Sears: Executives get 25 Million in Bonuses as Workers Laid Off (2018)
Ethics Controversy Case
Sears first began in 1886 in Minneapolis, Minnesota. They first began from selling watches by mails order. Sears was one of the first business to sell their products by mail order at the time. By the 1920’s through the 1950’s Sears began to expand and have stores all throughout the United States. By 1980 Sears was the largest retail store in the United States before becoming exceeded by Walmart at the time. In 2005 Sear got bought out and merged with Kmart. In October of 2018 Sears filed for chapter 11 bankruptcy.
Sears bankruptcy has been years in the making. Since the early 2000’s Sears has seen its stocks and revenue decrease. Sears bankruptcy has seen a lot of controversy due to Sears wanting to give 25 million dollars worth of bonus’s to its top executives. The problem with giving these top executives this money is Sears was going to close approximately 100 stores and lay off 5,457 employees. These employees were expected to receive no severance pay from Sears since many of them were not full-time workers.
The Sears company ended up going to bankruptcy court to get the 25 million worth of bonuses approved. Sears proposed 2 different plans in court. One was top executives could earn up 2.1 million with a maximum of 8.5 million. Plan 2 was for 322 other executives would see a maximum of 16.9 million which employees could earn up to 56,000 annually per employee. Judge Robert Drain Approved the plan to give the top employees these bonuses.
In This case Sears giving 25 million dollars worth of bonuses affects many stakeholders. One of the stakeholders are the laid off employees, Secondly is the stockholders, the CEO (Eddie Lampert), and ultimately the customers. These stakeholders often have a lot to loose, especially the employees, stockholders and the CEO.
With in individualism there are two forms. The first is Friedmans individualism. This is based off of the only goal of the business is to profit, which means the only goal of the business is to maximize its profits for its stockholders. In the particular case Sears is not maximizing its profits for its stockholders since they are providing such a large payout to their top employees. According to Friedmans theory Sears would be considered to be unethical. The second form is Machans individualism, this is based off of maximizing its profits, but it can be met by indirect goals aimed at profiting. Some of these goals are prioritized over other goals at maximizing profits. In this particular case Sears would be found ethical because they are investing in these top executives to stay with the company in their duration of bankruptcy.
Utilitarianism is an ethical theory which is based what “determines right from wrong by focusing on outcomes. It is a form of consequentialism.” Often time a utilitarian has a hard time distinguishing individual rights and justice. Utilitarianism is the most often approach used in business. With in this particular case Sears would be found to be ethical because sears is
using the money for the future of their executives hoping to stay with the company during their
time in bankruptcy.
Kantianism was first proposed by German philosopher Immanuel Kant, this is based off of moral theory. Kant believed that there was a “supreme principle of morality and he referred to it as The Categorical Imperative”. Kants theory is about how people shouldn’t be treated as objects. In this particular case using Kantianism, it would be unethical to give out these bonuses. The reason for this is because the people laid off should receive some sort of severance pay from their employer. Sears is treating the laid off employees as someone who was an object in their stores, rather than valuing them as a crucial part of their business.
Vitrue theory, was developed by Aristotle and other ancient Greek philosophers is based upon the “life of a moral character”. Virtue theory is an approach based on morality and exercising rationally in order to function well and live a good life. In this particular case regarding Sears would unethical. Since Vitrue theory is based largely upon morals it would be immoral for the company to issue these large bonuses while other employees receive nothing. Another reason why it would be unethical due to virtue theory is because it
doesn’t allow the people who are laid off to “function and live a good life” many of the
people who became laid off had to collect unemployment. Many of the people who were laid off are still looking for employment.
Justificated Ethics Evaluation
Based upon these four different ethical theories some are ethical and some are considered unethical. According to Friedmans individualism this is unethical. According to Machans individualism theory this case is considered to be ethical. These two theories vary based upon goals in which the company sets, and how they maximize their profits. Based upon the utilitarianism this case would be found to be ethical. The ethical theory of Kantianism would find that the using of 25 million for the top executives would be unethical because Sears is using these employees as just objects, rather than a crucial part of their business. Lastly, Virtue theory, would fin this particular case to be un ethical due to morality.
Company Action Plan
The current issue that is going on with the Sears company is it is giving its top executives with oil the company large bonuses worth of 25 million dollars while laid off employees receive no severance pay. Firstly, Sears should provide some sort of severance pay for the laid off employees so theses people can support themselves while they look for other employment. Secondly, After giving the employees a type of severance pay then they may issue these bon uses to their top executives so they stay with the company during the time in bankruptcy. Sears may also give incentives to these executive, such as a higher pay, more vacation time, a better work place. These incentives may help with keeping these executives rather than giving them large bonuses.
Sears new mission statement should include thing such as, a healthy work place, treat the employees far and just, and give the client the best possible price for their products. If Sears is able to do these specific things they may climb out of bankruptcy successfully. Some core vu;vu; es that Sears should instill in the company is they should first and format take care of their employees, Secondly they should always have a healthy workplace and lastly they should treat all employees the same. For Sears to move forward they should try to implement different things to gain attraction from the public. The best way for Sears to move forward and gain customers is to have large sales and good advertisement towards their stores. These thing will help improve the image of the company and it will also get the idea of Sears into the minds of the customers.
Isidore, Chris. “Bankrupt Sears Wants to Give Executives $25 Million in Bonuses.” CNN, Cable News Network, 16 Nov. 2018, www.cnn.com/2018/11/16/business/sears-executive-bonuses/index.html.
Whalen, Andrew. “Sears Executives and Senior Employees Will Get $25 Million in Bonuses, but Laid-off Employees Get Nothing.” Newsweek, 17 Dec. 2018, www.newsweek.com/sears-bankruptcy-stock-kmart-closing-filing-stores-pensions-judge-1262217.
Gibson, Kate. “Sears Bankruptcy Court OKs $25 Million in Bonuses for Top Execs.” CBS News, CBS Interactive, 17 Dec. 2018, www.cbsnews.com/news/sears-bankruptcy-court-oks-25-million-in-bonuses-for-top-execs/.
“While Sears Execs Get $25 Million in Bonuses, Laid-off Workers Struggle during Christmastime.” NBCNews.com, NBCUniversal News Group, www.nbcnews.com/news/us-news/while-sears-executives-get-25-million-bonuses-laid-workers-struggle-n949446.
“Q1: Could I Rationally Act on My Maxim in the PSW?” KANTIAN ETHICS, www.csus.edu/indiv/g/gaskilld/ethics/kantian ethics.htm.