W06 Case Study: Maria's Bonus Dilemma
Wow how time flies! One year ago, Maria made her dream a reality by
opening Maria’s Soup Shack. It has been a challenging year filled with long
hours, unexpected hurdles, and the steep learning curve of running a small
business. Despite these struggles, the Shack became a local favorite for its
wholesome, comforting soups and Maria’s commitment to sourcing
ingredients locally.
Maria’s dedication extended to her team of employees, some of whom
joined her from the start, believing in her vision. To keep morale high
through the tough early months, and based on the forecast she did for the
second half of the year, Maria promised her employees holiday bonuses if
the business succeeded.
Fortunately, her business performance for the last half of the year nearly
mirrored her forecast. Her employees, who have modest incomes, view the
bonuses as critical to meeting family needs and celebrating the holidays,
particularly in light of the economic strain many faced during the year.
The Issue
As the year drew to a close, Maria’s accountant, Jacob, initially reported
that the Shack had turned a modest profit—enough to cover the bonuses.
Buoyed by this news, Maria excitedly shared the good news with her
employees.
However, during a closer review of the financials, Jacob discovered a critical
error: taxes had been underreported for the year. This oversight resulted in
about $750 in unpaid tax liability, excluding penalties and interest. If Maria
pays this debt immediately, she will not have the funds to fulfill her bonus
commitments.
Maria now faces a painful dilemma.
The Stakeholders and Their Perspectives
1. Maria:
, o Values: Maria views herself as an ethical and responsible
business owner. She believes in honesty and integrity and wants
to set a strong foundation for her business’s future.
o Dilemma: If she addresses the tax issue immediately, she will
not have enough funds to honor her promise to employees. If
she delays or ignores the tax payment, she risks fines, audits,
and reputational damage.
2. Employees:
o Needs: Maria’s employees have invested long hours and effort
during a grueling first year. They see the promised bonuses as a
reward for their hard work and an essential boost for meeting
family obligations, especially during the holidays.
o Perspective: Failure to provide the bonuses might lead to
disappointment, resentment, and even turnover in a critical
phase for the Shack’s operations.
3. The Accountant (Jacob):
o Advice: Jacob has suggested Maria file her taxes correctly
moving forward and consider not addressing the oversight,
reasoning that the government tax authority is unlikely to notice
such a small amount.
o Risks: While this approach minimizes short-term financial strain,
it carries long-term legal and ethical risks.
4. Community:
o Impact: Maria has built her brand on community trust and
ethical values. Any perceived dishonesty or failure to honor
commitments could harm her reputation, impacting
customer loyalty.
The Ethical Dilemma
Maria is torn between competing values and obligations:
• Honesty and Legal Compliance: Paying the taxes immediately
aligns with her commitment to ethical business practices and legal
Wow how time flies! One year ago, Maria made her dream a reality by
opening Maria’s Soup Shack. It has been a challenging year filled with long
hours, unexpected hurdles, and the steep learning curve of running a small
business. Despite these struggles, the Shack became a local favorite for its
wholesome, comforting soups and Maria’s commitment to sourcing
ingredients locally.
Maria’s dedication extended to her team of employees, some of whom
joined her from the start, believing in her vision. To keep morale high
through the tough early months, and based on the forecast she did for the
second half of the year, Maria promised her employees holiday bonuses if
the business succeeded.
Fortunately, her business performance for the last half of the year nearly
mirrored her forecast. Her employees, who have modest incomes, view the
bonuses as critical to meeting family needs and celebrating the holidays,
particularly in light of the economic strain many faced during the year.
The Issue
As the year drew to a close, Maria’s accountant, Jacob, initially reported
that the Shack had turned a modest profit—enough to cover the bonuses.
Buoyed by this news, Maria excitedly shared the good news with her
employees.
However, during a closer review of the financials, Jacob discovered a critical
error: taxes had been underreported for the year. This oversight resulted in
about $750 in unpaid tax liability, excluding penalties and interest. If Maria
pays this debt immediately, she will not have the funds to fulfill her bonus
commitments.
Maria now faces a painful dilemma.
The Stakeholders and Their Perspectives
1. Maria:
, o Values: Maria views herself as an ethical and responsible
business owner. She believes in honesty and integrity and wants
to set a strong foundation for her business’s future.
o Dilemma: If she addresses the tax issue immediately, she will
not have enough funds to honor her promise to employees. If
she delays or ignores the tax payment, she risks fines, audits,
and reputational damage.
2. Employees:
o Needs: Maria’s employees have invested long hours and effort
during a grueling first year. They see the promised bonuses as a
reward for their hard work and an essential boost for meeting
family obligations, especially during the holidays.
o Perspective: Failure to provide the bonuses might lead to
disappointment, resentment, and even turnover in a critical
phase for the Shack’s operations.
3. The Accountant (Jacob):
o Advice: Jacob has suggested Maria file her taxes correctly
moving forward and consider not addressing the oversight,
reasoning that the government tax authority is unlikely to notice
such a small amount.
o Risks: While this approach minimizes short-term financial strain,
it carries long-term legal and ethical risks.
4. Community:
o Impact: Maria has built her brand on community trust and
ethical values. Any perceived dishonesty or failure to honor
commitments could harm her reputation, impacting
customer loyalty.
The Ethical Dilemma
Maria is torn between competing values and obligations:
• Honesty and Legal Compliance: Paying the taxes immediately
aligns with her commitment to ethical business practices and legal
