Cunningham Construction: Bonus Schemes and Dysfunctional Behaviour

Abstract

This study addresses the ethical issues that are raised when performance bonuses are awarded on the basis of accounting numbers. In the absence of self-control, or executive controls, bonus recipients are placed in a position where their decision-making is capable of distorting for their own advantage the intentions of the scheme. The case provides the opportunity to discuss the potentially dysfunctional impact of such decisions on shareholders, employees, and the community, when financial benefit to bonus recipients is apparently the only consideration.