How Ethical Decision Making Is Used in the Hospitality Industry - Example

Decision Making Student’s Name: Course: Tutor’s Name: Date: “‘Decision’ implies the end of deliberation and the beginning of action” William Starbuck, Professor in Residence at the University of Oregon’s Charles H. Lundquist College of Business Introduction True to the observation above as made by William Starbuck, a decision often marks the end of deliberations, negotiations or any discussions on a subject and this often gives way to action. The decision-making process on the other hand has been defined as a resource-allocation process that considers the best possible choices that a person or entity should pursue in order to succeed in its endeavours (Nutt, 2011, p. 13). This essay will focus on how ethical decision making is used in the hospitality industry. Specifically, the essay will focus on analysing how the different aspects of the ethical decision-making model can be used in the hospitality industry to resolve a problem in a hypothetical Hotel X, which needs to make a decision about whether or not ‘free gifts’ from suppliers are acceptable. In light of contemporary corporate policies that put a lot of emphasis on profits, cost saving and competitiveness, this essay recognises that the risk of managers within the hospitality industry being in ethically questionable positions is on the increase as indicated by (Yaman & Minett, 2008, p. 1). Without delving into ethical decision-making first, it is important to note that there are some critical aspects to a decision, which include the objectives (i.e. what needs to be achieved); the alternatives (i.e. the different ways that can be used to achieve the objectives); and the risks (i.e. what threats exist when the different alternatives are pursued) (Schwarber, 2005, p. 1087). After considering the three identified aspects, decision-makers can arrive at a decision, which is then implemented through action. The case of ethical-decision making especially in the hospitality industry often goes beyond the three aspects identified above. In legalese, ethics is defined as “choices of proper conduct made by an individual in his or her own relationship with others” (Barth & Hayes, 2008, p. 9). Applied in an organisational context, it would mean that choices made by the organisation should have the element of proper conduct. In other words, ethical behaviour and abiding by what is legal and socially acceptable should be major considerations in the decision-making process. While establishing just what ethical behaviour is is not a straightforward task, Barth and Hayes (2008, p. 9) identify seven guidelines that individual decision-makers or organisations can use in the ethical decision making process. The guidelines which are listed in question form include: “is it legal; does it hurt anyone; is it fair; am I being honest; would I care if it happened to me; would I publicise my action; and what if everyone did it?” (Barth & Hayes, 2008, p. 9). The ethical decision-making model was chosen for use in this essay because the hospitality sector, through its interaction with different stakeholders such as customers and suppliers, often faces issues that have no clear answers (Chapman, 2003, p. 17). As such, it becomes the decision-makers’ prerogative to make quality decisions which can be executed effectively if such issues are to be resolved without undermining the trust that people have towards the affected hospitality establishments. FINDINGS Ethical decision model in a local environment It has been lamented that many organisations wait until complaints about their processes, products or services start coming in for them to adopt ethical decision making (Harrison & Enz, 2005, p. 119). In the meantime, the decision-makers often ignore any warning cues that come their way by deeming them inappropriate (Harrison & Enz, 2005, p. 119). Australia’s hospitality industry, just like everywhere else, depends on successful relationships between customers, the hospitality service providers and the suppliers. At the centre of these relationships are the hospitality establishments, which rely on different players in the supply chain to provide them with different inputs, which in turn facilitate the provision of efficient services to the customers. While ethical decision-making relating to the hospitality establishment-customer perspective is not common, the subject always comes up in the hospitality establishment-supplier relationship. Chapman (2003, p. 17) for example notes that the issue of hospitality establishments receiving gifts from suppliers, and allowing such gifts to influence their purchase decisions in future is a widely discussed subject in literature. The pressure to compromise ethical standards set in the hospitality industry has also been identified as a tempting thought in many hospitality establishments owing to the interaction that vendors/suppliers have with some departmental managers (Lynn, Howey & Combrink, 2007, p. 2). Faced with such tough environments, the prerogative to enhance ethical decision making lies squarely on the leadership of such establishment, which should establish “ethical beliefs and guidelines that are shared by everyone” (Jaszay, 2005, p. 5). Specifically, the guidelines should be explicitly stated in the code of ethics, which should in turn be developed collectively by the management and lower-level employees for purposes of incorporating the different aspects of the organisational culture into any decisions made. In other words, Jaszay (2005, p. 5) is reiterating what other writers such as Harrison and Enz (2005, p. 119) have stated, indicating that the decision-making process is not a management initiative alone; rather, and if the management wants the decisions made to be acceptable by all employees, all staff members regardless of their positions in the organisations should be engaged. The leaders in such companies however have the responsibility of ensuring that they model the same behaviours that they expect to see in employees; communicate their expectations; discuss ethical issues with the employees; and reward ethical behaviour where appropriate (Coughlan, 2003, p. 3). According to (Jaszay, 2005, p. 5), the “behaviour of the people at the top” often determines “whether or not an ethical culture will permeate the company”. When making a decision therefore, the decision-makers should consider the need to uphold trust and communities (Lencioni, 2002, p. 188). Notably and as Jaszay (2005, p. 5) notes, “unethical business practices break down trust and destroy communities”. Any business community is made up of different stakeholders, which include the investors, local communities, employees, and government and regulatory authorities. Once trust is broken with any of the stakeholders, the bonds that hold such communities together weaken or break altogether. Some of the aspects that should guide decision makers when deliberating issues that have an ethical element include establishing whether the decision is fair to all stakeholders; whether they would publicise the decision to anyone without fearing opposition from some quarters; and whether they would want all employees engaging in the same decision (Jaszay, 2005, p. 5-6). When deciding whether or not top-level managers should receive gifts from business partners or suppliers, the hospitality establishment should base their decision on the likely feelings and responses that such an issue could elicit among different stakeholders were it to become public knowledge. In other words, receiving gifts from business partners (whose intent is likely meant to prejudice their future business decision involving the benefactor), can be perceived as an act of corruption disguised as benevolence as indicated by Upchurch (1998, p. 227). Figure 1: The ethical decision making model Source: Slide 5* ANALYSIS Based on the ethical decision making model above, it appears that successful decision making depends on two factors namely i) decision quality; and ii) execution effectiveness. Going by the model as illustrated in figure 1 above, both decision quality and execution effectiveness depend on ‘diversity of ideas’ and ‘commitment’ respectively. Notably however, diversity of ideas and commitment seems like two factors that are a counter thesis of each other; specifically, it is likely that the diversity of ideas would bring about conflict, and hence decrease the likelihood of attaining understanding among people working in the same organisation. Where people do not share a common understanding, less commitment towards the issue at hand is to be expected. Using Hotel X for example, the decision on whether not to receive freebies from suppliers and other ‘good gesture’ gifts from different stakeholders could bring about controversy. On one hand, the supply manager and other supervisors in his department could argue that the gifts do not affect their choice of suppliers and therefore should not be perceived as unethical. By inviting opinions regarding the ‘free gifts’ subject from all employee regardless of their positions at Hotel X, the hotel leadership would be encouraging diversity of ideas. According to Roberto (2006, p. 4), the diversity of ideas relies on candour or the honesty, forthrightness and sincerity with which employees in the organisation contribute to the discussion on a specific issue. In the absence of candour, any contributions made by participants in the decision making process will have what Roberto (2006, p. 4), describes as “superficial congeniality...pleasant on the surface, with distrust and savagery roiling beneath”. In other words, participants are unable to contribute to the decision-making process in an honest and forthright manner, and this means that their ‘buy-in’ to any decisions made thereafter can only be partial. Commitment on the other hand, relies heavily on people’s ability to understand the subject, contributions made towards the same, and the decisions made. Notably, attaining commitment is not always an easy task. For example, when employees across all departments are invited to discuss whether or not individuals or departments should receive gifts from suppliers, conflict is bound to occur among those who oppose the idea and those who support the same. Those opposing the idea may argue that their efforts (for example in serving customers and hence ensuring that the hotel business flourishes), though not noticeable to the suppliers, are responsible for the rising demand in supplies by the hotel. By this argument, the opposing side could be arguing that the purchasing department/manager or individual recipients are not justified to receive any gifts, because by matter of logic, they are just part of the bigger team that ensures continuity the in hotel-suppliers relationship. However, the leadership in hotel X should assist in resolving the conflict by encouraging rational and constructive ideas, while discouraging personal and self-seeking ideas that are destructive and threatening to organisational harmony. By encouraging the adoption of cognitive conflict where people deliberate and negotiate based on ideas rather than personal interests, Roberto (2006, p. 5) argues that any leadership would enhance the chance of having good quality decisions, which are well understood across the organisation. Specifically, Roberto (2006, p. 5) states that leaders can create opportunities where people working under them can “argue passionately, yet achieve breakthrough creativity” that is understood and accepted throughout the organisation. When understood well, the same decisions are more likely to inspire commitment and hence adoption among all employees. According to Roberto (2006, p. 5), the line between constructive arguments and dysfunctional arguments should be drawn in order to avoid affective conflicts that do not add any value to the organisation. For example, the discussion about whether or not to accept ‘free gifts’ from suppliers in Hotel X remains on the constructive side as long as arguments and counter arguments raise interesting questions, which provoke new discoveries, ideas or positions. However, it takes a dysfunctional turn if people keep repeating the same worn-out arguments, take staunch positions regarding an issue and personalise the discussion. Going by the model illustrated in figure 1 above, it is clear that trust is a prerequisite for candour and conflict if the ethical decision making model was to be used. As indicated by Harrison and Enz (2005, p. 118), the concept of trust not only affects how employees engage in the decision making process, but also affects how “specialists, managers, suppliers, distributors, customers, creditors, owners, local institutions, venture partners, and international agencies” relate with the firm. Specifically, any unethical decision made by an organisation is said to cost more in terms of the trust that the different stakeholders have towards the firm than any other measurable losses that the organisation may suffer. The Free Dictionary by Farlex (2012) defines trust as the “firm reliance on the integrity, ability, or character of a person or thing”. Based on this definition, it is easy to see why authors like Lencioni (2002, p. 188) and Maddalena (2007, p. 71) stress the importance of leaders to uphold transparent decision making and accountability especially when it related to social and organisational values. On the same premise, Schwarber (2005, p. 1091) underscores the need for leaders to gain trust in their decision making capacity by engaging “the right people in the decision, at the right time, in the right way”; “a process that keeps people engages and on track” and “recognise the power of shared decision-making”. Most importantly, effective leadership especially in the ethical decision making model needs to display integrity, fairness, honesty, forthrightness, courage and commitment towards doing the right things (Lencioni, 2002, p. 189). A look at the three sets of values that contributes to trust in the model diagram in figure 1 above shows that authenticity, humility and integrity are also essential factors that determine whether or not the decision-making process can be perceived as trustworthy or not. As Roberto (2006, p. 6) observes, leaders need foster the creation of open and transparent processes where the diverse expertise, interests and perspectives presented in the different participants can influence decisions. Notably, their trust, which is based on their perceptions of fairness and legitimacy, affects their commitment towards a decision. The need to include them in the decision-making process is founded on the fact that contemporary workers care about processes too and not just about the outcomes. As such, if they perceive the decision-making process as unfair, unjust and untrustworthy, Roberto (2006, p. 6) argues that they will most likely fail to commit to the decision, hence affecting its success. Going back to the Hotel X example, a lack of trust by participants would mean that whatever the decision, a section of the employees would see it as unfair, and would therefore be non-committal towards it. However, with trust, employees will most likely buy into the decision. To foster trusting relations in the organisation, Roberto (2006, p. 6-7) notes that the employees need to: have opportunities to express their opinions regarding an issue; believe that their opinions were carefully considered; perceive the opportunity granted to them towards influencing decisions as genuine, and not just superficial; and clearly understand the rationale used in reaching the final decision. Going back to the Hotel X example, a decision barring any employee (regardless of their position in the company) or any department from receiving freebies from suppliers and other stakeholders may appear like the most objective verdict. As noted however, the acceptance of the decision among all employees and departments depends on how the hotel leaders choose to engage other employees (i.e. fair process or procedural legitimacy); the perceived trustworthiness of the decision-makers (i.e. rational decision making), and the perceived fairness of the decision (i.e. fair outcome). Humility as a factor that contributes to trust Faced with a problem, many leaders, or managers always have an intuition about what action to take in order to address the problem. In some cases, and as Roberto (2006, p. 8) notes, they may be right, but in others, they are wrong. To avoid rushing into decision-making and stand the chance of making a completely wrong decision, leaders/managers need to practice humility. As one of the components that contribute to trust in the figure 1 above, humility is perhaps best interpreted as the ability by the leader/manager to accept that they do not have all the answers. It can also be interpreted as the realisation that though in a position of power, their decisions are useless if the rest of the employees do not commit to executing them (Roberto, 2006, p. 8). As such, they are humble enough to accept that their roles are limited to offering leadership, identifying mechanisms that will encourage new thought, and giving their teams the leeway needed to uncover answers for some of the toughest problems facing the organisation. Authenticity as a factor that contributes to trust In environments where authenticity is prevalent, leaders portray their concern for others; they engage in ethical decision-making; they uphold integrity; and also engage in role modelling (Brown & Trevino, 2006, p. 598). Additionally, such environments uphold positive values that enhance the well-being of the organisation and all stakeholders as opposed to the welfare of a few individuals. If employees perceive their leaders as being reliable, it is probable that they would be more willing to trust and engage in the decision-making process; something that would affect candour, the decision quality, and ultimately, the decision-making success. Integrity as a factor that contributes to trust Nothing erodes trust faster than the realisation that a person or organisation has engaged in cheating, dupery or dishonest dealings. A company that lacks integrity in its leadership is less likely to command trust in its employees and such employees are therefore less likely to engage in the decision-making process, especially if they do not think that the leaders will be honest enough to consider their contributions to the subject. In the Hotel X example, if lower-level employees do not consider the managers as people of integrity who can refrain from accepting freebies, then it is unlikely that they would exhibit candour in the decision-making process, let alone own the decision or execute it. CONCLUSION William Starbuck may have been right in stating that “‘Decision’ implies the end of deliberation and the beginning of action”. What Starbuck failed to alert his readers is that the deliberation process is not always clear-cut, and neither is there an assurance that the “beginning of action” is an indication of decision making success. As indicated herein, a decision whose “buy-in” is minimal cannot be termed as successful; additionally, a decision whose process did not involve candour, or which was not based on trust is less likely to enjoy commitment and buy-in from all stakeholders. Notably, the ethical decision-making model has different components which underscore the need for participative decision-making. This is based on the belief that leaders or managers do not always have all the solutions needed to resolve prevailing problems; and even if they did, such solutions would not always make sense or be acceptable to all people in an organisational setting. As such, engaging people in the decision-making process, especially those who will execute the decision is vital. To commit to the execution however, this essay, in line with the illustration indicated in the ethical decision making model, has established that people must be and confident that the decision is right and best suited to serve the greater organisational objectives. As noted, the leadership or management of an organisation has a pivotal role to play in setting the groundwork for ethical decision-making; specifically, they need to foster a trusting environment through upholding authenticity, humility and integrity at all times. Additionally, they need to ensure that only cognitive conflict, which is idea-based and can benefit the organisation, is fostered as a means of encouraging diversity in ideas, while discouraging any type of affective conflict that is personal in nature. References Barth, S C & Hayes, D K 2008, Hospitality Law: Managing Legal Issues in the Hospitality Industry, Wiley & Sons, London. 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