The Practices of Ethical Behaviour by Hyatt Hotel - Case Study Example

?Business Ethics Executive Summary The purpose of this study is to give a detailed explanation of the practices of ethical behaviour by Hyatt hotel and the issues related to the controversy sparked by the management team of this hotel. The controversy of Hyatt hotel created a stir in the United States of America (USA) and worldwide. Two sisters Lorena and Martha Reyes had been fired by Hyatt in California on 14 October 2011. This had instilled rage among the employees of Hyatt in California and other parts of the world. There were alleged reports of abusive behaviour related to the women employees, improper and long working conditions and ill-treatment of the working staff of the hotel. This protest has highlighted the fact that there is a lack of established ethical concepts in the company. Companies, which do not follow the concepts of business ethics and moral values, lack a congenial working atmosphere. The Utilitarianism theory was evolved by Jeremy Bentham and it suggested that a movement should focus on a right action which is for the benefits of the mass people. The protests against the Hyatt hotel were influenced by the Utilitarianism concept. The poor working conditions of Hyatt hotel as highlighted by the workers depict that satisfaction of employees should be the topmost priority of an organization. Ethical Dilemma The Hyatt Hurts Controversy Reports of conflict between the management of Hyatt hotel and the workers of the staff had been reported in the year 2008 (Roff, 2013). The labour contract between hotel Hyatt and the workers of the hotel had expired and the management was supposed to negotiate certain elements of the contract which included wages, benefits, right to organize and workload. However, it refused to negotiate with the terms and conditions and fired most of its housekeeping staff members with temporary staff being recruited from an agency. Majority of the housekeeping staff were working in the company since ten to fifteen years (Roff, 2013). The reason behind this sudden move was to reduce the administrative costs of the hotel due to inflation pressures. This angered the common people, employees of the organization and even certain government bodies and labour unions like UniteHere. The organization UniteHere went on a global boycott against Hyatt hotels to encourage consumers around the world not to visit the Hyatt hotels. The city of Indianapolis passed an ordinance act in July 2011 Hyatt and several other hotels to prohibit unethical practices within the company (Roff, 2013). Stakeholder’s Viewpoint The conflicts and controversies irked the stakeholders. The reputation of the company was hanging by a thread. From a Financial management perspective, stakeholders determine the company’s reputation from the ability of its managers to adapt with the changing environment. This is because a company which is socially responsible has lower perceived risk from an economics point of view (Dimitriou, et al., 2011). The hotel had received the ‘worst employer’ award from UniteHere in 2011 and even organizational bodies like Nation Football League and National Organization of women joined hands together to protest against the hotel (Stangler, 2013). In June 2009, four hundred workers of Hyatt Regency, San Francisco left the company to revolt against the unethical conducts being practised in the hotel (Stangler, 2013). These reports had affected the stakeholders badly. The managers of the Hyatt retaliated by publishing an article in the Washington Post in the year 2011 claiming that the allegations against the hotel were completely false and the hotel provided the best work incentives and benefits to workers. The vice president of the Human Resource department of Hyatt, Mr. Doug Patrick stated in a press conference that the workers were protesting against the hotel because they wanted to create a union membership in the hotel (Stangler, 2013). The managers of hotel Hyatt had become adamant and refused to apologize. Ethical Issues There is no standardized definition of business ethics. The word ‘ethics’ emerged has originated from the Greek word ‘ethos’ which means habit, custom and significance. Earlier, a great amount of emphasis was laid on honesty and integrity in their personal and work life (Dimitriou, et al., 2011). There are two major approaches to business ethics: Normative ethics and Descriptive ethics. Normative principles are the values of an individual that define their behaviour Descriptive Ethics emphasize on the “What If” behaviour of the company and an individual. Egoism approach states that an individual should focus on the benefits that it would derive by performing an action (Dimitriou, et al., 2011). There are two kinds of approach which are as follows: 1) Psychological egoism: This approach states that human beings are naturally egoistic and it would be unnatural for them to not to be egoistic. 2) Enlightened egoism: This approach states that an individual should treat another person the same way he/she wants to be treated. This enhances cooperative relations between two individuals (Pollock, 2011). Thus, we can conclude from that above mentioned controversy that Hyatt was performing a business activity when it hired a bulk of temporary employees from a staff agency. From a business point of view, Hyatt had outsourced employees from an agency which is permissible by the laws of the USA. The decision of firing the existing staff members to reduce costs was not a decent step taken by the management of the hotel. Most of the existing staff had been working for the past ten to fifteen years. Practice of business ethics in a company can turn a mediocre place to an excellent one; hotel Hyatt seemed to have forgotten that. Ethical Behaviour of Hyatt Rise of the Business Ethics Movement In the late 1970s, a movement termed as “business ethics movement” emerged which highlighted various social issues like Vietnam War and increase in pollution, toxic and ecological waste problems. These issues demanded immediate attention and interaction among the common people, media and the companies led to the implementation of ethical corporate codes and in-house ethics program. The implementation of these ethical conducts meant employees of a company should be sensitive towards unethical conduct. Several acts were introduced in the late 1960s and the early 1970s to prohibit unethical conduct and misbehaviour in companies. In 1991, the U.S. Congress enacted the Federal Sentencing Guidelines which were applicable to industries violating the U.S. civil act and Occupational Health and Safety Hazards Act (George, 2011). Theories of Ethics Ethics are a set of moral values and principles which differ from person to person. Theorists believed that business ethics help a company to distinguish between right and wrong. There are no moral set of guidelines that would help an individual or a company to tread on the correct path. Let us now analyze certain theories of ethics which would help us to get a clear idea about different ethical approaches that could be adopted by a company. Descriptive Theory: This theory revolves around subjects like psychology, anthropology and sociology. It helps in studying and analyzing the moral judgment of an individual. It compares the different moral systems, set of codes and ethical practices, beliefs and conducts between different societies. The assumption of descriptive theory is that most of the moral values and ethical practices conducted by a society are justifiable and the unethical practices conducted in a society are dominant because the society has failed to implement moral values and ethics (George, 2011). Normative Theory: The theory intends to reveal, justify and develop basic moral principles. The basic intention of this theory helps is to unfold the reasons behind the implementation of moral values and ethics in a society or company (Sadler, 2011). It is a systematic process to justify the morality of the society. These are called as “ethical theories” (George, 2011). Metaethics: This theory includes components of normative and descriptive theories. The only difference is that this particular theory studies the logic behind the moral principles and values (George, 2011). Consequentialism: This theory revolves around the moral judgment of an action. The right and wrong in an action is determined. Utilitarianism Concept: An action is either right or wrong but if the action provides goodness to a majority of the people then it is following the Utilitarianism concept. It is a technique that determines the moral value of action. It helps us in understanding whether our actions conducted in the past is having an effect in the present or not. This theory was developed by John Stuart Mill and Jeremy Bentham (George, 2011). Hybrid Theory: Instead of distinguishing between different theories conceptualized by different theorists, this theory distinguishes between parts of the same theory. As per this theory, the concept has two parts one part includes the definition that is called a core concept and is necessary while the second part is called identification concept and can be altered as per one’s choice. Therefore, we can say that the theory is categorized into two parts which comprises definition and main concept (Machery and Seppala, 2007). Corporate Social Responsibility: The ISO 26000 was released on 1st November, 2010 which provided a set of guidelines that emphasized on the social responsibilities that a company should undertake. Companies should take initiatives that would help in achieving the socio economic objectives and should also take initiatives that would prevent environmental degradation. From the above mentioned theories, we can observe that there are no standardized theories for different situations. There are certain set of moral guidelines that one needs to follow, for example, poaching, throwing litters on the road, telling a lie in a court determines that an action is wrong but situations like when a company fires its employees, it cannot be said whether it is right or wrong. It may be good for the company and bad for the employees. This is termed as ethical dilemma (Walker and Seppala, 1996). Suggested Recommendations Job Satisfaction in Hotel Industry The managers of a hotel should realize that employees are the most valued assets of a company. The employees of the hotel industry deal with a lot of physical labour, which might result in diseases like severe back pain, knee pain and headache (Roff, 2013). The managers should try to develop a congenial work atmosphere that would lighten and ease the pressure of the employees. Job satisfaction leads to a positive outcome where the employee is in a pleasant state of mind and the efficiency of an employee also increases. Remedies to increase job satisfaction The managers should develop a congenial and pleasant work atmosphere to lighten the mood of the employees. To appreciate an employee they can be rewards. This boosts the employee’s morale. Ensure health and safety standards for the employees. Provide incentives to employees on merit basis. Culture and Behaviour Every company has its own norms and culture. The hotel industry has a unique culture. Since, the employees are required to deal with the customers. The employees need to possess certain qualities like punctuality. For instance employees of Marriott hotel need to be on time otherwise they are given verbal and written warnings for being late repeatedly, employees need to be presentable and have good etiquettes (Walker, 1996). If the working atmosphere is not healthy then the employees would work in a sour mood which would hamper their productivity. The company can focus on conducting workshops for the employees on a regular basis which may help in the following ways: It reduces the communication gap between the employees and the management. It increases the knowledge of the employees. It breaks the monotony of the work. The managers can address to the employees’ issue. Increases the bonding among co-workers which may lead to unity. Social Responsibility Globalization has led to a stiff competition in all the sectors and the hotel industry is also facing certain challenges like stiff competition from other hotels, decreased business travel, current recession etc. However, amidst all these problems, the company should not only be profit motivated because earning profits is just a mere objective of the company and not the mission or vision of a company. A company should not forget that the employees are the most valued assets and it is through them that the company earns profits and creates goodwill. The company should harness the creativity of the employees in a positive manner. Overworked employees tend to be less enthusiastic and less productive. When a company has social responsibility on its shoulders, it identifies and assesses the environmental situations and realizes the importance of social and environmental values. It slowly learns that customers are attracted to those companies who have taken measures for the protection of society and environment. Companies which are only profit motivated do not earn goodwill. Hyatt has proved this concept to be true. Hotel Hyatt was one of the leading hotel companies of the industry but the poor working conditions of the workers have not only angered the employees but also workers and common people from all over the world. A company should learn not to discriminate between its workers and ensure that all the workers, employees and management are treated fairly and with equal amount of importance. Hotel Hyatt should ensure that it implements and follows certain theories of business ethics mentioned above. This would ensure a healthy work atmosphere and also enable employees to work with full vigour and passion. References Dimitriou, C.K et al., 2011. The impact of a hotel’s business ethics on employee job satisfaction and organizational commitment [pdf] Available at: [Accessed 28 February 2013]. George, R. T.D., 2011. Business ethics. 7th ed. New Delhi: Pearson Education India. Pollock, J.M., 2011. Ethical dilemmas and decisions in criminal justice.7th ed. Connecticut: Cengage Learning. Roff, C., 2013. When Business and Ethics Collide: Yoga Journal vs. Hyatt Boycott. Huffingtonpost, [online] 23 January. Available at: [Accessed 27 February 2013]. Sadler, G.B., 2011. Five ethical theories: Bare bones for business educators [pdf] Available at: [Accessed 28 February 2013]. Stangler, C., 2013. Hyatt Hotels Boycott Joined By Broad Coalition, Including Football Players Association. Huffingtonpost, [online] 23 July. Available at: [Accessed 27 February 2013]. Walker, J.R. and Seppala, S., 1996. Against hybrid theories of concepts [pdf] Available at: [Accessed 28 February 2013]. Walker, J.R., 1996. Introduction to hospitality management.2nd ed. New Delhi: Pearson Education India. Read More