Ethical Concerns in Food and Beverage Management H.A. Divine, Ph.D. From Ethics in Hospitality Management: A Book of Readings, edited by Stephen S.J. Hall The first focus of this chapter is on ethical decision-making in food and bever- age operations. The second is to show the close relationship between the attention given to ethical decisions and the quality of the products and services provided by that organization. It is not the function of this chapter to provide a hard-and-fast list of do’s and don'ts, but rather to look at the daily decisions made by employees, = managers, and owners and to suggest a way of including an ethical component into this decision-making process. Food and beverage operations exist in a number of different settings, all with similarities and differences. These settings include hotels, motels, resorts, restau- rants of all types, country and city clubs, schools, colleges, health care institutions, business and industry dining, prisons, convenience stores, supermarkets, depart- ment stores, and a myriad of other organizational settings for thesaleand service of food and beverage. In each of these settings, the sale of food and beverages serves as an important contributor to the achievement of organizational goals. The sale and service of food and beverages is a large business, contributing upwards of 6% of the gross national product, and its importance keeps expanding. Two characteristics of food and beverage operations that generally come im- mediately to mind when discussions involve ethical behaviorare that this business is still very much a cash business and that the products are both highly perishable and highly portable. These two characteristics provide opportunities for chicanery. Misappropriation, outright theft, and other misuses of cash and products by enn- > ployees, managers, owners, and vendors are problems confronted by many food and beverage operations. Unfortunately, these also become a single focal point ‘when anyone begins to talk about ethics in this industry. As important as this un- ethical behavior (stealing) and its preventionis, itis only one of many ethical issues. Ethical concerns should be pervasive in the decision-making process, not pe versely simplistic as would be the case if one dealt only with stealing. In their book Strategic Management: Concepts and Experiences, Rue and Holland seem to capture the essence of the importance that should be attached to the devel- opment of a way of incorporating ethical considerations into decisions: “The question of what is ethical behavior has existed since people began to wark together in primitive societies. In those societies what was right and what was ‘wrong became an integral part of tribal customs, practices and mores. Life was simpler and consequently, ethical decisions were simpler. As societies became complex, ethical issues became more complex. Today with rapidly changing tech-2 Ethical Concerns in F&B Management nology increased worldwide communication anda community thatencompasses theentire globe, we can no longer have customs, practices and mores that provide the correct’ answer to every ethical issue. As managers and employees, we must try todevelop within usan ethical discipline that helps guideus and the companies for whom we work to the most ethically “correct” answer possible} Ik is only through a commitment to begin thinking through a problem or opportunity with due consideration for the ethical implications that we can become ethical in our actions, Ethical issues confound the decision processes of management. Rue and Hol Jand suggest a second major consideration in managerial decisions—not only must there bea profit consideration (long and short term), but there must also be ethical considerations of whether the actions proposed to produce the profit ate indeed ethically right. Stress The hospitality industry may be just now truly confronting the organizational stress that has existed in the production industries for the past two decades. This, industry has emerged as an industrial giant in the 1980s, which has caused public attention to be drawn to industry activities. Once thought of only as a collection of ‘small businesses (which is stil) true for the majority of outlets), the industry is now seemingly perceived as a major economic force. This has forced and will continue to forcethe industry tobe both more publicly accountableand more positively con frontative with emerging public values. Once somewhat immune from public scru- tiny, the hospitality industry is now included in the mainstream of public action. Whether this action is directed at the need for public protection in terms of cleaner facilities, proposed labeling laws, truth-in-menu regulations, warning signs rela~ tive to alcohol, or provision of non-smoking areas and the like, there is a demand that the hospitality industry be held accountable for what are perceived tobe public health issues. Likewise, there are concerns for the employees who work in the industry, in terms of minimum wage anda plethora of laws and regulations either proposed or in force that would protect the work force. The industry has also become a focal point relative to recycling, regardless of the true coniribution to the problem caused by the industry. Too, the concern for discrimination in serving and employ- ing those with physical or other handicaps has resulted in a codification of those concerns into law. Inaddition to meeting the strict letter of the law or regulation that codifies right and wrong as viewed by a society at a particular time, there is the need for management to consider the rightness or Wrongness of decisions in accatdance with a set of values that are internal. How we arrive at those values is critical. Kristol, in a Wall Street Journal editorial, spoke of the development of morals, the key to ethical behavior: ‘This task, (moral education) in today’s America, is performed in the traditional structure of incentives one encounters in real life situations, all of which form the. ‘character of one citizenry ... The home is obviously the Key institution for such ‘moral education, since is there that ome learns the radiments of personal respon sibility and moral obligation. School isalso very important sinceitishere that one learns how to cope with and to internalize impersonal, social discipline. And then there is participation inthe activities of one’s religious community, where one ex- periences moral commitments a bond between generations past and generationsEthical Concerns in F&B Management 3 present. Itis the sum of these crucial experiences that forms one’s moral character. It doesn’t always work, as we know. But, once again, as we also know, nothing always works? : Many individuals have written about ethics both'in general and as they are ap- plied to business situations. Bases for Ethics Harry Truman was once reported to have said that all one needs as a guide to ethical behavior is the Ten Commandments and The Sermon on the Mount. While for many in a Judeo-Christian culture this might provide the appropriate bases for deciding right and wrong, there ere other bases available. Sharpin, in his book Strategic Management, cteated a simple model which sug- ested that individuals have innumerable bases for determining right or wrong: (1) the Bible, Koran, and other “Holy” books; (2) the conscience; (3) the behavior and advice of “significant others”; (4) codes of ethics; and (5) laws3 Sharpin writes, “The strength of the relationship between what an individual or organization believes to be moral and correct and what available sources of guidance suggest is morally correct is Type I Ethics. Type II Ethics is the strength of the relationship between what one believes and the way one acts."4 If there isno strong relationship between the way one believes and the way one internalizes whatever bases he or she has to guide that thinking, itis unlikely that there will be any linkage to behavior. There is a powerful, generally mistaken belief among employees in many or- ganizations in the hospitality industry that they are being “ripped off,” taken ad- vantage of, end generally used to produce obscene profits for owners and managers. In general, management has been guilty of myopic perceptions about ! employees, believing, for example, that employees could not possibly understand cost ratios and overhead cost allocations. With such perceptions, management sees noneed to even bother trying to explain the business and profitatility of the organi- zation. In the absence of factual data, hearsay becomes fact. In that world, itis easy to project that the organization is making huge profits and employees are being abused. When an individual feels deprived and views the organization as both the cause of the deprivation and as a center of comparatively huge wealth, there ap- pears to be justice in balancing the scales to some degree. The balancing, of course, ‘Comes in a myriad of forms, from cheating on guest checks to manipulating the in- ventory and hundreds of other ways that employees have to sabotage a food or beverage outlet for personal gain. Cyclical Pattern When management allows these feelings to fester and the subsequent actions to occur, it becomes a major challenge to reverse the trend. In those instances where = management itself exhibits questionable behaviors, the challenge is insurmount- able. At the same time that such misappropriations are occurring, there is an ines- capable consequence to profitability. When either income is not reported or costs are increased, the result must be one of two things—either profitability must suffer or quality of product ox service will decline. Once in this cycle, it becomes ex if tremely difficult to escape.4 Ethical Concerns in F&B Management Exhibit 1 Cyclical Pattem Caused by Feelings of Injustice Employeesimanagers stealing or (giving away 1000 or beverage, not Employee and manager teporting Income, etc. feelings of injustice and 3 ‘need fo “get even” Increased employee! Decrease in ‘manager alienation and income relating decreased organizational to.costs for the ‘commitment ‘operation 41) Decreases in bonuses for managers 2) Increases in workioas for Pressures on the ‘employees profitability ofthe firm 9) Decreases in the quality of product and service to ‘quests Less able and Decreased guest inexperienced ‘counts and sales employees hired oe aed ‘Additional pressures on ‘managers (profitability) and Tipped empioyees {income} Exhibit 1 depicts the cyclical pattern that can occur in food and beverage opera- tions when there are feelings of injustice that are felt to justify unethical acts by sanagement and employees. Onecan enter the cycleat any point, butthe unethical behavior seems to cotne, in most instances, froma feeling oFalienation and a need to get even. If an individual feels that his or her rewards are inequitable, he or she has three choices: (1) put up with the inequity by finding a way of psychologically justifying it; (2) leave the job (which does not heipif theres a perception thatall like jobs provide the same inequities); or (3) increase one’s rewards by misappropriat- ing the assets of the organization, Unfortunately, the third alternative is chosen an alarming number of times. ‘Such actions have predictable negative influences upon profitability since revenues are either decreased or remain the same relative to increases in costs. Also predict ° able are the actions of most upper management groups—cut costs. This may have negative impacts upon the quality of service and product provided to the guest. As \Ethical Concerns in F&B Management 5 depicted in Exhibit 1, this seems to set in motion another interrelated cycle involv- ing quality, guests, and employers. As pressures mount, there's a greater feeling of injustice on the part of employ- ees and managers and a greater felt need to get even. As this “flush” cycle gains ‘romentum, it becomes increasingly difficult to stop, reverse, and correct without massive top-level changes. There are several ethical considerations in addition to the obvious one of steal- ing, which is against the law and is generally considered unacceptable behavior. Ethical questions abound in terms of reward stracture for employees and manag- ers. Ifupper management is, by word and deed, committed to providing a minimal reward structure in order to maximize short-term profitability, does it not share the ethical culpability for the actions of sub-managers and employees? As manage- ment strives to maintain profitability through various cost-cutting programs, often affecting the quality of products and services to the guest, is it also acting in possi- bly unethical ways? As profit pressures are exerted, how difficult is it to decrease ‘the grade of food product, to utilize frozen product (and not mention the change to the service personnel), to drop the quality of house winesand spirits and maintain, premium price, and other actions that can have a short-term positive effect on the ‘bottom line of profitability? Are there ethical considerations involved when the size of service stations is increased in an effort to save labor dollars? Beyond the service quality question, there are seemingly questions of reason able workload and another question of so overloading the service staff as to negatively influence thelr tip income becouse they are tunable to offer acceptable service. These are often not thought of as ethical concerns but rather as operational expediencies. Many operational decisions that must be made ona daily basis have relevance to bothvethics and quality. In general, there seems to be an inseparability between excellence in ethics and excellence in quality at any given market level. Acting to Geceive or mislead a guest or employee would result in an inevitable decline in quality. Such actions may come from managerial decisions—decisions that might ave been made without concern for the ethical dimensions of the problem. Considerations for Decision-Making Many individuals have written about things that management should consider when making decisions. The following are three different lists of considerations to use as guides in decision-making: 1. Have you defined the problem accurately? 2. How would you define the problem if you stocd on the other side of the fence? 3. How did this situation occur in the first place? 4, To whomand to what do you give your loyalty asa person and as a mem- ber of the corporation? 5. What is your intention in making this decision? How does this intention compare with the probable results? 7. Whom could your decision injure?6 Ethical Concerns in F&B Management 8 Can you discuss the problem with the affected parties before you make your decision? 9. Are you confident that your position will be as valid overa long period of time as it seems now? : 10. Could you disclose without qualm your decision or action to your boss, your CEO, the board of directors, your family, society as a whole? 11, What is the symbolic potential of your action if understood? If misunder- stood? 12, Under what conditions would you allow exceptions to your stand? Six questions provide a useful framework for moving beyond concern and confusion to practical and respansible decisions. When a manager is faced with ethical dilemmas, careful attention to these six questions leads to a thoughtful resolution—not the right answer, but an ethically sensitive and well-considered judgments 1. Why is this bothering me? Is it really an issue? Am I genuinely perplexed, ‘or am L afraid to do what I know is right? 2. Who else matters? Who are the stakeholders who may be affected by my decisions? 3, Isitmy problem? Havel caused the problem orhas someone else? How far should | go in resolving the issue? 4, What is the ethical concern—legal obligation, faimess, promise keeping, honesty, doing good, avoiding harm? 3. Whatdo others think? Can | learn from those who disagree with my judg- ment? 6. Am 1 being true to myself? What kind of person or company would do ‘what I am contemplating? Could I share my decision ‘in good conscience’ with my family? With colleagues? With public officials?” ‘Also useful are the “Bthics Check” questions: Is it legal? Will I be violating either civil law or company policy? 2. Isitbalanced? Is it fair to all concerned in the short termas wellas the long tertn? Does it promote win-win relationships? 3. How will it make me feel about myself? Will it make me proud? Would I feel good if my decision was published in the newspaper? Would J feel good if my family knew about it? The Dilemma of Serving Alcohol Food and beverage managers must internalize some of these questions as guides to their decision-making. A current dilemma faced by food and beverage managers and servers presents an ethical challenge. Nearly everyone is aware of the problems of drunk driving and the other societal problems caused by the abuse of alcohol. These problems have been considered serious enough to have causedEthical Concerns in F&B Management 7 laws to be written to guide the actions of individuals. Specifically, all states prohibit the sale and service of alcohol to minors and to individuals who are visibly intoxi- cated. Any server, bartender, or manager who does sell or serve alcohol to either of these classes of individuals could be guilty of breaking the law. As a Consequence, there should be no more question of the appropriate action to take in cases of this nature than there would be if confronted with a question of whether to steal or not to steal. However, there are questions of what constitutes, and how one identifies, a “visibly intoxicated” person, and how far one goes in checking the identification of individuals before serving them an alcoholic beverage. This becomes a managerial decision that certainly has social ramifications and ethical overtones. Most indi- viduals would agree that the establishment has a legal and ethical responsibility to take reasonable care to ensure that these two classes of individuals are not served alcohol. However, if you are a server who makes your living from the tip income given to you by guests who are pleased with your service, you do not want to do anything that might upset the guests. Individuals who have been refused servicea alcoholic beverages are generally not pleased. The server is thus placed in an inter- esting position of knowing or strongly suspecting someone in the party is ether underage or visibly intoxicated and should not be served and yet also knowing that not serving will havea negative impact upon their income. Aé that point, the server, may convince himself or herself that the individual really does appear to be sober or of age. After all, itis in the server's best interest economically to do so. However, doing so could be against the laws, and bath the server and the establishment could be found liable. In other cases, servers might say that their commitment to not only the letter of the law but the spirit of the law transcends their own economic considerations, and. they might intervene. The decisions reached are influenced by the actions and di- rection provided by management. Is management training servers to identify indi- viduals who are underage or who are intoxicated and showing them how to deal with such situations? And is management then supporting the servers when they act in an appropriate manner? While there is certainly an individual question of ethical behavior when the server makes a decision to serve or not to serve, there is arguably a larger ethical question of how management supports the server. In both instances (server and management) there is an economic consideration—either individual or corporate. The situation is further compounded by the reality that the sale of alcoholic bever~ ages has seriously declined, which has had a serious economic impact upon organi- zations that derive substantial income from such sales. The true search for ethical behavior and decisions must occur when there are uncomfortable situations, Eve- ryone can be ethical if there is no cost associated with such action. Blanchard is quoted as saying: “There's a difference between interest and commitment. When you are interested in doing something, you do it only when it’s convenient. When. you are committed to something, you accept no excuses, only results."? Most managers haveat least an interest in being ethical, whether it isin dealing with their employers, social issues, their guests, or any other aspect of their opera- tion. The difficulty is that many managers seem to lack the commitment to take the ethically correct action when the economics of the issue may lead in a different direction. The strange and often overlooked element is that generally, when implement- ing a program supportive of a socially responsible position, there are very positive outcomes. Using again the example of serving alcoholic beverages, we know that there are positive returns from improving the quality of service. Certainly, one of8 Ethical Concerns in F&B Management the primary elements of judging service quality is the attentiveness of the server. An important component of instituting a good monitoring program to ensure that individuals do not overconsume alcoholic beverages is to encourage server atten- tiveness to the guest. Thus, the idea of paying attention to the guest afid his or her needs, which is essential to providing quality service, is found also to be essential to. ensure a safe environment. Using Ethics in Decision-Making As operators become ever more mindful that there are ethical elements in snany of the decisions they make on a daily basis, they will begin to make these elements part of their decisions. Will this eliminate all unethical behavior from food and beverage operations? Unfortunately, the answer is that it is doubtful. As has been mentioned in this article, the determination of rightand wrong is an individu- alistic one predicated upon one’s past that has shaped one’s values. As cultures dif- fer, so will individuals” feelings about right and wrong. in certain cultures alcohol itself is unacceptable; therefore, any thought of there being acceptable guidelines for its service is impossible, It is absolutely true that for most of us there is never a right time or way to do a wrong thing. Managers in the hospitality industry must spend more time on determining the long; term ethical impact of their decisions and determining what are the right things to do rather than totally concentrating on doing things right. ‘The three checklists contained in this chapter are helpful in directing the atten- sion of individuals to considerations that can be taken into account as they make decisions. They have a common core in that they all direct our attention to internal feelings and the long-term and far-reaching effects of thedecisions. A food and bev- erage manager confronting a problem or developing a policy about responsible beverage service is advised to be guided by any of these lists (see the section on “Considerations for Decision-Making”). Each list encourages one to consider the many different audiences affected by the decisions Ethical determinations are never teally simplistic. However, each individual has a background that has established his or her values. It is up to management to provide the support and direction that allows these basic values to act in positive ‘ways forthe individual and the organization. Ethical dealings with people is the most positively powerful role madel that top management can provide for middle management and for the employee. Endnotes 1. Leslie W.Rue ard Phyllis G, Holland, Strategic Management: Conepts and Experiences (New York: McGraw. 1989), p. 85 semen cone 2 Irving Kristol, “Ethics, Anyone? Or Morals? Wall Street Journal, September 15,1987 3. Arthur Sharpin,Statepic Management (New York: McGraw-Hil, 1985), p24 4 Tei 5. Laura Nash, “ics Without the Semen,” Hered Busines Revi November Decetber 1981 pat 6, Michael Rion, The Responsible Manager: Practical Strategies for Ethical Decision Making (New York: Harper Row, WoO pp ase ele 8 7. Ibid. 8, Kenneth Blanchard and Norman Vincent Peale, The Power of Ethical Management (New York: Mor- row, 1988), p.19. 9, Blanchard, promotional matses.Ethical Concerns in F&B Management 9 Discussion Topics Elaborate mechanical and accounting controls have virtually eliminated the need for managerial concem for thett and misappropriation of goods and cash. 2. Public health and welfare issues are legal, not ethical, issues. Discuss the ethical vs. legal concerns and the locus of responsibility in the ser- vice of alcohol to a visibly intoxicated or underage customer. . Discuss the ethical dilemma faced by food and beverage managers in balanc- ing profitability and social responsibility in such issues as truth-in-menu (fresh vs, frozen, substitute brands, point-of-origin products, methods of preparation, etc.) Term Paper Topics . Select a hospitality industry company and, based on issues and guidelines provided in this chapter, analyze how it achieves and maintains ethical stan- dards for behavior in its food and beverage operation, Selecta current social issue involving food and beverage operationsand unre- solved legislation, and prepare a position paper on that issue. The position Thust consider the effects of that position on both profitability and ethical/s0- ial responsibility concerns. (Examples of possible topics: drunken driving; truth-in-menu; smoking /non-smoking; discrimination in employment based on age, sex, ethnicity, religion, sexual preference, disability, etc.)C