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Corporate Greed

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Corporate Greed Forces Change

Keller Graduate School of Management
HR587 - Managing Organizational Change
Professor T.

Downfall of the Old Boy Club Back in 2003, one of the largest healthcare company in the United States, HealthSouth was in its height of success when it experienced the largest organizational change starting from the board of directors all the way down. The CEO at the time was Richard Scrushy who was accused of directing his company employees to falsely report exaggerated company earnings in order to meet its stockholder expectations. This was a violation of the Sarbanes-Oxley Act of 2002. This act was enacted on July 2002 in response to a number of major corporate and accounting scandals such as Enron, Tyco International, and WorldCom. These scandals cost the investors billions of dollars due to the fall of stock prices. This act was implemented to hold companies accountable for falsely reporting their financial statements. The act contains eleven titles that describe specific mandates and requirements necessary for financial reporting including Corporate Responsibility, Financial Disclosures, and Corporate Fraud Accountability. In HealthSouth’s case, the entire board of directors was ultimately held accountable for falsely inflating the company earnings as much as 4700% at one point. HealthSouth was the leading provider of acute care hospitals and orthopedic clinics, employing more than 60,000 people in over 2,000 facilities. By 2006, one of the major organizational changes was the selling of all of these facilities and company jets and vehicles, restructuring the entire hierarchy of the company and now only operates one division: inpatient rehabilitation. The dramatic organizational change ultimately occurred due to the greed of its company executives, resulting in the complete change in leadership, structure, and operating

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