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Ricky Thompson

Ethics and Organizations

Chapter 1 Case – HealthSouth

18 January 2015
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1. Which of the “obstacles” to moral behavior do you see at work in Aaron Beam’s

behavior and thinking? In Scrushy’s?

The obstacles to moral behavior that I personally see at work in Aaron Beam’s behavior

and way of thinking are intimidation and greed. I would say that intimidation played a much

larger role in Aaron Beam’s behavior and thinking than the greed part. Scrushy’s intimidation

affected Aaron’s way of thinking because of the overbearing charm that Scrushy produced from

within himself. If Beam did not do what Scrushy said to do, then he was letting him down, and

Beam definitely did not want to do that to the man that offered him a very high ranking job and

lots of money to compensate him. Beam’s way of thinking was something like this: “Scrushy

offered me this prestigious position at this multi-million dollar company, compensating me with

millions upon millions of dollars. If I let him down, I will be a failure, and he won’t like me. I

want him to like me, because he is such a natural leader, and a charismatic person in general. He

makes me want to help him succeed, no matter what.”

Scrushy’s main obstacle to his moral behavior was most likely his need to be greedy.

Money changes how most people think, and it alters the morality of many people that get into a

greedy mindset. Scrushy’s greed allowed him to become enveloped by it, and his morality and

business ethics were completely thrown out of the window when that happened. Scrushy’s way

of thinking was probably something close to this: “I know that I am successful, I just need to let

everyone else know that I am successful, and that will bring me more success and money.”

2. Explain how Aaron Beam might have used the “loyal agent’s argument” to defend his

actions. Do you think that in Aaron Beam’s situation the “loyal agent’s argument” might

have been valid? Explain.

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I believe that Aaron beam could have used the “loyal agent’s argument” in order to

mitigate his offenses. He did whatever he could to serve his employer, Scrushy, in order to

advance his interests. Although what Beam did was illegal, he is definitely still under the “loyal

agent’s argument” because he is serving his employer by doing whatever it takes in order to

advance his employer’s interests. This could have definitely diminished his sentence if he had

used this type of argument in his criminal court case.

3. In terms of Kohlberg’s views on moral development, at what stage of moral development

would you place Aaron Beam? Explain. At what stage would you place Richard Scrushy?

I feel that Aaron Beam would be part of Level Two, Stage Three: Interpersonal

Concordance Orientation. Beam’s loyalty and trust for Scrushy leads him to believe that if he

does not live up to Scrushy’s expectations, he will be exiled from his presence, and that is not

what Beam wants. Beam wants to be around Scrushy, and liked by him, so he does whatever he

can to please Scrushy.

I would place Richard Scrushy at Level Two, Stage Four: Law and Order Orientation. As

it said in the book, Scrushy acted like a dictator for the majority of the time he was running the

business. He generated extreme loyalty towards him from his fellow employees, so when he said

to do something, the majority of the people under him would comply without asking any kinds of

questions at all. Scrushy became a dictator for the company that he founded and worked for, and

his influence spread to everyone else in the company, generating compliance and general

agreement for anything that he ever wanted.

4. Was Aaron Beam morally responsible for engaging in the “aggressive accounting”

methods he used? Explain. Was his responsibility mitigated in any way? Explain. Was he
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morally responsible for changing the clinic reports to increase the company’s earnings?

Was his responsibility for this mitigated? Explain. Were those who cooperated in his actions

morally responsible for those actions? Was their responsibility mitigated? Do you think

Richard Scrushy was morally responsible for the accounting fraud? Explain.

I feel that Beam was morally responsible for engaging in the “aggressive accounting”

methods that he used. He knew from an accountant’s standpoint that what he was doing was very

shady, and knew that from the very beginning. Because of his admiration for Scrushy, however,

he threw away his own moral compass in order to please him. I don’t believe that his

responsibility was mitigated in any way because he knew what he was doing from the beginning.

I do feel that Beam was morally responsible for chaning the clinic reports to increase the

company’s earnings. He knowingly added to the profits using fake numbers that appeared out of

thin air. His responsibility for this was definitely not mitigated. I do feel that those who

cooperated with Beam’s actions are not morally responsible for those actions. They were only

following the orders of the employees that had more power than them. They most likely followed

blindly in order to keep their jobs, because the worst case scenario would be that they were fired.

Their responsibility is definitely mitigated because of the influence that the upper management

had over them. They were most likely in fear of losing their jobs if they did not comply with the

higher up management team. As weird as it sounds, I do not believe that Richard Scrushy is

morally responsible for the accounting fraud that took place within his company. He trusted is

friend and chief financial officer to the bookkeeping of the entire business, trusting him with the

bookwork and financial outlook of the entire company. This would have left him without any

kind of moral obligation to the fraud, because although he knew that it was happening, he wasn’t
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actually carrying it out himself, which I would say mitigates his responsibility for the entire

fiasco.