Introduction
Ethics is a broad concept that impacts individuals and organizations alike. Over the years, many scholars have tried to study ethics and determine its importance in organizational settings and most agree that there is a strong link between ethics and organizational success. Ethics is especially significant in the context of the hospitality industry due to the nature of its operation. The hospitality industry, for instance, deals directly with different types of people in the delivery of their products and services; people who have different sets of values that can impact the company’s operation and culture. In the face of an increasingly competitive environment, hospitality organizations are compelled to make its client’s experience as remarkable as they can in the hope that the client would continue to patronize their products and services. Many hospitality organizations, however, fail in this aspect not because they have poor facilities or products, but because they have poor ethical practices. Dishonest acts such as theft, fraud and the likes are common ethical problems that plague the hospitality industry. These practices, if not addressed, can gradually wear down an organization’s resources. On the other hand, a hospitality organization is also compelled to act ethically towards society; most especially towards its employees, the community and the environment.
What is Ethics?
Ethics can be simply defined as the basis of one’s morality. While a person may have a pre-conceived moral values; that is, he already has a notion about what is wrong and what is right, ethics is a logical explanation of why he believes in such moral values. Ethics, therefore, is a study of the effect of one’s moral values. Morality and ethics, however, have been used interchangeably, which makes it difficult to distinguish between the two. In an organizational setting, ethics are a set of moral codes that governs an organization conduct. Morality defines a person’s character and is arbitrary since not all people share the same moral values. Ethics, on the other hand, sets a defined system of moral principles that aims to guide individuals on how to act within the organization. Despite the fact that people have different moral values, when it comes to an organizational setting, the person would have to set aside his moral values that come in conflict with the organization’s ethics or set of moral codes. For the same reason, sound ethical practices are very important in any organizational setting because it defines how an organization acts as a whole.
Ethical Theory of Utilitarianism
In trying to create a theoretical framework that aims to generalize how people should act when faced with an ethical dilemma, philosophers have come up with two broad ethical theories: utilitarianism and deontology. The utilitarian perspective is an ethical framework that defines the rightness or wrongness of an act based on “the maximization of overall well-being” (Eggleston, 2012, p.452). The utilitarian theory of ethics is an age old ethical framework that can be traced back to the philosophical works of classical Greek thinkers such as Plato and Aristotle(Eggleston, 2012, p.452). But the modern perspective of utilitarianism did not emerge until the 18th and 19th century in the works of Jeremy Bentham and John Stuart Mill. From the Latin word ‘utilis’ or useful, the utilitarian theory of ethics determines the value of an act based on the usefulness of its result. The utilitarian ethics are about pursuing happiness and happiness as the major basis of what is ethical and what is not. According to Bentham, people are governed by two things; pleasure and pain. For Bentham, “Actions are approved when they are such as to promote happiness, or pleasure, and disapproved of when they have a tendency to cause unhappiness, or pain”. And so in order to satisfy the natural tendency of humans to seek happiness, Bentham declared that organizations and individuals should act to increase the happiness of their community. Like Bentham, Mill argued that happiness is an important consideration of what is ethical or not, and added that the happiness of the majority should supersede that of the individual. In the context of nation building, Mill argued that governments should strive to secure the highest level of happiness for the most number of people. According to scholars, utilitarianism is characterized by maximization, aggregation, individualism, welfarism and consequentialism (Eggleston, 2012, p.452). In making ethical decisions, a utilitarian would have to consider many things such as if the act is maximized or if it impacts everyone; if it is for the welfare or good of everybody; if it is for the happiness of the individual and not just the institution or organization; and if the perceived consequences of an act is desirable.
Ethical Theory of Deontology
Unlike utilitarianism, the ethical theory of deontology considers ethics as absolute; that is, there are things or decisions that are innately good, they can never be bad. Deontologists seek this absolute goodness in making ethical decisions. They are not concerned about the consequences of their actions because it is understood that whatever the consequences are, it must be good since the decision or procedure that they took is considered as an absolute good. The ethical principle of deontology has been has been clearly articulated by the German philosopher, Immanuel Kant. For Kant, the utilitarian principle is highly subjective. Accordingly, “our desires and our beliefs about how to satisfy them are not the only things that could guide our intentional behaviour” (Hooker, 2002, p.1). Kant believes that the rightness or wrongness of an action should not be judged on its consequences, but rather on its intentions (Hooker, 2002, p.1). According to Kant, one could not objectively determine the consequences of his actions because no matter how logical one acts, his actions are subject to mistakes. Kant also believes that there are natural laws in the universe that governs human behavior and man must act according to these laws (Hooker, 2002, p.1). For the same reason, Kant argue that the only acceptable way to act is to act based on good motivation or intention. Man, therefore, has a duty to do what is good not because of its consequences, but because it is the right thing to do. To put deontological ethics in perspective, consider a dying woman who has promised her wealth to charity when she dies. The utilitarian ethics would consider it ethical to kill the dying woman for the good of the orphans, which, apparently, is not a sound ethical decision. Deontology justifies the right of the woman to life, primarily because it is the right thing to do. For people who advocates deontology, killing the woman is bad even if her death means many orphans will live comfortably.
Ethical Issues in the Hospitality Industry
Deontology is one of the most accepted and observed ethical framework in most organizations because it offers a distinct and explicit meaning to what is wrong or right. There are behaviors, for instance, that are considered as outrightly wrong and unethical. Behaviors such as theft, fraud, pilfering and the likes are all considered as unethical no matter what their consequences are. According to experts, the hospitality industry is likely to be affected by ethical problems because of the opportunity it presents to commit dishonest acts. The nature of how the hospitality industry operates places both employees and clients on tempting circumstances to steal and commit other forms of unethical acts. Many opportunities to commit dishonest acts because of the many transactions that involves money and other things of value. In fact, there are many ethical issues are encountered in the hospitality industry that range from a simple act of dishonesty to serious unethical practices both in the lowest and highest levels of the organization. Among the most common ethical concerns are fraud, such as unreported sales and erroneous reporting of inventory; pilfering and inside theft. As observed by scholars, the inside theft in the hospitality industry “was both rampant and costly in the 1990’s and 44% of restaurant workers reported they had stolen cash or merchandise from their employers” (Stevens, 2011, p.23). Embezzlement is also rampant with scholars reporting an average loss of $385,000 in 2010 alone (Stevens, 2011, p.23). There is even a case wherein a single employee embezzled almost $500,000, which took several years to discover (Stevens, 2011, p.23). Aside from the problems of dishonesty, the hospitality industry is also increasingly concerned about social responsibility. Today, the hospitality industry is not only concerned about its financial and operational performance, but also rates its success in terms of sustainability and social responsibility criteria such as the use of green energy; the efficiency of its waste management; and community contributions. In all these endeavors, ethics play a crucial role and can define the success and sustainability of an organization that operates in the hospitality industry.
Importance of Ethics
The Case of Johnson & Johnson
Many situations arise wherein an individual or organization is faced with an ethical dilemma and knowing how to address these ethical dilemmas can define individual and organizational success. Take for example the case of the drug company, Johnson & Johnson. In the 1980s, the company was plagued with claims about its product, Tylenol when the drug was suspected of being the cause of death of several individuals. It was suspected that the drug was tampered with cyanide. Nevertheless, the company recalled the drugs from the market. The company’s action was never heard of before in the 80s. And so what was supposedly a negative experience, Johnson & Johnson turned it into a public relations campaign. It was, however, the sound deontological ethical principle that made the company recall all of Tylenol in the stalls. The recall hurt the company financially. According to observers, the company “spent more than $100 million for the 1982 recall and re-launch of Tylenol”. Nevertheless, the Tylenol case made Johnson & Johnson a hero and the company’s financial trouble was only short lived since the sale of Tylenol and other Johnson & Johnson products rebounded. Although the act was simple, it was the underlying message that made consumers patronize Johnson & Johnson more. The move to recall the products, for instance, showed that the company is trustworthy and that it will not compromise public trust for profit.
The Case of TYCO
While Johnson & Johnson case is an example of how ethics can help a company survive a major issue, the lack of ethics can destroy even a huge company. Several years ago, many companies went bankrupt because of unethical practices that were left unchecked. One particular example is the case of TYCO and its CEO Dennis Kozlowski. TYCO is a manufacturer of electrical and electronic products with global manufacturing facilities. Dennis Kozlowski, on the other hand, joined the company in 1975 and gradually rose up the corporate ladder. Kozlowski was a brilliant executive who impressed the company’s board with his ‘shareholders first’ policy. Kozlowski was eventually appointed as CEO and was noted for his aggressive management. However, Kozlowski engaged in an extravagant and lavish lifestyle at the expense of the company. According to observers, Kozlowski personal purchases were paid for by the company which includes $7 million apartment on Park Avenue and a $16.8 million apartment on Fifth Avenue, New York . With the help of other top executives, Kozlowski embezzled millions by mediating company acquisitions and awarding themselves with millions of dollars in incentives. They also tried to manipulate the company’s books to make their acquisitions appear legitimate. TYCOs and Kozlowski’s case is not an isolated issue. In fact, many companies have experienced such unethical practices. Worldcom, Enron and TYCO are just a few examples of major companies who went down because of unethical practices.
Ethical Consumerism
One compelling consideration why it is important for organizations, especially business organizations, to be ethical is the rising trend of ethical consumerism . A growing number of people today are consuming products based on how socially responsible an organization is. In fact, a number of consumers even scrutinize the source of raw materials on whether it uses child labor or whether it has poor working conditions or not. Scholars, for instance, observed that some consumers are willing to pay extra for products that are produced ethically. According to experts, more that 50% of consumers worldwide are willing to put their money in an organization that is committed to creating positive social and environmental impact even if they have to pay extra for a similar product or service. Pursuing high standards of ethics in terms of social responsibility is now the most acceptable way of doing business. Many organizational experts, for instance, advocate the concept of a triple bottom line, wherein the organization measures its success not only on its financial success, but also in its environmental and social performance (Norman, & MacDonald, 2004). Many organizations who tried to ignore their ethical responsibilities towards society have faced serious consequences. Several organizations, for instance, have to face consumer boycotts due to their unethical practices. The sports apparel manufacturer, Nike, for instance, was forced to change its corporate stance towards social responsibility due to consumer activism. Other successful consumer activism includes the boycott of De Beers, Fruit of the Loom and Nestle.
Applying Ethical Theories
Investing on Social Responsibility
Part of an organization’s social responsibility is its responsibility towards its employees. Putting the ethical issues of a hospitality organization in this context, it is observed that employees are more likely to commit dishonest acts primarily because they are poorly compensated for their work. According to scholars, the industry is “susceptible to dishonesty of all sorts” because most of its employees are “notoriously underpaid” (Stevens, 2011, p.23). The case of Starbuck can be a good example of how valuing employees and providing them with reasonable compensation is a crucial recipe for success. To provide an excellent customer experience is a Starbucks primary strategy and CEO, Howard Schultz, believe that the key to achieving this goal are happy, empowered and motivated employees. For the same reason, Schultz pushed for improving employees’ compensation and benefits. The company’s board were at first reluctant to Schultz idea, but then Schultz convinced them that doing so would increase the employees’ morale, which would eventually benefit the company. With Schultz proposal, Starbucks provided full health coverage to its part-time employees in 1988; the first company in the United States to provide such benefits. He also gave employees a chance to become part of the company’s shareholders by giving them a chance to own the company’s stocks . Schultz’ theory proved right. From being a small coffee bean retailer in Seattle; today, the company has over 19,000 stores in more than 60 countries across the globe .
Making an Ethical Change
The organization’s ethical practices are a reflection of its culture and this culture attracts or repels certain types of employees. The common adage that says ‘birds of the same feather flock together,’ applies to an organization ethical practice. Ethics, for instance, is the reason why some people find it hard to stay in a particular organization. A person who finds an organization’s ethical practice in conflict with his personal ethics is more likely to leave the organization. On the other hand, a person who finds the ethical practices of an organization in line with his own personal values will tend to stay. It is only logical to think that an ethical organization will attract ethical individuals while an organization with poor ethical practices will also attract people with similar ethical orientation. For the same reason, the importance of ethics could not be undermined, especially in a hospitality organization where individuals are subjected to tempting circumstances. Experts believe that in building an ethical culture, an organization needs to commit itself to the strict observance of high ethical standards and this observance should begin with the top management (Baker, Hunt, & Andrews, p.2006). It is expected that when organization leaders observe a high-level of ethical standards, it will have ripple effects to the rest of the organization’s employees. As observed by organizational behavior experts, people are willing to follow when they see a similar behavior in their legitimate authorities (Cialdini, 2003, p.23). Creating an ethical organizational culture is not an easy task, but there are things that experts suggest, which can initiate the necessary changes within an organization. In creating organizational changes such as in overhauling an organization’s culture, Harvard professor, John Kotter suggest that first, the management should establish a sense of urgency that the change is necessary (Kotter, 2007, p.99). Next, the management should create a coalition or a dedicated team who would lead the change effort. It is also important that management should create and share its visions of change in order to provide a clear goal on what the organization is trying to achieve. Kotter also suggests that the management should encourage people to act towards the organization’s vision for change (Kotter, 2007, p.99). It is also necessary to create short-term goals as a motivation strategy. Short-term goals, according to Kotter, motivate people to continue the change efforts because they see improvements or progress (Kotter, 2007, p.102). Kotter also suggests that management should not rest until they see change embedded deep into the organization’s culture and institutionalized (Kotter, 2007, p.99).
Conclusion
Ethics is arbitrary and depends on the moral orientation of an individual or organization. There are people and organization, for instance, that strive for high ethical standards while there are those who succumbed to their greed and performed dishonest and fraudulent acts. Based on the experience of several organizations, the lack of sound ethical standards, especially in the management level could lead to devastating results. Ethics is, therefore, important, especially in the hospitality industry, because it provides the organization with a set of moral principles that would guide it in achieving its goals. The hospitality industry is specifically prone to ethical issues due to the nature of its operation. For the same reason, it is important that management should promote strong ethical practices; first, within the inner management circle and down to the organization’s employees.
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