Category Archives: Philanthropy

The Two Faces of Corporate Responsibility: Haiti and Bonuses

The best and worst examples of how corporate responsibility connects with reality are colliding with each other, building and destroying credibility simultaneously.

The outpouring of U.S. corporate money to Haiti, $43 M in the first 72 hours and more than $83 M two days ago demonstrates a sense of corporate responsibility that is fundamental to the American spirit. It represents the best of how companies and their employees connect with the world around them.

This makes it even harder to understand what happens to the reality connection when TARP companies and others continue to jack up compensation. Morgan Stanley, who received $10 B in TARP money last year, is the latest to announce they are increasing employee compensation even though they posted a net loss of $960 M.

When disasters happen like Katrina or the 2001 terrorist attacks in the U.S. or an earthquake in Haiti or tsunami in Malaysia or AIDS in Africa – you get where I am going – corporate America goes to the front of the line. It is very moving and creates a rich experiences for employees in companies who step up. I have watched employees who channeled Dilbert transform over getting others involved in collecting food, clothing or cash donations.

In supporting causes, the company expresses who it is and what it cares about by the commitment of money, products, volunteers, technologies and expertise donated. What may start as good public relations becomes something so much bigger than a media mention or Annual Report blurb. These are opportunities for a company’s collective heart to be evident. Beyond tragedies, these opportunities exist every day in corporate foundations and charitable giving programs and the smart leaders are those who choose their issue, global or local, and work alongside employees to create successful outcomes.

However, another side of corporate responsibility makes much less sense these days. In the wake of the economic downturn and TARP bailout money, for TARP recipients to be giving huge bonuses and raises is a stunning disconnect.  The argument about needing to be competitive has so completely spiraled out of hand, out of step with the reality lived by most Americans and a further erosion of corporate credibility.

Shareholder activism has gained added momentum during the financial crisis. And, taxpayers are no longer disinterested parties. They were invited inside the tent when the federal government bailed out Morgan Stanley, Goldman Sachs, and other TARP companies.

I heard about a new kind of road rage this week — against someone perceived to be a banker because of the expensive car he was driving. Turns out it was an automotive journalist test driving a Bentley Contintental Supersports, price around $300,000. A few cars passed the Bentley at various times and made obscene gestures.  A driver in a Ford F-150 rolled down his window and screamed “you @#$%  Banker, you think you can change lanes without using your signal, who do you think you are in your fancy car? You take the next exit and I’ll teach you and your fancy car a thing or two.”

Whether companies pay out all the bonuses planned or not, for some, the damage is done.

Gael O’Brien, January 21, 2010

The Week in Ethics