Perk Persona Problems
At HealthSouth, Bob May, too, reached out to internal staff to
correct external perception problems. Some of the fixes he instituted were
almost symbolic. The board members opened the executive dining room to all
employees, as well as the two floors that had been reserved for top executives
at HealthSouth’s headquarters. To create a more inclusive corporate culture, May
began hosting brown-bag lunches in the cafeteria, where he reassured employees
on all rungs of the corporate ladder that executives were working hard to turn
things around.Then there was the significant matter of trying to clear the
company’s muddied reputation among an entire generation of investors who will
probably never hear the name "HealthSouth" without thinking of Scrushy’s 13
corporate jets and sponsorship of an all-girl rock band. HealthSouth
board members met
in special sessions
for three years to avoid having founder
Richard Scrushy crash their
discussions. |
The company hired New York public relations firm Joele Frank,
Wilkinson Brimmer Katcher, which specializes in crisis management for tarnished
companies. (One of its other clients is distressed donut maker Krispy Kreme.)
The board wanted to differentiate the HealthSouth bloated with executive perks
from the new, leaner company focused on patient care. Part of that involved
selling off the corporate jets and divesting extraneous businesses that had
nothing to do with rehabilitation hospitals. But it also required reassuring the
general public that HealthSouth was still a viable company and that creditors,
consumers, employees and investors should not feel compelled to go
elsewhere.Because HealthSouth had so many outlets in so many different
communities, the board signed on to a public relations strategy focused on
convincing newspapers to write stories showing that its local facilities were
not involved in the scandal, which was centered at the company’s headquarters.
It won small publicity victories: the Miami Herald announced in September 2003 that
HealthSouth Rehab Hospital of Miami would take part in National Rehabilitation
Week, reminding the public that at least the hospitals remained open for
business. In fact, admissions and volume at HealthSouth facilities remained
relatively strong. After the company announced in July 2003 that there was no
reason for HealthSouth to file for bankruptcy, business gradually began
returning to normal. In May 2004, the company was able to hire a permanent CEO,
Jay Grinney, a veteran health care executive, whose job, now that the company
was stabilized, was to start growing HealthSouth again. May, who left HealthSouth to become CEO of San Jose-based
Calpine Corp. last December, says today that there are few things more
satisfying than helping a struggling company avoid collapsing under the weight
of scandal. Today HealthSouth may be much smaller, but observers such as Charles
Elson, director of the Weinberg Center for Corporate Governance at the
University of Delaware and a member of HealthSouth’s new board, credit the board
of directors with managing to keep the company alive during an incredibly
challenging period for both managers and the company’s thousands of employees.
Michelle Leder is the author of Financial Fine
Print: Uncovering a Company’s True Value.
Art by Ken Orvidas.
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