Industry experts weigh in on Raytheon CEO's reputation

WALTHAM, MA: The decision taken May 3 by the Raytheon board of directors to reprimand rather than fire CEO William Swanson for plagiarism has left PR experts and defense industry analysts questioning whether Swanson may ultimately choose or be forced to resign.

WALTHAM, MA: The decision taken May 3 by the Raytheon board of directors to reprimand rather than fire CEO William Swanson for plagiarism has left PR experts and defense industry analysts questioning whether Swanson may ultimately choose or be forced to resign.

The booklet, "Swanson's Unwritten Rules of Management," may originally have helped promote Raytheon in general, and Swanson, in particular, as a kind of management guru in the mold of former General Electric chief Jack Welch, whose Winning and Straight from the Gut helped iconize him and his company.

Now it has backfired as a tool for positive publicity. That parts of the pamphlet - which the company distributed free to thousands of people - were plagiarized was first reported in an April 24 story in The New York Times.

The story said 16 of 33 management rules were copied practically word for word from The Unwritten Laws of Engineering, a 1944 book by an engineering professor from California named W.J. King. The discovery also came around the time Harvard student Kaavya Viswanathan was accused of plagiary.

"His credibility is shot; there's no way he can go on as CEO at this company and have any kind of credibility with key constituents, including employees, investors and regulators," said Paul Argenti, a professor of communications at Dartmouth College's Tuck School of Business Administration. "I think the board should have let him go; I think he should have resigned. If he had any courage at all, he would have resigned."

Raytheon's initial response was a statement from Swanson that the similarity between the rules in both publications was "beyond dispute" and that Swanson regretted not properly crediting King's book.

Last week, the company's board of directors voted to freeze Swanson's salary at its 2005 level and reduce by 20% the amount of restricted stock that he will be given this year.

Raytheon did not respond to repeated requests via phone and e-mail for comment. In an official statement, the company said it retains "full confidence in Mr. Swanson's leadership," but a number of defense and PR experts said they don't believe Swanson will be able to continue effectively as head of the company and will have to leave.

Nick Kalm, a partner with Reputation Partners, which represents several defense companies, said that whether Swanson is able to hang on as head of Raytheon is a big question mark.

"Now, as he continues on as CEO, every other deal that's done, every other difficulty they may encounter with the US Department of Defense or foreign government operations, all of that is going to be either a little bit or a lot more scrutinized just because of this, which is unfair, but not out of the ordinary."

The defense industry in recent years has been plagued with incidents of unethical behavior. For example, former Rep. Randy "Duke" Cunningham, who was a Republican member of the House Armed Services Committee, was recently jailed for eight years for receiving bribes from a defense contractor, and the former CEO of Boeing, Harry Stonecipher, resigned last year after having an affair with a female employee.

Dennis McBride, president of the Potomac Institute for Policy Studies and a former US Navy officer, said a military-like standard of behavior pervades the defense industry, given that the industry's main customer is, of course, the military. So many employees in defense companies are former or even reserve military service members. "It's not just wrongdoing, but the perception of wrongdoing that is so important in the military," McBride said. "If a general or an admiral is perceived to have done wrong, he steps aside."

Dartmouth's Argenti said customers and colleagues working with Swanson and his company likely will now call into question not just the wisdom of Swanson for plagiarizing another person's writings, but the wisdom of the board of directors for allowing Swanson to remain at the company.

And, he added, the episode may serve as a cautionary tale for others.

"I think maybe there will be a little bit more of a tendency to be more careful and discreet about what you're writing and who takes responsibility for it," Argenti said.

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