dennis Kozlowski

The short answer is, "Not in his lifetime."

Dennis Kozlowski, CEO of Tyco, Inc., fancied himself a new Jack Welch, but will most likely go down in history as a new version of Jack and the Beanstalk:

“IN DAYS OF YORE, there lived a widow who had a son, named Jack. Being an only child, he was too much indulged, and thus became extravagant and careless, so that he wasted the property which his mother possessed, until at last there remained only a cow, the chief support of her and her son.

One day the poor woman, with tears in her eyes, said to Jack, "O, you wicked child, by your ungrateful course in life, you have brought me to beggary in my old age. Cruel boy! I have not money to buy even a bit of bread, and we must now sell the cow... And Jack exchanged the cow for a few paltry beans.

When his mother saw the beans, and heard Jack’s story, her patience quite forsook her; she kicked the beans away in a passion; they flew in all directions. Not having anything to eat, they both went supperless to bed...”

For Dennis, of course, the mother is Tyco, the once respected New Hampshire conglomerate that now faces not quite starvation, but at least a number of lawsuits and a plummeting stock price. Tyco’s cash cows over the years were traded away for companies and apartments and artwork that in the end amounted to even less than a hill of beans.

The sad thing is that, at first, Kozlowski pulled off an amazing turnaround by being open and forthright with stock analysts and the media. Through unstinting devotion to local charitable causes, Kozlowski and Tyco achieved a regional reputation that was almost as good as the company that Kozlowski tried so hard to emulate, GE. Local stockbrokers, even after the embarrassing indictment of the CEO, were still recommending that clients buy the stock. In fact, the recipients of Tyco’s largesse are still saying nice things about them in the local media.

Interestingly enough, while Kozlowski was buying his way into local hearts and minds, he wasn’t being nearly as charitable to his shareholders. His exhorbitant salary wasn’t enough—he had to add additional compensation for sitting on the board. And even at that salary, he couldn’t afford his own apartments, taxes, etc.—he had to get the company to pick up the tab.

There is an outside chance that Tyco’s reputation may still survive, if it can weather the tsunami of legal bills. The reputation that is likely to endure is one of unimaginable greed and negligence: a CEO who was “...too much indulged, and thus became extravagant and careless...”

Now, Boston’s Cardinal Law is a different matter: tune in next month …