Frito-Lay Inc.

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 Navy’s 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 didn’t 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-Pedic’s 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 Johnny’s 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