Business Ethics Assignment: The Corporation and Social Responsibility - Essay Example

The public saw these bonuses as outrageous and unethical for several reasons. One reason was that it began to appear as though people on Wall Street were congratulating themselves for a job badly done, and, another was because some of the firms giving out large bonuses had received bailouts from taxpayers. The question we must ask ourselves as businesspeople is whether or not big corporate bonuses are ethical or not. But that is only part of the issue. A lot will hinge on questions of perception.

This memo will discuss this issue. In business, perception can very easily become reality. That in part is what public relations companies do for businesses—they try to manage perceptions. But businesses can also do a lot to help themselves. If they appear unethical or overly greedy, it is very likely they will turn off many potential customer and lose long-time customers too. It is important to consider how your company is being portrayed in the press. This is especially vital to consider in times of economic downturn.

The recent crisis created a new context in which many actions taken by management in large companies came under new scrutiny. Many people in the media, as well as ordinary people, blamed large firms on Wall Street such as banks and insurance companies for taking unreasonable and foolish risks (Wayland, 90). It is indeed true that many of these companies gambled big. They failed to properly understand the products that they invested in. That in itself may be an ethical issue, but the thing that really got peoples' goat was what followed.

The idea that large bonuses would be paid to upper management following the crisis was seen by many as infuriating and unethical. It rubbed people the wrong way. People became very cynical about business. There were three main reasons for this. The first reason was simple: bonuses are to paid when someone does a good job. When you do a bad job and your company loses lots of its value and would normally go bankrupt, you should not be rewarded, you should be fired. For many observers there was an ethical chasm between the cause and effect in this situation.

They viewed the idea of paying bonuses for failure as part of a scheme. It suggested to them that these businesses were acting unethically and were even congratulating themselves for the destruction they caused. The second reason had to do with the size of the bonuses. Many bonuses involved millions of dollars. For ordinary people, these numbers were astronomical and completely out of proportion to what was happening in the real world. It seemed highly unethical for managers to be receiving bonuses of this magnitude when shareholders were wiped out.

That dissonance struck people as indicative of a seriously unethical situation. They then became angry. The third reason was that following the crisis many major firms received taxpayers money as a form of bail-out. These companies would normally have gone bankrupt, but the government decided that this was too risky and would have terrible consequences for the entire economy if too many banks and insurance companies were to fail. Taxpayers were forced to bail out these companies with billions of dollars.

To see their hard earned money spent on bonuses, drove ordinary citizens up the wall. AIG, a large recipient of bailout money, was the subject of numerous death threats. People strongly felt their money was being stolen and that these companies were seriously ethically compromised. Little could be done