Bonuses are a symbol of business's bigger problem - an eroded sense of duty to the wider community

[marmar]

from the Guardian UK:



A breakdown in our values
Bonuses are a symbol of business's bigger problem - an eroded sense of duty to the wider community

Klaus Schwab
guardian.co.uk, Wednesday 6 January 2010 21.00 GMT


Given the uncertainty of the recovery and fears about the social impact of the economic crisis, it is little wonder that debate about corporate bonuses has crept back on to the agenda. You wonder whether managers have learned from the excesses that have to a large extent caused the crisis.

Nevertheless, this discussion is superficial, as it doesn't consider the essential point: the role that companies, including banks, play in society, and the role of executives within those companies. The bonus discussion is actually just a symbol of a much deeper transformation that has taken place in the business world. Let me outline this transformation, as it has severe social implications.

Almost 40 years ago, I developed the "stakeholder" theory for businesses. This considers the enterprise as a community, with a number of social groups connected directly or indirectly to the enterprise which are dependent on its success and prosperity. These of course include shareholders and creditors; but employees, customers, suppliers, the state and the society in which the enterprise is active are stakeholders.

The idea at the core of the Davos meetings was to create a platform where managers could meet their stakeholders and discuss their mutual responsibility. According to the stakeholder approach, the management of the enterprise acts as a trustee for all stakeholders – not just for share owners. It is based on the principle that each individual is embedded in societal communities in which the common good can only be promoted through the interaction of all participants – and business success is also embedded in this interaction. ...........(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/2010/jan/06/bankers-bonuses-crisis-social-risk

[dkf]

1. Hear hear.

K and r