How Fraud Happens and What It Takes to Dig Out

Weston Smith, Former CFO of HealthSouth

 

 

Weston Smith recounts how the pressures of hitting quarterly numbers and a culture of reaching short-term goals at all costs created a situation that eventually landed him in federal prison. He describes the rationalizations the company used, the slippery slope that followed, and the tipping point that made him decide to do the right thing.

Teaching Notes

Use the following prompts to facilitate a guided discussion on this installment of Walking the Talk: Insights on Putting Ethics into Practice.

How did “tone at the top” contribute to the challenges at HealthSouth?  What lessons can we learn about the role of leadership in an organization?

What are some specific strategies organizations can undertake to manage the trap of short-term thinking and foster a culture of long-term success?

How do rationalizations lead to a slippery slope of unethical behavior?  How can organizations disrupt a trajectory of unethical decision making?

Smith cites several rationalizations for unethical behavior at HealthSouth, including materiality, the idea that “everyone is doing it”, pressure to meet expectations, and short term thinking.  How can acknowledging and anticipating these common rationalizations help us successfully confront them? 

What factors contributed to Smith’s decision to “blow the whistle”? 

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