Poor ethical performance may be hazardous to a hotel's bottom line.
The integration of ethics in the hospitality curriculum has repeatedly been
supported by educators. Most colleges and universities offer courses in ethics,
and some require students to take those courses. Moreover, scholarly interest
in the field continues to grow. According to William Shaw and Vincent Barry, "It
is hard to imagine an area of study that has greater importance to society
or greater relevance to students." [1] By preparing hospitality students
to logically and ethically solve dilemmas they will face when in the industry,
educators are equipping future managers with confidence and self-esteem to
make the right decisions on the job. [2]
As Aristotle observed 2,400 years ago, a man of bad character is not likely
to be reformed by lectures. Even if philosophical lectures alone will not
make students virtuous, however, they can help them think more clearly about
day-to-day ethical problems with which they will be confronted in their future
careers. Indeed, the survey reported in this article indicates that ethical
challenges remain a daily occurrence in the hospitality industry.
A Growing Concern
Many organizations and sections of American society are concerned with ethical
behavior. American public education has long been concerned with the morals
of young students. [3] Boards of education in many states have encouraged
schools to take an increased role in educating children in moral values,
character education, or whatever term is in current use. [4]
Business leaders have also become concerned with creating awareness of ethical
principles. Annual conferences on applied ethics, for example, allow presentation
of conceptual and empirical papers to business, professional, and education
audiences.
College-level educators are also involved in the effort to promote ethical
behavior. An annual publication on business ethics is printed at Pepperdine
University; comprising articles dealing with ethics topics published in journals,
newspapers, and magazines. The Josephson Institute for the Advancement of
Ethics, based in Marina del Rey, California, provides government, business,
journalism, and education agencies with instructional materials and trainer-
training workshops for the dissemination of ethics. Formally known as the
Joseph and Edna Josephson Institute of Ethics, the institute offers training
programs for ethics educators.
Two institutions dedicated to the advancement of ethics in the hospitality
industry are the International Institute for Quality and Service in Ethics
and Tourism (IIQUEST) and the Marion Isbell Endowment for Hospitality Ethics
Center. Both are non-profit organizations dedicated to the promotion of ethics
in hospitality and tourism. Based at the Glion Management Center, in Switzerland,
IIQUEST conducts periodic surveys to determine progress in ethics within
the industry and organizes contests for published articles and essays written
by students from hospitality and tourism schools around the world. The Marion
Isbell Center was created in 1988 by the founding family of Ramada Inns.
Housed in the School of Hotel and Restaurant Management at Northern Arizona
University, its mission is the study and promotion of hospitality ethics.
One of the reasons for concern about character development and business values
is that today's business practices are generally based on a profit-focused
economic system that does not expressly embrace ethical principles. While
it is possible to be both ethical and successful, it is also possible to
have financial success without observing ethical principles. Closer to home
for educators are revelations of ethical breaches by students. For example,
12 to 24 percent of student r[acute{e}]sum[acute{e}]s contain false information,
and an earlier study in which we participated found an increasing willingness
on the part of students to lie on financial-aid forms. [5] In April 1999,
two dozen students in a business ethics course at San Diego State University
were dismissed from the class and put on academic probation for cheating.
[6] In response to such news, some schools are emphasizing the need for future
managers to behave ethically in their careers. Indiana's Manchester College,
for one, invites its students to sign a non-binding pledge to be socially
and environmentally responsible. [7]
Testing Ethical Principles
We wondered what major principles should form the basis for ethical decision
making and for establishing standards or rules of behavior within which a
future hospitality manager must function. To that end, we developed this
study in an effort to rank 12 core ethical principles suggested by the Josephson
Institute in Ethics. [8] Josephson suggests that these principles establish
the standards or rules of behavior within which an ethical person functions
and could be adopted as the basis of the formation of future business leaders.
The study's results provide the perceptions of lodging executives on the
importance of ethical principles and lay the groundwork for the topics that
should be discussed in hospitality ethics classes. [9]
The 12 principles suggested by Josephson are as follows (in alphabetical order).
Accountability. People are morally accountable for their actions and treatment
of others, particularly in connection with the specific professional position
that they hold. Morally responsible hospitality managers should be accountable
for the welfare of the employees they supervise given that, in most cases,
the workers' livelihood depends on them.
Commitment to excellence. Commitment to excellence determines the necessity
to deliver the best service possible for the price obtained. Hospitality
managers who deviate from this principle would cheat their guests of their
right to have their money's worth for services received.
Concern for others. At minimum, the golden rule ("do unto others as you
would have them do to you") applies in having a human concern for the
needs of others. This principle is hard to observe from the lofty position
of managers vis-[grave{a}]-vis hourly workers performing menial jobs.
Fairness. A basic policy is to deal with people evenhandedly for equal performance.
In violation of this principle managers tend to deal more harshly with minorities
such as women, people of color, the old, and undocumented aliens.
Honesty. Being able and willing to state the truth (no matter how painful)
is ethically essential. This is true not only because deceiving or misleading
others often results in costly lawsuits and, in some cases, jail sentences.
Integrity. While soundness of moral principle and character may be qualities
of an individual's moral code, managers and employees may feel conflicting
pulls of moral conscience and self-interest. The hospitality industry offers
many examples of situations that can damage individual integrity and responsibility.
One instance would be a manager's willingness to continue daily operations
and preserve his job even as the resort is polluting the local environment.
Law abiding. An action's legality does not guarantee that the action is morally
right. While laws codify customs and mores, they can reflect political compromise
and, thus, are not sufficient to establish the moral standards that should
guide individuals or professions. As a result, hospitality managers can follow
the letter of the law while still acting against their values. An example
might be taking advantage of bankruptcy laws to avoid having to pay creditors.
Leadership. An example of ethical leadership in the hospitality industry would
be to refuse to employ illegal aliens at below-market rates even when competitors
are doing so.
Loyalty. Faithfulness to engagements and obligations toward laws, companies,
guests, and employees should be part of the moral behavior of all professionals.
This faithful adherence may be difficult if one's own benefit or social comfort
is at stake. A hospitality manager might, for instance, find it difficult
to abide by legal or company principles if his or her quarterly bonus for
improving the bottom line is in jeopardy.
Promise keeping. Some time ago, a business deal made orally with another person
carried all the necessary assurance that the expectations would be fulfilled.
Today, most deals must be closed in the presence of attorneys lest one of
the parties involved breaks the original promise. Hospitality managers intending
to make use of another person as a means to an end would be acting untrustworthily.
An example of this would be signing a promissory note while knowing that
the company is going into bankruptcy proceedings.
Reputation. The community's and guests' estimation of a company is important
for conducting business. Attempts by hotel managers to resist employees'
organizing could cast an unfavorable shadow on the company's ethical values.
[10]
Respect for others. One of Kant's principles states that everyone should be
treated as an end, not merely as means to an end. Every human being deserves
to be treated with respect, as an independent moral agent. The above example
of hiring illegal immigrants at low wages also violates this principle of
respecting other human beings.
Studying Ethics
We wanted to survey general managers of the largest lodging properties in each
of the 50 United States. To that end we drew a sample of general managers
from the ten largest lodging establishments in each state, or 500 executives
in total. The sample was selected by identifying the largest ten properties
by state as printed in the spring 1999 edition of Hotel & Travel Index.
[11] Because of the disparity among lodging establishments in different states,
the sample property size ranged from under 200 to 5,000 rooms. We sent the
survey instrument to these industry leaders by mail. Using a series of Likert-type
scales, the questionnaire asked respondents to rank their perceptions on
ethical issues and to provide demographic and psychographic information about
themselves and their properties. The number of returned valid questionnaires
was just 9 percent of the sample, or 45 managers. The mean property size
for all respondents was 554 rooms. This limited number of responses is typical
for hospitality executives' surveys of any kind. Although we do not attempt
to apply statistical analysis of the sample (other than some cross-tabulations),
a qualitative examination is enlightening.
Exhibit 1 shows the demographics of the respondents. Well over half of the
responding executives have been in the industry over 26 years, worked in
their current property between two and five years, and earned between $120,000
and $159,999. All but six of the respondents were male; on average, their
age was 46.2; they held a college degree; and they were married with at least
one child.
Exhibit 2, which is based on psychographic questions, describes the majority
of the respondents as being ideologically conservative, believers of God
and attending church regularly, and holding the perception that they had
higher personal ethical traits than other people in general and other hoteliers
in particular. [12] The perception of most respondents was that ethical behavior
in the hospitality industry ranks about the same as in other industries.
Design. The study has the characteristics of descriptive and analytical research,
in that it is concerned with analyzing the perceptions of respondents. The
data collected from the survey were processed using the Statistical Package
for the Social Sciences (SPSS) procedures for frequencies and cross-tabs.
Findings. We asked respondents to rank Josephson's 12 ethical characteristics
in two separate ways--the attributes' importance, and how often the respondents
saw them being violated. Exhibit 3 shows the ranking the general managers
gave to the 12 attributes based on the importance they have on the successful
operation of their properties. Four characteristics for operational success
were ranked with percentages above 10 (i.e., at least five respondents selected
them as most important): leadership, accountability, commitment to excellence,
and integrity. Four or fewer said the rest were most important to an operation's
success. Four people selected "honesty," for instance, and none
voted for "concern for others."
Similarly, Exhibit 4 shows the ranking the GMs gave to the 12 attributes in
terms of which ones they saw breached most often (i.e., observed unethical
behavior). Five or more respondents identified three attributes as being
frequently violated. Those are accountability, commitment to excellence,
and respect for others. No more than four noted frequent violations of the
other nine factors and no one listed frequent violations of the law.
Honored in the Breach
The results of this study indicate that the 45 general managers who responded
to this survey are concerned with the breach of ethical principles by lodging-industry
operators. We found this chiefly in the comments expressed by the respondents.
Among their comments: "Owners routinely lie and deceive employees. For
example, owners have denied knowledge of 'sticky' issues despite irrefutable
evidence to the contrary"; "A large number of associates are more
concerned about 'what is in it for me' versus dedication and loyalty for
the long-term"; and "Too many junior managers want the rewards
without the accountability." That respondent gave the following example: "A
manager-on-duty left the hotel at the end of his shift even though a tornado
was heading in our direction." Exhibit 6 lists selected qualitative
comments specific to breaches of the 12 core ethical principles.
Educational Clues
Taking a step back from the survey to our role as hospitality educators, we
believe the study results lend support to our suggestion that we should require
hospitality students to study ethics. Acting ethically requires certain intellectual
skills that develop with both maturity and formal education. It seems reasonable
to propose that a critical period in the formation of operational or applied
ethics occurs as students are about to graduate from college and begin their
careers. If ethical principles have been internalized during college, they
will be readily carried into the workplace. The college years are almost
certainly the last opportunity educators have to instill ethics in students.
We argue that an approach to ethical decision making should be grounded on
Josephson's 12 principles, as ranked by industry operators in our study.
Those principles should form the basis for an integrated hospitality-ethics
program. Integration of these topics into the curriculum should result in
an increased awareness of ethical considerations among future hospitality
managers. [13]
Case Studies for Ethics
Our suggestion that hospitality curricula embrace ethics is not novel. Most
business-administration programs offer courses in ethics that involve questions
of economic policy and business practice intertwined with issues in politics,
sociology, and organizational theory. Although business ethics remains anchored
in philosophy, abstract questions in normative ethics and political philosophy
mingle with analysis of practical problems and concrete moral dilemmas. [14]
Indeed, case studies using real-life problems appear to be the most effective
way of teaching ethics. [15] Case studies help people to realize that correct
choices are often not obvious. Through the use of cases, business cultures
can be examined; multicultural considerations can be contemplated; profit
motives and human values can be analyzed; and professional codes of ethics
can be dissected. Case studies need to be appropriate for hospitality students
and yet have a certain element of uncertainty built into them, with the instructor
serving as f acilitator and guide in the resolution of the cases.
Exhibit 7 offers six elementary case studies tailored to accommodate first-year
college or high-school students that address the ethical principles ranked
first in importance in this study: leadership, accountability, commitment
to excellence, integrity, honesty, and fairness. The cases have been compiled
based on the professional experience of the authors and provide ethical situations
facing hospitality managers on a daily basis. We hope that the integration
of these cases, and others of similar characteristics, in the hospitality
curriculum will push students to think more deeply about the nature and purpose
of business in our society and about the ethical choices professionals must
inevitably make in their business lives.
Gary Vallen, Ed.D. [ll]Gary.Vallen@nau.edu[gg], and Matt Casado, Ed.D. [ll]Matt.Casado@nau.edu[gg],
are professors in Northern Arizona University's School of Hotel and Restaurant
Management.
(1.) William Shaw and Vincent Barry, Moral Issues in Business (Belmont, CA:
Wadsworth Publishing Company, 1992), p.1.
(2.) Lynda Martin, "Integrating Ethics in the Hospitality Currieulum," Journal
of Hospitality & Tourism Education, Vol. 10, No.2 (1998), p.25.
(3.) For example, see: Francine A. Herman and Thomas P. Cullen, "Still
Needed: Ethics in Business Instruction," Cornell Hotel and Restaurant
Administration Quarterly, Vol.27, No.2 (August l986),pp. 49-52.
(4.) Arizona's board of education, for instance, has called for character education
in every grade level. See the Report of the Task Force on Values in Education
for the State of Arizona, Arizona Department of Education, June 1990.
(5.) Matt Casado, William Miller, and Gary Vallen, "Ethical Challenges
of the Industry: Are Graduates Prepared?," FIU Hospitality Review, Spring
1994, p.2.
(6.) [ll]nt.excite.com/news/u/990430/16/newscheatingscandal[gg].
(7.) J.R. Ross, as quoted in the Arizona Daily Sun, May 9, 1999, p. 8.
(8.) Michael Josephson, "Teaching Ethical Decision Making and Principled
Reasoning," Ethics: Easier Said than Done," Winter 1988, pp. 27-33.
(9.) Other studies of lodging executives' views of ethics include: James W.
Damitio and Raymond S. Schmidgall, "Hospitality Professionals' Responses
to Ethical Situations," Cornell Hotel and Restaurant Administration
Quarterly, Vol.34, No. 4 (August 1993), pp. 40-43; and Betsy Stevens and
Andreas Fleekenstein, "Comparative Ethics: How Students and Human-resources
Directors React to Real-life Situations," Cornell Hotel and Restaurant
Administration Quarterly, Vol. 40, No.2 (April 1999), pp.69-75.
(10.) Moreover, the presence of a union can be a source of management strength.
See: Stuart R. Korshak, "A Labor-Management Partnership: San Francisco's
Hotels and the Employees' Union Try a New Approach," on pp. 14-29 of
this Cornell Quarterly.
(11.) Hotel & Travel Index (Newton, MA: Cahners Travel Group, 1999).
(12.) This echoes a finding by: T. Tyson, "Does Believing That Everyone
Else Is Less Ethical Have an Impact on Work Behavior?," Journal of Business
Ethics, Vol. 11 (1992), pp. 707-717.
(13.) Casado et al., p. 5.
(14.) Shaw and Barry, preface.
(15.) M.R. McMinn, "Ethics Case-study Simulation: A Generic Tool for Psychology
Teachers," Teaching Psychology, Vol. 15, No. 2, pp. 101-102.
Demographic profile of responding general managers (N = 45)
Years in the industry
Mean = 26 years
Less than 6 = 0
6 to 11 = 2
12 to 18 = 11
19 to 25 = 11
More than 25 = 21
Years at current property
Mean = 6.5 years
1 year or less = 6
2 to 5 years = 20
6 to 10 years = 6
11 to l5 years = 6
16 years or longer = 5
Age
Mean = 46.2 years
Under 31 = 0
3l to 40 = 11
41 to 50 = 20
51 to 60 = 14
61 or older = 0
Hotel size
Range was 153 rooms to 2,019 rooms; mean was 554 rooms.
Overall compensation
Mean = $119,535 annually
Less than $40,000 = 0
$40,000 to $79,999 = 10
$80,000 to $119,999 = 11
$120,000 to $159,999 = 14
$160,000 or more = 10
Education
Not finished high school = 1
Some college (no degree) = 8
2- or 4-year college degree = 28
Some graduate work = 4
Master's or doctoral degree = 4
Psychographic findings
Political ideology
Participants rated themselves using a Likert-type scale of 1 = very liberal
to 5 = very conservative.
Mean = 3.6
Very liberal = 0
Liberal = 6
Neutral = 7
Conservative = 30
Very conservative = 2
Religious beliefs
The typical respondent scored 4.2 (between believing in God but seldom attending
church versus believing in God and regularly attending church) on a 1-to-5
scale of religious beliefs, where 1 is an unbeliever and 5 is a committed
believer.
Do not believe in any higher being = 2
Believe in a higher being but it was not "God" = 1
Believe in God but do not attend church = 8
Believe in God but seldom attend church = 11
Believe in God and regularly attend church 23
Personal ethics versus those of others
On balance, the general managers perceived their own ethics to be substantially
higher than that of the average population, with a mean of 4.0 (my own personal
ethics are "higher" than other people in general) on a Likert-type
scale of 1 (my ethics are much lower than other people in general) to 5 (my
ethics are much higher than other people in general).
Ethics much lower than others' = 0
Ethics lower than others' = 0
About the same as others' = 8
Higher than others' = 29
Much higher than others' = 8
Personal ethics versus those of other hospitality managers
The respondents perceived their own personal ethics to be substantially higher
than those of the rest of the hospitality industry, with a mean score of
4.0 on the same Likert-type scale as above.
Much lower than other hospitality managers' =0
Lower than other managers' = 0
About the same as other managers' = 12
Higher than other managers' = 23
Much higher than other managers' = 10
Cost of Breach
General managers were asked to assign an annual overall cost to the hotel from
ethical breaches of conduct by hotel managers and employees. The average
annual cost from ethical breaches of conduct was $101,794.87.
Less than $10,000 = 8
$11,000 to $25,000 = 5
$26,000 to $50,000 = 5
$51,000 to $100,000 = 14
Over $100,000 = 13
Note: Respondents who believed the projected cost of ethical breaches was over
$100,000 were asked to indicate at exactly how much they perceived this annual
cost. Two of the respondents stated their perception was an average annual
cost of $500,000 per property per year!
Ranking of 12 ethical characteristics by importance on profitable hotel operations
Respondents were asked to rank 12 ethical characteristics in terms of the importance
they perceive such ethical characteristics have on the successful operation
of their hotel. The list below shows the number of respondents deeming the
characteristic "most important."
(1) Leadership = 11
(2) Accountability = 9
(3) Commitment to excellence = 7
(4) Integrity = 6
(5) Honesty = 4
(6) Fairness = 2
(7) Law abiding = 2
(8) Respect for others = 1
(9) Promise keeping and trustworthiness = 1
(10) Reputation and morale = 1
(11) Loyalty = 1
(12) Concern for others = 0
Ranking of 12 ethical characteristics by frequency of breach
Respondents were asked to rank 12 ethical characteristics in terms of which
had most often been breached by managers or employees. The list below shows
the number of respondents who indicated that these characteristics had been
breached most often.
(1) Accountability = 8
(2) Commitment to excellence = 8
(3) Respect for others = 7
(4) Concern for others = 4
(5) Fairness = 4
(6) Honesty = 4
(7) Leadership = 4
(8) Loyalty = 2
(9) Promise keeping and trustworthiness = 2
(10) Integrity = 1
(11) Reputation and morale = 1
(12) Law abiding = 0
Note: Respondents were asked to rank the 12 ethical characteristics listed
above, ranging alphabetically from "accountability" to "respect
for others."
Cross-tabulation of annual cost of ethical breaches by property size
In general, the larger the property the higher the perceived annual cost assigned
by the survey participants.
Average number
Cost of breaches of rooms
$25,000 or less 513 rooms
$26,000 to $100,000 535 rooms
Above $100,000 777 rooms
Respondents' comments on each characteristic
Accountability
* Hourly employees do not accept responsibility for their part in building
business for the property.
* Managers are not accountable for their areas of responsibility. Instead,
they tend to blame others when things go wrong.
Commitment to excellence
* People aren't committed to growing in their positions. Will do only what
is asked of them.
Concern for others
* The owner told the director of sales that she was doing a fine job, and then
told the general manager to terminate her for non-performance.
Fairness
* Managers sometimes disregard fairness due to the need to make a decision
that may be advantageous to their needs (e.g., promoting somebody they like
without going through the proper selection process).
* Hardworking members of the team feel unfairly overworked when the laziness
of family owners creates additional burdens.
Honesty
* There are double standards at our hotel. Owners expect employees to be honest,
but employees see dishonesty among the owners.
* When a manager makes the wrong decision, he or she tends to stretch the truth
so that he or she doesn't appear incompetent.
Integrity
* In the hospitality industry we are so desperate for business that we will
sell our soul (integrity) to book the business.
* Not keeping information confidential, even after being told to do so.
Law abiding
* Stealing of cash or not charging for food products to improve tips.
* Diversity applies to someone else. Comments made out of context (e.g., "You
are too old[ldots]") come back to haunt the organization.
Leadership
* Youthful managers tend to leave decisions to higher management even though
they are empowered to make things happen themselves.
* Not setting a good example (e.g., when a department head parks in a guest
parking space).
Loyalty
* Excessive gossiping and searching for "the guilty party" prohibits
loyalty (as a result, upper management recently told a manager to call in sick
and take an extra vacation day without advising that manager's boss).
* Sharing trade secrets with newly opening hotels or going to work for them
after spending years being trained by a hotel firm.
Promise keeping and trustworthiness
* The general manager before me violated the trust o dozens of employees by
making any promise necessary at the time to solve the current crisis.
* Meeting planners are not receiving the same level of service promised to
them (and expected) at the time the contract was signed.
Reputation and morale
* Our employees do not show pride in their work-approaching their responsibilities
as another eight hours to survive rather than a challenge to make the best
presentation they can.
Respect for others
* Due to increasing pressure to perform, managers act in a way that can be
perceived as lacking respect for hourly employees. This may be a result of
how senior management is treated by the corporate office, which then translates
into the behavior those managers take out on their staff.
* This is the number-one human-resources issue due to the diverse employee
population (over 1,000 minority employees in our hotel). Customers still
have numerous stereotypes about our industry (e.g., addressing a housekeeper
as "maid").
Other comments
-- We have a lot of backbiting here among all the department heads.
-- Too many junior managers want the rewards (money, title) without the accountability.
-- Because employees are not properly trained, they lack the basic knowledge
of good service and are unable to make the commitment to excellence.
-- The head housekeeper does not stand up for her employees even when she knows
they are right.
-- The corporate office undermines the general manager by telling employees
belittling things about the GM.
-- The corporate office runs blind ads for positions at various properties
even though those positions are currently filled, and they do that without
informing the property general managers.
-- Owners routinely lie and deceive employees. For example, owners have denied
knowledge of an issue despite irrefutable evidence to the contrary.
-- I continue to see disrespect for the hotel and others with an "it's
not my job" attitude or with leaving the workplace unprepared for the
next employee or shift. I also see outright sabotage.
-- Line-level associates are more concerned about "what is in it for me?" versus
dedication and loyalty for the long term.
Six hospitality-ethics case studies
The following case studies are simple examples of the type of situations that
one might encounter in a typical hospitality enterprise.--G.V. and M.C.
Leadership
Al Brown is general manager of a 400-room downtown hotel in the midwest. The
establishment has been in business in the city for over 40 years, and most
local companies use the hotel for business functions, conventions, fine dining,
and other social occasions. As a result, business is good, and the average
earnings before taxes for the last ten years has been excellent. Because
of the lack of competition and the abundant supply of workers, the hotel
has been able to maintain low expenses for salaries and wages and employee
benefits.
Recently, a group of employees representing all hourly workers in the hotel
asked to meet with Al to request that the company offer medical insurance
benefits as part of the compensation package. According to the employees,
those workers who are in need of medical care cannot easily cover their health
expenses with the wages paid by the hotel. After making the necessary inquiries,
Al figures out that the hotel's income would diminish from 28 percent of
the revenue to 23.5 percent.
The general manager decides to reject the petition based on the law of supply
and demand regarding labor. According to him, there are a large number of
local residents that would be willing to work for the compensation the hotel
currently offers. Besides, Al recognizes that as a manager, his job is that
of maximizing profit while complying with existing labor laws. Did Al Brown
behave ethically in this case?
Accountability
Frank Felgentreff was the executive chef of a large casino in Las Vegas. For
the last six months the profit of the food and beverage department had been
exceedingly low, to the point that Tony Sciallo, the food and beverage director,
strongly requested that Frank increase the departmental income by at least
5 percentage points (from 7 percent to 12 percent). As an experienced chef
and excellent professional, Felgentreff began to analyze the possible causes
for the low departmental income. He arrived at the conclusion that the purchasing,
receiving, storing, and issuing procedures were well controlled. There was
no possibility of theft or pilfering. Food production, portion control, yields,
selling prices, and restaurant and bar operations were all in line. Frank
determined that the main cause of the poor departmental profit was the high
cost of payroll expenses of kitchen employees. Determined to comply with
his boss's demand, Frank decided he needed to eliminate nine fulltime positions
and create instead 14 part-time positions (offering no benefits). The savings
for this concept would make up for the 5 percentage points he needed to bring
the departmental bottom line up to the desired level.
On being notified of the chef's decision, the nine full-time employees were
deeply upset. They immediately approached the general manager and complained
bitterly, arguing that they had several years with the company and that their
livelihoods was being unfairly jeopardized. This was the first the general
manager had heard of these drastic terminations. In fact, neither he nor
the director of food and beverage knew anything of Frank's decision to terminate
the nine full-time employees. Yet when they called Frank to the general manager's
office to understand what was happening, the chef immediately placed the
blame on the director of food and beverage. Frank Felgentreff's exact words,
as he pointed a finger at Tony, were, "I was only doing what you told
me to do. It's not my fault I had to terminate those employees. You told
me to increase departmental profit." Did Frank Felgentreff act ethically
in this case? Did he take accountability for his actions?
Commitment to Excellence
The regional representative of a tour operator that sends Japanese tourists
to the United States has contacted Anne Martinez about providing a catered
lunch to a group arriving in the Phoenix area for a special event. The travel
agency is based in San Francisco and specializes in sending tourists to Yosemite
National Park. This trip to Arizona will happen only once.
The tour operator has arranged for Anne's restaurant to prepare the best food,
regardless of price; as a matter of fact, the cost per person was settled
at $16.50. Martinez confirmed the following menu: fruit cup (honeydew melon,
guava, mango and kiwi), seafood salad (fresh, diced, king-crab leg meat in
light honey mustard sauce), gourmet roast-beef sandwich with creamy horseradish
sauce, and fresh strawberry mousse.
On preparing the catered lunch, Anne is notified that the shipment of fresh
king-crab meat had not arrived. The chef recommended using frozen meat, which
according to him, is similar in taste to the fresh product, and the tourists
will not even notice. "Besides, said the chef, the cost of frozen crab
meat is $6.00 cheaper per pound. We could reduce the price per person by
$3.00 to compensate for the difference in quality."
Anne Martinez okayed the change, thinking that her food cost would be 27 percent
per order rather than the 33 percent projected. Martinez decided not to notify
the customer for two reasons: the agency will not send any other groups to
the region anyway and the tourists will not even taste the difference. Did
Anne Martinez behave ethically in this case?
Integrity
David Pistolesi is the general manager of a successful resort in California.
Operational results have been excellent for several years and the corporation
has rewarded David with a large yearly bonus for maintaining operational
and capital expenses below budget targets.
Last year, David was visited by a group of concerned local citizens about the
fertilizer used on the resort's golf course. According to them, the fertilizer
has several strong chemical components that contaminate the water table from
which the community draws its well water. The resort, they insist, should
use a biodegradable fertilizer that doesn't contain noxious chemicals,
After consultation with the company's lawyer, David finds out that there are
no federal, county, or city regulations compelling golf courses to use biodegradable
fertilizers. David, however, feels that it would be nice to help the environment
by using ecology-friendly products. Looking into several types of fertilizers,
David soon finds out that the cost of biodegradable products would be three
times higher than the fertilizer the resort is using now. Discouraged, but
resolute to maintain the operational profit of his establishment, David decides
to keep using the current fertilizer. Is David's decision ethical?
Honesty
Steve Smith is a nontraditional student who went back to college after working
several years in the hospitality industry. This semester, Steve is graduating
with a Bachelor of Science degree in hotel and restaurant management. Steve
has had two interviews with a leading national management company that is
looking for an assistant to the general manager at a restaurant in San Antonio,
Texas. Steve Smith has had substantial experience in the industry in hotels
(including food and beverage) but has never worked in restaurants. The management
company, however, has as a requirement that candidates have previous experience
in restaurant operations.
Determined to obtain the position, Steve decides to list as a reference a successful
restaurant in his hometown that burned to the ground some years ago, together
with the personnel records of all its employees. Smith is confident that
he can easily handle the requirements of the lob as assistant to the general
manager and considers it unfair that the restaurant require previous experience.
Steve lists the restaurant as a reference, knowing that it will be impossible
for the management company to verify this record. Did Smith behave ethically?
Fairness
The Royal restaurant is located in a medium-size community in central Texas.
Because of labor shortages, lodging and food and beverage establishments
are using illegal immigrants to fill positions in the back of the house,
such as dishwashers, kitchen helpers, housekeepers, and groundskeepers. These
workers are paid the minimum wage in most cases and receive no benefits.
The manager of the Royal restaurant, Mike Henderson, has been having difficulty
with maintaining the restaurant's labor-cost percentage close to budget projections.
As a matter of fact, last month the percentage was 39 percent of revenue,
11 percentage points above budget. Believing that his job might be in jeopardy,
Mike decides to lay off 15 back-of-the-house full-time employees and replace
them with illegal immigrants, paying them minimum wage and providing no benefits.
Most of the dismissed full-time workers were making well above minimum wage
and received full company benefits.
One month after these changes, the restaurant's labor-cost percentage was under
control, with figures below budget projections. Did Mike behave ethically?
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Cornell Hotel & Restaurant Administration Quarterly, Apr 1, 2000
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