Cornell Hotel & Restaurant Administration Quarterly, April 2000 v41 i2 p44
Ethical Principles for the Hospitality Curriculum. Gary Vallen; Matt Casado.
Full Text: COPYRIGHT 2000 Cornell University


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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