• Stephan Busch

Only for the rich? Ethical conduct in hospitality and cruise industry

How much do companies actually care about the ethical conduct and code that they publish? Hospitality had always difficulties with ethical conduct but changes for the better have often been announced.

Every year companies get praised for being the top ethical ones or best companies to work for. Many of them rightfully but many names on those lists are raising eyebrows!

Hospitality – Restaurant and hotels have their home made problems.

While employment has been replaced by “jobs” all that is paid is minimum wage and even often not even that. While London is praised as the city in which no hotel pays minimum wages to housekeeping staff ( legally by outsourcing) another great example came from Australia recently.The operators of billion-dollar pub empire the Merivale Group have had a bizarre whinge about needing to pay their staff the wages they’re entitled to.

The Fair Work Commission yesterday terminated the company’s Work Choices-era employment agreement, which saw thousands of young workers paid well below the current hospitality industry award. Jan 2019. Another classical case from the past even involved Cesar Ritz. "For instance in 1898 Caesar Ritz and his Auguste Escoffier manager and chef respectively were discharged from London’s Savoy Hotel for accepting less weighing food deliveries and extorting commissions from suppliers thereby using the hotel for their own gain and profit (Fennel & Malloy, 2008).

Some organizations view ethics as a constraint on their profitability, they are of the view that profits and ethics are inversely proportional. It is indeed true that adopting ethical practices may reduce the company’s profits. However, the long term effect on the organization’s profitability is positive

How does ethic get measured? And who is measuring?

Here the problem starts. Measuring ethical behavior is difficult and there are lot of discussion around this topics. When it comes to treatment of employees , harassment, mobbing, discrimination it would be very easy to take turn over ratios or evaluate exit interviews. But which company would do that to themselves? And who else would have access to this information? That’s a problem. Then you have the companies like Ethisphere that have a questionable way of praising ethical behavior. Their way might be even called unethical.

Ethisphere’s selection process

Companies can self-nominate by simply completing the survey, submitting backup materials and sending in the modest fee. Next, Ethisphere scores and ranks each nomination, looking for evidence that one or more of the “Ethics Quotient” areas may be inadequate or overly vague. To its credit, the group also searches online for information about each self-nominated company.

The company’s business model appears to be more focused on holding and charging for ethics seminars for companies across the globe. They also publish a quarterly magazine in which companies can buy ad space. In case you are wondering, the companies that receive the designation have the option to pay $10,000 for use of the World’s Most Ethical Companies logo.Companies can also pay to be part of the Ethisphere’s Business Ethics Leadership Alliance. Now that explains a lot.

One of the most ethical companies in 2014 according to Ethisphere was Waste Management, the garbage-disposal company, was involved in a massive financial fraud that led to a $7.5 million payment in 2011 to settle charges that it broke Massachusetts environmental laws.

Another one Royal Caribbean Cruises Ltd. (NYSE: RCL) has been recognized by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices, as one of the 2018 World's Most Ethical Companies. This is the third year in a row RCL has been recognized. This besides one of the many reports like the one from Walker & O’Neil – Maritim Lawyers in 2009:

"Right now this particular cruise line has embarked on a purge of removing ill crew members from its "sick lists" and slashing the medical treatment and daily stipend provided to the ship employees.

We have addressed this problem in prior blog articles – Cruise Ship Medical Care – Royal Caribbean Gives Their Crew Members the Royal Shaftand "Titanic Dreams" – Royal Caribbean Wins "Worst Cruise Line in the World" Award.

Royal Caribbean requires its waiters and assistant waiters to carry trays weighing up to 50 lbs. The

waiters work over 12 hours a days, 7 days a weeks, carrying the trays over their shoulders. The result is a rash of neck, shoulder, wrist and back injuries due to the repetitive heavy load and strain.

Once their bodies are broken, the crew members are of little use to the cruise line. Royal Caribbean sends them back to their home countries, where they are neglected and then abandoned."

Walker & O’Neil – Maritim Lawyers

This comes in addition to tax evading issues and other unethical practices reported from almost all cruise lines.

Goldman Sachs received the “Most people focused CEO Award” besides the involvement in the financial crisis and court rulings that the bank was misleading clients.

Kellogg's and PepsiCo were featured in Oxfam's Behind the Brands report on ethical shortfalls, scoring low on commitment to improving the rights of women and farmers. Neither was given a good rating for transparency. The following month, they were listed as two of the world's most ethical companies by the Ethisphere Institute and awarded at a gala dinner in New York.

No wonder that there is no trust in the measurement

Low levels of business trust in ethical indices as reported in SustainAbility’s Rate the Raters survey which revealed that only 48% of the sustainability professionals surveyed considered the DJSI to have a high credibility, and 34% for FTSE4Good.

Some of the best companies to work for are the ones with tremendous profits like Microsoft, Amazon, Google. Its good that they spend some of their profits on the staff. In some interviews with staff it was mentioned that they are perceived of being so great because they provide free medical, childcare and other benefits that were actually taken for granted and provided free of charge in East Germany. They never got an award.

Reserved for the rich?

You might get the impression that ethical behavior is reserved for the rich when benefits can be considered breadcrumbs. If even that is too much to ask for there is still the possibility to buy an ethical award. We are ask for and should educate children and students for honesty, integrity, ethical behavior and respect. We better come up with some good answers if ever anybody ask us to explain the behavior of big companies. What we should do is being an example on our level. On whatever level we are right now and not give up.

© 2017 by Stephan Busch