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By Jed Boal
SALT LAKE CITY -- The U.S. government spent hundreds of billions to bail out failing businesses, and executives took home bonuses again. Americans are steamed.
"They didn't have control over the bailout to begin with, and now they're being rewarded for failure," said Thom Hall, certified financial planner with the Financial Strategies Institute.
Hall says AIG likely wrote the executive contracts before the bailout, so the company must pay. "We're seeing some real frustration right now because when this bailout was passed, they didn't build in safeguards to prevent this type of thing as part of the deal," Hall said.
He believes the AIG bonuses are among the unintended consequences of not putting restrictions on the bailout money. "The government made a decision to bail this company out and didn't set safeguards in place is what's put us where we are right now," he said.
But, can business ethics change? And what role do business schools play in training the leaders of tomorrow?
"What we need to learn from this is that managers need to be not just clever. That is to say, they don't just need technical skills, but they need to be wise. They have to have good judgment," said Harris Sondak, professor of management at the David Eccles School of Business.
Sondak says in recent decades, business schools focused on two major assumptions: The purpose of the business is to make money, and the individuals who make up the business are self-interested.
He suggests if the manager has good judgment and wisdom, not just skill and cleverness, and judgment is prevalent in the company, no one manager is indispensable. If no one is indispensable, then no one demands a multimillion-dollar bonus.
"I think that we should be outraged," Sondak said. "Even if they had succeeded, they wouldn't have been indispensable. And in fact, they didn't succeed."
In a statement Monday, Utah Congressman Jim Matheson called the bonuses indecent and said the lack of accountability for the money is one reason he voted against the bank bailout in the fall. [Click here to read Matheson's entire statement]
E-mail: jboal@ksl.com
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