Mba 560
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Frito-Lay Inc.
In August of 2001 the Frito-Lay Corporation was forced to pay $57,000 in fines due to the death of an employee at their Lubbock, TX production facility.
When an employee was “making repairs to equipment near an oil tank he hit his head and fell into the oil.” (Peterson) Because he was not following strict confined space entrance procedures he was operating alone and did not have a safety observer to assist him when he fell in.
The Occupation and Safety Health Administration (OSHA) closely governs the operating practices of American businesses to ensure their employees have a relatively safe and healthy work environment. Along with the fine Frito-Lay was forced to demonstrate compliance with the confined space entry procedure which is approved by OSHA.
This is a case where the hasty work practices of a single employee cost a corporation. While the death is tragic on many levels it is a reminder to the executives that safety and compliance at all levels is of the utmost importance.
K-Mart
There is something to be said for Integrity. Back when I was attending the Navys Officer Candidates School in 1997, my Drill Instructor (Gunnery Sgt. Krouch) defined Integrity as “Doing the right thing even when no one is watching.
K-Mart exercised Integrity when they filed a report of violations to the EPA in the spring of 2007. Following and internal audit of 17 distribution centers they discovers waste management and waste disposal violations in 13 of the facilities. K-Mart promptly reported these violations to the EPA realizing there would be financial consequences for such action.
In recognition of their forthright approach to their situation, the “EPA reduced the 1.6 million dollar fine to just over 102,000 thousand dollars.” (UPI) K-Mart was not being watched but the socially responsible leadership at the time determined that the safety of the communities in which they operate was more important than the fines associated with their violations.
This is great example of “Ownership”, K-Mart didnt try to pass responsibility, and they took ownership of the situation and received a significant reduction in fines.
A lesson learned for Management was that a greater level of oversight needs to be applied to the regional support centers. Continuous monitoring of these facilities will catch violations before they become environmentally impacting problems. We and managers “Get what we Inspect, not what we Expect.”
Tempur-Pedic
Tempur-Pedic, Inc., a world-wide leader in the premium bedding business, manufactures and markets premium mattresses and pillows made of special foam-based material incorporating special technology in making their product unique and genuine. In addition, over the past 7 years since conception, Tempur-Pedic has grown at an average rate of 25% over the time period bringing them in excess of the one billion dollar mark in 2007, thus making them second, behind Sealy, in the premium bedding business in the world (Tempur-Pedic North America, 2007). Despite major success since conception and over the past 3 years specifically, Tempur-Pedic has recently started down the path of establishing a sound corporate governance policy that not only serves to meeting Sarbanes Oxley (SOX) requirements, but also formulate an internal risk management business plan that properly addresses business risk. In addition, due to recent SOX failures and the pressures encompassing audit compliance as a newly IPO established company, Tempur-Pedic needed to respond to the situation with an aggressive project plan in effort towards rectifying the current SOX violations and establishing the necessary corporate governance framework, thus making this entity common business practice.
In response to the SOX violations a lack thereof of formal corporate governance polices, Tempur-Pedic began by hiring the necessary in-house expertise to establish the necessary infrastructure in dealing with the current issues (Cagle, 2008). Moreover, Tempur-Pedics first move was the hiring of Johnny Cagle in effort towards obtaining the necessary leadership that was knowledge about corporate governance that also had vast experience developing, implementing, and maintaining SOX as well. In addition, under the direction of Johnnys leadership, he subsequently hired the necessary internal audit personnel that included experience in IT, finance, operations, and marketing. Once staffed with the necessary expertise, Johnny began to look at all corporate governance polices and thus most important, address the current SOX violation issues at hand. Moreover, Johnny and his team not only addressed the issues at hand, but also aimed at creating guidance and adequate corporate governance/SOX polices that would serve to establish the necessary foundation and presence needed in remaining compliant (Cagle, 2008).
The outcome of the issue resulted in Tempur-Pedic not only hiring the necessary in-house talent, thus saving thousands of dollars on consulting, but also rectifying corporate governance issues and SOX compliance woes. Currently, Tempur-Pedic has a strong set of policies and procedures according to Johnny and is well prepared and equipped to deal with issues of this nature in the future. From an overall prospective, Tempur-Pedic has been able to address all issues and grow from a compliance standpoint during the process.
L3 Communications
L3 Communications, a contractor in the command, control and communication, and the intelligent arena, provides services to government and military affiliated entities. In addition, L3 Communications is also a leading merchant supplier of guidance and navigation systems and plays a huge role in homeland security by providing products and services in the aviation and maritime arena as well as crisis management (L3 Communications Holdings, LLC, 2007). L3 has recently gone through an ordeal of establishing a business risk plan in effort towards addressing business risk and SOX compliance. According to Shawn Clark, L3 was faced with critical business risks that caused major problems, thus affecting business operations in the past. Moreover, without a solid business risk plan, L3 did not have an effective plan or committee to address business risk and establish the foundation towards enabling preventative methods for future containment.
In response to the need for a business risk and solid SOX compliance plan, L3 formulated a committee consisting of 10 internal employees with Shawn leading the effort (Clark, 2008). In gaining complete coverage from a business prospective, L3 employed the committee consisting