TOP VIEW: When scandal-plagued companies formulate their crisis-management plans, they often look to new board members first and foremost. These veteran leaders are often given the dirtiest jobs in business: purging standing board members, jettisoning tarnished executives and spinning out careful PR campaigns to assuage creditors, investors and employees.

During their first 45 days at Tyco, Krol and Breen dismissed roughly 200 executives and managers who seemed too closely tied to the old Tyco. They hoped that if new managers could show Tyco’s bankers that they were taking the company’s problems seriously, they would earn some negotiating power in regard to the company’s $26 billion debt, and thus avoid bankruptcy. "After assessing the situation, we realized that speed was the only friend we had, so we started making changes very quickly," Krol recalls.

(Now board members at Tyco face a new battle. In February, institutional investors filed a lawsuit to try to prevent the company from splitting into three separate parts, a move the board believes could help unlock value, which, in turn, could help rebuild trust in the company.)

Reliant Energy, because of its base in Houston and a similar business model, was frequently compared with Enron. Reliant Energy brought in Texas lawyer Bill Barnett as its post-crisis lead director in October 2002. He viewed the company’s problems as a series of legal challenges, each of which he describes as "a crisis of confidence that we knew we had to tear down and rebuild." That included razing and rebuilding the company’s management. "As the new directors began to meet, they realized that the company had to change in a radical way, and we didn’t think the existing managers could do it," says Barnett, who was named the National Association of Corporate Directors’ 2005 director of the year for his work on Reliant Energy’s board.

Barnett believes that one aspect of Reliant Energy’s relatively successful restructuring is the fact that none of the new board members knew each other very well, and the board included only one holdover. "We had to learn to trust one another," he says. "We wound up giving each other a crash course in how to fix a troubled company." But even while he was helping build the new board, the Department of Justice was preparing criminal charges against Reliant Energy for allegedly inflating electricity prices.

What Barnett now calls the company’s saving grace was that, unlike Enron, Reliant Energy did not suffer the challenges of out-of-control management. The new board and senior executives began an aggressive campaign to distinguish their business in the public eye from the other notorious energy company. Executives met with middle managers and provided them with reams of information to help answer employees’ questions. Employees who met with customers and vendors were given FAQ briefs so they could quickly and accurately respond to questions. The face-to-face forums between managers and employees continue and have become an important form of internal communications. Reliant Energy also started an ethics hot line that employees, customers and investors could call, and invested in ethics training for its staff. It also brings in outside business leaders on a regular basis to discuss ethical dilemmas at other firms.

The new management team holds frequent meetings with investors and analysts, and has increased the amount and quality of information it discloses on the company’s financials. The changes are reaping benefits. Investor Relations magazine honored Reliant Energy in 2005 for having the best disclosure policy, based on responses from 500 investors and analysts.