Ethical Issues Surrounding Hospitality Industry

Subject: Business Ethics
Pages: 7
Words: 1931
Reading time:
8 min
Study level: PhD

Problem Statement

The hospitality industry that consists of restaurants, lodging, transportation, parks and events planning is facing a variety of challenges including intense competition, reduction in the business travel, and the current economic recession. These challenges have encouraged unethical and unquestionable behavior in management of services in the industry. Kohlberg (1984) suggests that the hospitality and service industry surveys have not paid much attention to ethical dilemmas and issues. Due to the characteristics exhibited in the hospitality industry, it is necessary to enforce ethical issues more than other types of industries. Boella (2000) points out that many industries spend millions of dollars to improve the public image of their businesses but fail to attend to ethical issues thereby leading to wastage of the entire plan in the long run.

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Studies show that companies with high levels of ethical practice make more profit as compared to other businesses that do not practice the same. This implies that service and hospitality tourism can benefit immensely by adhering to ethical issues and social values. Since it is a phenomenal issue, there is need to focus on ethical dilemmas facing this industry more than ever before (Enz, 2010).

Introduction

Ethics is one of the most debated topics today. According to Hammond and Slocum, “the term ethics is a Greek word that means a habit, significance, custom or disposition” (1996, p, 160). Philosophers place a great emphasis on ethics, fairness and honesty not only in the family but also at the work place. Philosophers further pointed out that ethics are permanent virtues that should be respected, cultivated and applied in work places at all times. A great philosopher pointed out that wisdom, kindness and decorum are permanent values imposed on individuals.

However, the definition of business ethics is not clear. According to Derry (1989), business ethics or morals include rules or regulations, codes, values or benchmarks that act as guiding principles for acceptable conduct in definite circumstances. Other philosophers have supported the same and continue to argue that application of ethics in work places can be a great foundation for employees’ motivation. Business ethics encompasses a wide range of guidelines that employees and managers need to follow (Walker, 2010).

The significance of business ethics has been noted since the discussion of corporate responsibility and the application of personal ethics to ethics relations in business management (Goodpaster, 1983). Ethical behavior exists due to the existence of ethical environment. Therefore, the hospitality industry needs to conduct its business in an ethical environment.

The ethical problem in a business setting

A reduction in a company’s reputation regarding ethical values and social responsibility affects both guests and stakeholders. In addition, investors are not willing to participate in a company that is less socially responsible due to the associated risk of government intervention. It is therefore important for the hospitality industry to work towards being socially responsible to reduce the risk of government hindrance. Similarly, the industry is perceived as more sensitive to external factors and therefore able to control the changing environment. According to Lantos (1999), a businessperson who only relies on short term and bottom line concerns without application of ethical principles ends up harming the entire business in the end due to negative publicity resulting from class actions such as lawsuits or consumer boycotts. Consequently, not only will the business suffer, but also the profession and the industry involved (Goodspaster, 1983).

It is worth noting that for the hospitality and service industry to adapt to ethical and socially acceptable behavior, it requires much time and money. However, the money is provided by expected profits emanating from the morale and productivity of employees. Therefore, it is justifiable for the industry to invest in activities that promote ethical behavior as it will benefit the industry in the long run because positive publicity, which is the outcome of social responsibility and ethical values promotes the entire industry (Goodspaster, 1983).

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The Ethical Climate and Research Application

Application of business ethics in the hospitality industry is very complicated and challenging too contrary to what people think. Fortunately, researchers have come up with effective ways of estimating the ethical climate. Ethical climate is the perception of business procedures and practices in regard to ethics. On the other hand, the climate of unethical practices is indicated when codes of ethics and the policies of an organization that discourage, stipulate, monitor, control and discipline unethical behavior are not incorporated efficiently in the organization (Whitney, 1990).

Chonko and Hunt (1985) clarify that the role of ethical climate in any business set up is paramount. Further, they found out that the ethical climate encourages expected behavior that consequently influences the employees’ ethics. By enforcing rules that govern ethical behavior and imposing discipline in the management, firms can create an ethical climate that influences business ethics in the entire organization. This promotes employees’ motivation as they prefer working in organizations with a positive ethical climate. This is because a company with a positive ethical climate creates a good working environment where ethical values such as trust and honesty prevail. Similarly, a positive ethical climate has less stress and a greater job satisfaction. Similarly, the industry is perceived as more sensitive to external factors and therefore able to control the changing environment.

The solutions to the problem

Application of Business Ethics to Enhance Job Satisfaction

An employee is one of the most important assets in any business set up. Therefore, it is crucial that businesses take care of their employees by guaranteeing them job satisfactory and ethical environment. This is influenced by understanding and enforcing the culture that enhances employees’ satisfaction. According to statistics shown by Choi (2006), employees’ job satisfaction culminates from what they perceive of their employers. If they perceive their employers as ethical, then job satisfaction is high and the chance of leaving the company is very low. On the other hand, if the employees perceive their employers as unethical, job satisfaction is reduced while turnover is essentially decreased (Brayfield & Roth, 1951). Further studies clarify that companies that enforce ethics in their operations are more profitable as compared to other companies that show low levels of ethics. This implies that service and hospitality tourism can benefit immensely by adhering to ethical issues and social values. Since it is a phenomenal issue, there is need to thoroughly focus on ethical dilemmas facing this industry more than ever before (Enz, 2010).

Similarly, business ethics play a very important role from the perspective of the manager. Actually, ethical applications in a company are major managerial problems that need to be addressed properly. It is therefore essential for managers to play a leading role in ensuring ethical behaviors are applied in the organization adequately. Managers should play an essential role of impacting positive ethical climate in which other employees would follow as an example. This implies that the manager has the capacity to help employees on their ethical behaviors (Choi, 2006).

According to Whitney (1990), the hospitality industry employees require higher level of business ethics as compared to other industries. In addition, a higher ability to judge ethical issues in accordance with the principles governing the company is required. Employees of the hospitality industry, unlike those in the other industries, are diverse. They come from diverse cultural, sex, social, racial and religious backgrounds. This is a clear indication that hospitality professionals needs to understand the acceptable business ethical behaviors accordingly. Essentially, the consciousness of the business ethics in this industry promotes the positive ethical climate that in turn increases performance tremendously. In the long run, immense profits are expected from the practice and application of business ethics. Failure to enforce ethical behaviors in the industry leads to additional costs in the entire company. Further, the studies show that apart from promoting employees by good payment, promoting positive ethical climate influences job satisfaction in the long run.

Enhance Organizational Commitment

As mentioned earlier, job satisfaction is the key to productivity and reduction in the rate of turnover in a company. This has necessitated the need to look deeper in the involvement of the employees in the company and, to what extent. The study has resulted to the term organization commitment that is defined as the strength of an individual’s involvement in the organization (Sonnenfeld, 1981). Organizational commitment is essential in understanding the work related behaviors at work. Essentially, it explains the turnover rates and retention problems inherent in a company (Chen, 2009).

Although not widely studied, some researchers have found out that a relationship between organizational commitment and the ethic as exhibited in the business environment exists. Yang (2008) supports the relationship based on the ethical rules that govern a company and employees’ commitment in the organization. Corporate ethical behaviors predict the organizational commitment of employees. According to his studies, ethical behaviors are rewarded whereas unethical values are punished in the business profession. This implies that the manager has the capacity to impact on the ethical behaviors on the employees (Choi, 2006).

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According to Whitney (1990), the hospitality industry employees require higher level of business ethics as compared to other industries. In addition, a higher ability to judge ethical issues in accordance with the principles governing the company is required. Employees of the hospitality industry, unlike those in the other industries, are diverse.

Application of Business Ethics in relation to Gender

One of the most important aspects of business ethics in the hospitality industry is the gender disparity. Gender has become the focus in many studies and particularly the business ethics. Many studies have revealed different results related to gender in relation to business ethics. Albaum and Peterson (2006) after their research found out that feminine gender illustrated more complimentary feelings toward moral principles as opposed to males. Women tend to be more sensitive to ethical values than their male counterparts are. In other studies, research shows that females are more likely to experience ethical problems than males in marketing and management professionals (Akatan, Burnaz & Topku, 2008). Similarly, another study reveals that women highly appreciate ethical climate as compared to men in same work place.

On the hand, some researchers disagree with the existence of gender differences in regards to business ethics practice and application. Other researchers support the same by claiming that there is no much difference based on ethical reasoning in work places. Because the studies on gender differences are contradicting, further research needs to be conducted.

Reasons for Practicing Ethics

Every business should realize the importance of practicing business ethics in everyday activities. All businesses should define their ethical boundaries and enforce them in the system as part of the rules and regulations (Waddock & Smith, 2000). The significance of business ethics has been noted since the discussion of corporate responsibility and, the application of personal ethics to ethics relations in business management. Therefore, it is justifiable for the industry to invest in promoting ethical behavior, as it will benefit the industry in the long run because positive publicity, which is the outcome of social responsibility and ethical values, promotes the entire industry

Ethics builds integrity and trust. These are tenets of building a good working environment that promotes productivity. With trust and integrity, employees are satisfied with the working conditions, which in turn results to high retention rate of the employees. Similarly, they enhance better services and consequently, immense profits. In fact, business ethics are the pillars of building high profits. Moreover, ethics practice and application aids significantly in building a better image of a company. Therefore, studies that focus on business ethics are significantly encouraged for the improvement of the entire hospitality industry (Boella, 2000).

References

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Albaum, G., & Peterson, R. (2006). Ethical attitudes of future business leaders: Do they vary by gender and religiosity? Business and Society, 45(2), 300-321.

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Boella, M. J. (2000). Human resource management in the hospitality industry. Cheltenham: Stanley Thornes.

Brayfield, A. H. & Roth, H.F. (1951). An index of job satisfaction. Journal of Applied Psychology, 35 (5), 307-311

Chen, J. S. (2009). Advances in hospitality and leisure: V. 5. Bingley: JAI.

Choi, K. (2006). A structural relationship analysis of hotel employees’ turnover intention. Asia Pacific Journal of Tourism Research, 11(4), 321-337.

Chonko, L. B. & Hunt, S. D. (1985). Ethics and marketing Management: An empirical examination. Journal of Business Research, 13(4), 339-359

Derry, R. (1989). An empirical study of moral reasoning. Journal of Business Ethics, 8(11), 855-862.

Enz, C. A. (2010). Hospitality strategic management: Concepts and cases. Hoboken, N.J: John Wiley & Sons.

Goodspaster, K. E. (1983). The concept of corporate responsibility. Journal of Business Ethics, 2(1), 1-22.

Hammond, S. A. & Slocum, J. W. (1996). The impact of prior firm financial performance on subsequent corporate reputation. Journal of Business Ethics, 12(2), 159-165.

Kohlberg, L. (1984). The psychology of moral development. San Francisco, CA: Harper and Row Publishers

Lantos, G. P. (1999). Motivating moral corporate behavior. Journal of Consumer Marketing, 16(3), 222-232

Sonnenfeld, J. A. (1981). Corporate views of the public interest. Boston, MA: Auburn House Publishing Company

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Walker, R. J. (2010). Introduction to hospitality management. 3 ed. Upper Saddle River, NJ: Prentice Hall

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Yang, J. T. (2008). Effect of newcomer socialization on organizational commitment, job satisfaction, and turnover intention in the hotel industry. The Service Industries Journal, 28(4), 429-443