The Ethics of Business in the Hospitality and Tourism Industries: the provision of the company and stakeholders
“The good ethical manager is therefore not only a person with solid value orientation, knowledge and abilities for moral reasoning, but also a person with communicative skills who is able to gain insights into the stakeholders’ perspectives, who can discuss difficult issues and provide sensible compromises (Manburg 2005, p. 574).”
The corporate world is characterised by paramount restrains, high demands and expectations on productivity, and excessive competition where management members necessitate the familiarity and importance of business ethics. Considering the above trends in the corporate world, many employees are pressured to cut corners, break standards and rules, and engage in other forms of questionable practices so as to do away with a number of inconveniences and achieve outcomes the fastest way possible while neglecting the provision of appropriateness and fairness. According to Robbins and Judge (2007), many employees are confronted with instances where they need to define and decide right and wrong conduct. The characteristics of good ethical behaviours have never been clearly projected in the recent management literatures where the line that differentiates right against wrong conduct has become even more blurry. Managers and leaders respond to ethical behaviour issues (De Mesa Graziano 2002).
It is provided that when analysing the role and meaning of ethics from the internal perspective within a company, Kline (2006) states that, “There is a potential problem ...with attaching the duty of managers to the specific desires of shareholders. If anything, moral constrains are meant to constrain desires. Desires are fickle and not always moral”. Kline’s statement holds veracity and openness provided that business ethics is concerned. This paper elucidates on the relevance and adequacy of Kline’s statement by looking on the case of ethics of business as practiced in the hospitality and tourism industries. It will further provide possible counter arguments that are relevant when considering ethics and stakeholders in the hospitality and tourism industry. Also, patterns of morality or amorality will be considered to emerge in ethical patterns of behaviour in the future in international standard hotels and resorts.
Hospitality and Tourism Industries: the challenge of sustainability
The hospitality and tourism industries serve millions of people from different parts of the globe and multibillion-dollar industries (Brymer, et al. 2005) and among the largest industries in the world (Hudson and Miller 2005; Wheeler 1995). Latest statistics published in UNWTO World Tourism Barometer last June 2007 report that there is a 6% increase (15 million) on international tourist arrivals from January to April 2007 as compared to the same months of the previous year. This shows that people of modern societies are able to treat themselves with their own share of leisure and convenience that they see in tourism. There is an apparent progression in terms of number of tourists visiting specific tourist destinations. For economically-inclined experts, this is an opportunity for business and revenue acquirement in the world (Lansing and De Vries 2007). Tourism is certainly a vastly persuasive driver of national socio-economic development (Tapper 2001). Most developing nations with a rich assortment of tourism features including natural resources, historical sites and cultural practices and so on are said to be hopeful on the potentialities of tourism in national income and economy generation as well as employment opportunities. Ghimire (2001) affirms the common perception on tourism as among the excellent ways of revitalizing and branching out national and regional economic base by means of creating new employment and income opportunities for immediate communities and at the same time as enhancing interpersonal contacts and regional cooperation in some cases. According to Holden (2003), tourism is not just the business of foreign environment destination but also an interaction of divergent societal factors. This is evident on the concurrent tourism initiatives and programmes of various countries and tourism-related institutions and organisations. Provided that tourism particularly worldwide tourism is placed on economic limelight, the issue of sustainability or sustainable development in tourism and its management become known seeing that there is a need and call for the protection of the environment and its underlying elements.
Sustainable development is a coined termed that basically characterised by living and doing business without destroying and endangering the potential interest of others and Mother Earth. There has been persistent debate on the actual and comprehensive definition of sustainable development or sustainability (Sofield 2003). Sofield states that a narrow yet inclusive definition of the term should be based on cultural, political, and economic impacts on communities. However, it is contended in this paper that the terms ‘sustainable development’ or ‘sustainability’ are rooted on the United Nations Conference for Environment and Development (the Earth Summit) in 1992 with two important variables namely, development and protection of the environment. Sustainable development is not actually a new idea (Jamal 2004). It originated and rise from public’s and people’s consciousness because of the growing awareness on the increasing cases of companies and organisations that violate environmental protection policies and regulations. Sustainability within the hospitality and tourism industries was advocated in response to the negative images directed upon the impacts of mass tourism (Weeden 2002). It is a positive alternative and a necessary concept involve in tourism planning and development. Hall (2000) and Inskeep (1991) assert that sustainable development is a crucial element in planning and developing tourism initiatives and programs. Even if a significant number of tourism researchers and practitioners (i.e. Weaver 2001; Casado 1999; Manning and Dougherty 1995) assert that sustainable tourism is a “good thing” provided that there has to be a balance approach to protecting host cultures and environments, they argue that “sustainable tourism is effective only if it is, in fact, sustainable” (cited in Hawkes and Kwortnik 2006, p. 370). All businesses that operate in sustainable-tourism systems must be able to generate their needed economic resources to fully support their operations and growth. They can also cooperate with the government in designing policies for tourism and funding. With the unique attributes of the industry as well as tourists’ attention to authentic and natural travel experiences, Hillman (2001) poses the challenge community assessment and influence on demand. Sustainable development is relatively related to the issue of ethical conduct in the hospitality and tourism industries. Members of the hospitality and tourism industry must embrace a corporate social responsibility (CSR) as ethical response to a variety of dilemmas concerning acceptable standards in providing hospitality and tourism services. The acceptance of the veracity of ethics in sustainable development and CSR in hospitality and tourism is reflected in the duty of managers to serve the specific desires of stakeholders. However, there is a problem on identifying the acceptability of desires because Kline (2006) considers them as “fickle and not always moral”. Stakeholders are said to be key players of the industry yet the managers are the key implementers of managerial pursuit granted that they acquire and possess the fundamental elements of management. In dealing with their managerial duties, managers are subjected to outside pressures including desires from stakeholders, which in return affect the decision-making process and implementation. Managers on this particular instance are engaged in ethical dilemma. For this reason, business ethics comes to the rescue. What circumstances, when, and how are desires considered morally right or morally wrong? Is it good to majority of all concerned parties? How do managerial functions coincide with business ethics considering the pressures of stakeholders? Questions like these may explore the condition of Kline’s (2006) assertion.
Business Ethics: choosing and doing the right against the wrong conduct
Defining ethics is an academic and contextual issue by itself. There have been numerous scholars who encapsulate ethics in a single description. To Kant and the Greek meaning of the term, it is a science of customs or morals that attempts to comprehend the nature of morality. Blackburn (2003) generally characterised ethics as the basis of acceptable behaviours and practices based on honesty and integrity. Meanwhile, Tiles (2000) describes ethics as the moral philosophy or the process of purposeful action towards a moral obligation. Ethics is a major segment of the practical sciences that advocate the principles on how human life must be formed in order to achieve its purpose or ultimate end. It is basically situated at the top of the practical sciences to encompass all practical science in a positive measure and basis (Rist 2002). All arts are designed to serve the ultimate purpose of perfection and responsibility (Gibbs 2000). This is same as true in relation to ethics in business.
Ethics in business is primarily an applied ethics. Traditionally, the principles of ethics are incorporated on the idea of corporate social responsibility (CSR). It is also associated with and significant to the value system of every person in business. Payne and Dimanche (1996) consider business ethics not an option and necessity but an absolute determinant and requirement for industry success. Ethics influences the value system of every organisation and employee by serving as a moral guide or “base” (Sweet 2001). Furthermore, business ethics is a potential vehicle for employee pride and motivation as well as a focus for customer satisfaction (Hall 1991). Ethics is a part of the manager’s responsibility as the ethical environment reflects managerial value system including personal and organisational perceptions and preferences of morality and known to be fundamental on a person’s attitude towards ends and means (McCarty and Bagby 1990, p. 21 cited in Fox 2000, p. 70). Fox (2000) believes that ethics are values that traditionally sprouted from religious or organisational influences and may evolve from personal experiences. There is importance in combination of value systems that leads to generalised principles, which are used as guidelines in making and evaluating decisions and specific cases that require acceptable conduct among people. General theories of business ethics are considered generic and are not directed to specific applications (Walle 1995). Hospitality and tourism industries cater to a certain niche market and have their own sets of problems and concerns that should be individually addressed according to specific needs. Walle emphasises that distinctive ethical considerations in the hospitality and tourism industries must be assessed from a particular point of view. More often than not, the hospitality and tourism industries borrowed general concepts from business without the evaluation of whether or not such concepts are adequately able to provide the given set of specific needs. Ethics and social responsibility evolve in order to cater to various emerging occurrences and factors faced by global businesses. Hospitality and tourism industry is a special case in terms of ethical consideration because the given needs of several different types of stakeholders have to be taken into further attention and consideration particularly when existing strategies are being counterfeited (Walle 1995). Hospitality and tourism industries are responsive to the needs of various stakeholders who are affected by the forces of the industry.
Consequently, the stakeholder theory is about organisational action on addressing stakeholders’ interests wherein organisations that address such needs are considered better than others (Polonsky and Scott 2005). Stakeholders are any group that is affected by, or can influence, activities of the organisation (Freeman 1984 cited in Polonsky and Scott 005). In order to serve the needs and interests of stakeholders or other groups, managers employ their managerial expertise based on standard theories of management. Organisational relationships are associated by stakeholders’ interests and managers’ ability to be guided in terms of strategies employed in maximising organisational performance. The influencing ability of stakeholders is high that most managers are required to give in to it. This influential power guides managers to decision making in relation to strategic issues affecting the whole business operations. Managers are often dependent on stakeholders’ interests and act on the applicability of generic strategies. Such interests reflect desires that are subjected to moral evaluation by the manager by looking on ethics on business management.
Business ethical practices and principles are important elements in building an ethical working environment with strong corporate guidelines. These guidelines govern the overall condition of the organisation in terms of allowing members of the workforce be familiar with the upper management authorities’ deliberation of ethical behaviours as significant ingredients of business operations. In almost all organisational setting, Frederick and colleagues (1994) state that ethical guidelines are expressed in the forms of code of conduct, outlining the organisation’s foremost expectations to every contributing factors such as the employees and other stakeholders. Business ethics further support management strategies, accountability structures, organisational policies, incentive systems, training programs, and decision-making processes. It ensures their unity of work as the common denominator of strengthening the organisation’s essential ethical code of conduct.
There are numerous ethical dilemmas taking place in the global workplace setting. According to Beauchamp and Bowie (2001), bribery, extortion, facilitation payments, environmental problems, and human rights are the most fundamental issues in business ethics. Ferrell and associates (2002) add sexual and racial discrimination, price discrimination, and destructive products on the growing list of business ethical concerns. In the Australian setting, Pedigo and Marshall (2004) include bribery, breach of contract, human rights and confidentiality issues as among the ethical problems concerning every manager. These ethical challenges confront every manager not only on addressing such but also on whether or not they involve their self in these kinds of activity. Specific business trends in the modern global marketplace like high concentration and fast rate of competition heightens the question of business ethics. In competition, managers and stakeholders are pushed to the limit to come up with drastic actions that are primarily directed to keep up or stay ahead of their competitors without the consideration of social responsibility or pure ethics. Frequently, this instance shows the start of cultivating unethical business practices and behaviours. For this very reason, today’s managers and industry leaders are exposed on the ultimate challenge of building behavioural models and corporate cultural structures that is mainly supported by ethical practices and at the same time maintaining maximum business profitability and performance (Vickers 2005).
The growth of hospitality and tourism industries as legitimate businesses needs standard code of ethics (Fleckenstein and Huebsch 1999). Generally, ethical codes are used as functional agents that govern the conduct of the members of a particular profession. It guides individuals in making decisions based on sound moral judgment. Codes further enhance working relationships and adjudicate disputes among members of the organisation. General principles of business ethics should guide behaviours in any field and type of business and its operations. Also, these codes are clearly articulated, wide-ranging, phrased in order to accentuate and provide commendation on doing the right thing other than listing a series of prohibitions. There is no apparent moral compass to direct managers to get through difficult ethical dilemmas that requires coming up with accepted judgment about what is morally right or morally wrong. Walters and Maher (1997) note that attention to ethics in the workplace makes managers susceptible on their responses to particular business ethical dilemmas or even common situations encountered daily. Perhaps, established code of conducts help in ensuring managers’ ability to respond on times when they are struggling on moral crises and confusion. They keep hold of a strong moral compass. In hospitality and tourism industries, holding on to the moral compass of managers is a challenge when they try to serve the desires of stakeholders.
Today, ethics in tourism is a controversially vibrant area for discussion and policy development and implementation (Fox 2000). An ethical tourism business is not just about price (Weeden 2002). It has to be something that is morally acceptable in reference to the actions of the people behind a tourism business or organisation. The role of ethics is linked with organisational performance and reputation. In tourism marketing for instance, the role of ethics revolves around effective segmentation and promotion tourism products and services (Wheeler 1995). Fleckenstein and Huebsch (1999) maintain that ethics and quality can be equated since the production of quality goods and services is a clear manifestation of ethical treatment of the consumer. In this case, serving the desires of the stakeholders is difficult. It exposes the manager to ethical concern on how to come up with balance on customer satisfaction and profitability. The duty of the managers must stick on the basic and personal beliefs of what are right and never entertaining unethical options. Ethics is a personal promotion of external goodwill (Rondinelli and Berry 2000). It is strengthened by codes of ethics existing within the bounds of the working organisation. Hospitality and tourism industries demand acceptability in terms of conducts and behaviours because these industries are concentrated on services or providing tourism service. While hospitality and tourism industries require maximum satisfaction on the tourists, the managers in response to the desires of the stakeholders must encourage responsible tourism planning, management, and development. This is done through implementing tourism programs that are not just limited on profitability but include the community and other factors of production (i.e. employees, finance, information, etc.). On the case of employees, for instance,
Stevens (2001) believes ethics for the hospitality and tourism industries to be fundamental due to the circumstances in which most employees are frequently to be found. The success of tourism development is dependent on the ability of the workforce to provide the tourists with the most reliable and enjoyable tourism products and services as well as meeting or even exceeding their expectations.
Stakeholders’ desires are crucial consideration in decision making of managers. Weeden (2002) declares that all businesses are involved in decision making and exposed to a variety of choices. Hospitality and tourism-related individuals, for example – hotel managers, must aim to create an ethical environment for all stakeholders. It is acknowledge that most employees prefer to work in a working environment governed and guided by high ethical standards. Since all sustainable tourism businesses attract a diversity of customers (Eagles 1995 cited in Hawkes and Kwortnik 2006, p. 378), tourism should share its benefits with local communities and marginalized stakeholders (Hawkes and Kwortnik 2006, p. 380). In addressing ethical dilemmas in tourism, managers should stick on managerial foundations and practices and full adherence to CSR. The concept of CSR aims to create a more equitable international trade system (Hudson and Miller 2005). Mowforth and Munt (2003) argue that the hospitality and tourism industries are far behind other industries in relation to CSR and due to the absence of ethical leadership. Considering ethical practices in tourism industry, sustainability is taken into further importance. It should be articulated basing on principles of sustainability that are rooted in social, economic, and environmental equity. Rules of ethics provide the foundation for employee pride and motivation (Fleckenstein and Huebsch 1999). Articulating stakeholders’ desires is a challenge yet can be fulfilled successfully through holding and believing into management principles and practices including organisational and individual commitment to CSR. This is a counter argument relevant when considering ethics and stakeholders in the wholeness of both hospitality and tourism industries.
Ethical decision making poses danger on unethical or selfish motives of stakeholders as seen on their unjustifiable desires. Thus, managers should know how to classify ethical dilemmas and react to such in the best and most acceptable ways possible. According to Hudson and Miller (2005), ethical decision making is also expected to be affected by the type of ethical dilemma being faced by, and level of ethical education of the managers. It must be remembered that hospitality and tourism industries are among the global industries that work with a diversity of cultures, moral and ethical values, thus, it necessitates a solid foundation of principles and practices. This is the moral pattern that every international standard hotels and resorts should be interested into. Managers are to be educated and trained to compare outcomes to the various stakeholders for each promising decision and decide on the choice that has the best outcomes for greater number. Because, organisation’s ethical working atmosphere is strongly inclined to the overall management’s ethical conduct (Upchurch 1998), the positions of tourism managers and employees should assist in making certain or more appropriate, or at least better prepared managerial functions.
More often than not, the moral ordeals that are faced by managers are difficult to describe as they are complex and complicated (Marnburg 2005). These ordeals might occur instantaneously and involve several factors of people, things, or circumstances. Interpreting and understanding managerial pursuits including complying or defying the desires of stakeholders is based on the manager’s own set of expectations toward behaviour that is or is not match with their individual standards and values. While managers are often subjected to ethical dilemmas where they need to lie, break certain law, cheat subordinates, and the likes, they feel that they need to occasionally participate in such behaviour as it is an implicit part of the working setting (Marnburg 2005). However, it is argued that such practices are simple yet open violations of moral standards.
Reacting on stakeholders’ desires as example of workplace ethical case needs a concrete instrumentation based on virtues of justice, integrity, competence and utility. These virtues are expected in a manager’s complete personal disposition. For Fleckenstein and Huebsch (1999), the idea of impartiality, sound judgment, and correctness is exemplified in justifiable decisions that are made in response to some desires of stakeholders. Integrity and competence, on the other hand, are also significant factors to consider by the managers particularly in performance of their identified duties. Lastly, utility is a virtue that projects the principle of efficiency by providing the greatest amount of good to the greatest number. If managers are able to consider these virtues, identifying the merits of stakeholders’ desires is easier, thus, facilitating accountable and ethical decision making. Choosing what is good to the majority of stakeholders is prioritised if and only if the means used justify the end.
Participation is also important aspect of determining the acceptability of stakeholders’ desires. Through participation, there are more opportunities of accumulating choices and solutions that a manager can choose in response to a moral dilemma. The consensus of other members of the management is needed in organisational ethical cases. It is expected that managers are able to communicate to other managers on issues affecting the workplace especially on cases where a certain department is governed by two or more managerial figures. The concept of who is to be blame or is anyone to be blamed is also considered. Relationships on individual’s performance and certain ethical dilemma are apparent, where “moral voice” is quite strong. The behaviour being shown by the superiors in every moral situation in the organisation is often associated to outcomes. For example, a neglect of duty or lack of knowledge of operational and managerial matters is referent to coming up with poor judgments and decisions. No one is claiming or forcing managers to pursue in rationality, efficiency, and profit given the unconditional circumstance. However, it is the ethical codes that manipulate managers on how to act, what to do, or when to do things according to what is perceived to be standard and acceptable. Sometimes, managers become schizophrenic on their personal value systems (Pruzan 2004). But then again, it is always the ethical codes and the belief of what should be the most appreciate action based on morals are to be considered. This is also applicable on the instances of integrating managerial duties to stakeholders’ desires. For example, hotel managers wish to control the “moments of truth” for the basic purpose of ensuring the most efficient service to be experienced by the customers. But, this should be guide with high ethical standard that in return creates favourable results. Managers need to identify specific situations where temptations and potential dilemmas exist and the common reaction is for them to act according to clear corporate code of conduct for all the employees to understand, abide, and emulate. Wong (1998) affirms that an individual’s line of thinking about work ethics serves as his/her basic compass that will navigate him/her to act in accordance to what is right. The ethical beliefs of an employee affect their ways on coming up with rational judgment on any work-related concerns.
Responding to ethical dilemmas is a manager’s or leader’s concern. There are numerous ways used to promote business ethics such as drafting copies of codes of ethical conduct and are to be distributed as guidelines to employees in overcoming ethical dilemmas; involving employees to scheduled seminar-workshop and training programs concentrated on enhancing ethical behaviours; or providing in-house advisors who can be directly consulted during urgent ethical cases; and so on (De Mesa Graziano 2002). In conclusion, the duties of managers are always bounded on standard management principles and practices. Responding to the desires of stakeholders is an ethical dilemma in business. By classifying the merits of stakeholders’ desires on whether ort not valid or invalid, managers are expected to come up with what is right. Today’s managers, particularly those who are serving the hospitality and tourism industries, need to form an acceptable workplace environment that is guided with ethical behavioural guidelines undermining productivity and moral responsibility. Most people actually know that they are doing something wrong. The only difference is seen on their lack of personal fortitude or courage and inability to make the right choice.
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