Case Richard Scrushy In Healthsouth

No single person can deny that they have faced an ethical issue at some point of their life. If is almost impossible for one to say this. Ethics is the moral values that govern an individual’s or organization’s behavior or decision. Ethical decision making, is seen in almost any industry or field from managing a supermarket to running a large corporation or even being a lawyer. An individual may not realize that ethical decisions don’t always involve extreme cases such as life or death, in fact most cases relate more to theft or dishonesty. Many recent cases such as HealthSouth case prove that making the right decision is often seen in our society. Choosing the right decision may not always be a clear decision. Richard Scrushy, is an example of this. Scrushy was the CEO of HealthSouth Corporation. He was known to many is home state of Alabama as a hero and philanthropist. However, it wasn’t until 2004, where many of those who adored him had discovered that he had taken part in embezzlement and theft within his corporation. Professor Jennings, from Carey School of Business in Arizona State University, describes the signs that are seen both in this and other ethical collapses. She
suggests that there are seven indications, which include: pressure to maintain numbers, fear and silence, young’uns and a bigger-than-life CEO, weak board of directors, conflicts of interest overlook or unaddressed, innovation like no other company and goodness in some areas atones for evil in others. When Scrushy was arrested, he made many claims that he was in fact not involved in what some would call “cooking the books” in order maintain investor interest. Almost anyone who met Scrushy, saw how diligent and passionate he was at what he did; however, some also said it was his greatest strength that had blinded him to the path he ended in. In early 2003, the FBI had invested the corporation and found it violated many security laws. It was at that time when, Scrushy had become the very first CEO to be investigated and charged by the Securities and Exchange Commission. The signs that Professor Jennings suggests in her book can also be seen throughout this case. As Jennings indicated the fist sign to an ethical turmoil is the pressure to maintain the numbers. CFO, Aaron Beam, is the example on how there is truth to her theory. Beam had even said Scrushy had come to him and said, ““I can't believe you are hurting me, I am trying to get this company public and your conservative accounting is holding us back.” It was this statement that had pressured Beam to manipulate the numbers seen in the company’s financial records in order for investors assume they were more profitable. The second indication that Jenning mentioned is the fear and silence.
When looking at the case, one can agree with this indication. Many people in both in high and lower positions did not speak up, even when they suspected or witnessed unjust activity. Some did not want to be preserved as whistleblowers and did not want to put their job on the line. The next sign to this ethical lapse, is the “Young’uns and a bigger-than-life CEO.” Scrushy was a man in a very high position. Many of his employees feared him. He was intimidating and had even carried a gun in a brief case as well as bodyguards. He only looked at his own best interest and had little to no relationship with his employees and someone had even heard him say, “If we ever get caught I would blame them all and deny
everything.” With a man who many preserved almost “God-like,” a week board of directors would naturally be common. The company’s board of directors had never over sighted anything Scrushy or even management had taken part in. Anytime Scrushy argued or came to a disagreement with one of the board members, he had gone to all means to rid them from their position. Culture and conflict, is another indication for this ethical collapse. They way everyone viewed Scrushy, had allowed him to get to get away with many things. In fact, he created conflict whenever anyone tried to stop on his toes or brought up anything he had done wrong. This prevented anyone from coming forward. Professor Jennings, had also suggested that accompany that innovated like no other was also a clear sign to a lapse. The company was continually innovating and seeing its revenue increase, which in many cases is a great sign; however, the way its numbers had drastically changed over time was a clear indication of fraud taking place. Jennings last sign that she discussed was “Goodness in some areas atoned for evils in others.” What Jennings is suggesting in this sign is that often at times the individual or organization will make an unethical decision based on what they think is for the greater good. Scrushy and many other people involved in this case had made these unethical decisions because they believed lying and stealing was a good excuse in order to take their company to the top.