Toys R Us Closures Essay

Tags: bankruptcy business corporate social responsibility ethics leaders stakeholders toys

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Though Toys ‘R’ Us has recently announced bankruptcy and closures of its stores, a business ethics situation has arisen related to the compensation packages given by the company to its executives. As Held (2017) points out, “a bankruptcy judge has granted struggling retailer Toys R Us permission to pay millions of dollars in bonuses to executives after the company argued it was necessary to motivate its top brass during the critical holiday shopping season.” The problem, as Judy Robbins of the Justice Department’s U.S. Trustee Program has shown, is one of accountability. Ethically speaking, the bankruptcy court’s allowance of this goes against all sense of ethics and how a corporation should be expected to govern itself and be accountable to shareholders. But it also goes against the Bankruptcy Code as Robbins notes: “It defies logic and wisdom, not to mention the Bankruptcy Code, that a bankrupt company would now propose further multi-million dollar bonuses for the senior leadership of a company that began the year with employee layoffs and concludes it in the midst of the holiday season in bankruptcy” (Held, 2017). The ethical issue at stake with Toys ‘R’ Us giving millions to its executives is that while the company closes its stores and lays off thousands of employees across the States it has the temerity to reward and “motivate” its executives with big, fat bonuses—all while shareholders and lower level workers are shafted and left with little to nothing for their loyalty to the company.



Business ethics is not something that is just for show in the 21st century but something that actually has an impact on communities.

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The idea of corporate social responsibility is one that has gained popularity over the years because it puts companies on a pedestal, which is rightly so, because corporations serve the interests of so many stakeholders that they deserve to have the spotlight shown on them—and they also have a duty to do what is right by the communities that they serve. Were it not for the communities in which the corporations are situated, the corporations would not be in operation. Business is not a zero sum game but rather a process by which something that benefits the community is provided by workers who have the skill and ability to provide the good or service. In so doing, both community and business depend on one another. A corporation that takes advantage of stakeholders so that a handful of executives at the top of the pyramid benefit while all those below them are left in the cold, that corporation can be seen as unethical. Accountability is an ethic that companies must possess in order to be viewed as good for the community.



For a corporation to be ethical in terms of demonstrating corporate social responsibility it should engage in practices that promote the “social, environmental and economic environment in which” the business operates (Castka, Bamber,….....

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References

Castka, P., Bamber, C., Sharp, J. (2005). Implementing Effective Corporate Social Responsibility and Corporate Governance: A Framework. UK: British Standards Institution.

Held, A. (2017). Struggling Toys R Us plans to pay executives millions in bonuses. Retrieved from https://www.npr.org/sections/thetwo-way/2017/12/07/569088557/struggling-toys-r-us-plans-to-pay-executives-millions-in-bonuses

Schyns, B., Schilling, J. (2013). How bad are the effects of bad leaders? A meta-analysis of destructive leadership and its outcomes. The Leadership Quarterly, 24: 138-158.

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