BUSINESS ETHICS

Avari Group: Organizational Values and Crisis

Leadership (A)

Summary:
In 2010, Avari Group was approaching the end of six decades of successful operations. While
reflecting on Avari Groups past successes, Byram D. Avari, the Chairman, was also thinking
about the organizations future. On the one hand, he was wondering how successful his sons
Dinshaw and Xerxeswould be in bringing up another generation of leading
entrepreneurs. And on the other hand, he was thinking about the dilemma he was facing
regarding the lifelong employment policy of Avari Group. Avari Group was established by his
father, Dinshaw Byramji Avari, and he founded the organization on the core values of respect,
honesty, lifelong employment (no retirement) and equal opportunities for people from all
religions and backgrounds. In recent years, however, due to low business opportunities and
low growth in Pakistan, most of the other five-star hotels were reducing headcounts in their
organizations. However, Avari Groups top leadership was reluctant to change its lifelong
employment policy, yet they were thinking about different alternatives. Furthermore, if they
decided to change it, what would the next steps be?

Objective:
To explore the HR initiatives, managerial practices and critical success factors that
contributed towards making Avari Hotel a learning organization and ensuring its continuous
success and rapid expansion in the International world.

Problem Statement:
Management of the Avari hotel was facing a major challenge in Pakistan as a result of the
poor law and order situation,economic problems and the on going war on terror,most hotels
were experiencing low occupancy and decline in the business activities of the hotel industry
in all major cities Karachi,Lahore and Islamabad. Several top hotels were reducing their
headcounts.Avari group survived because of their core values but now that was becoming
very difficult to keep their head above the water.They were facing a real test of their core
values.They were worried about the employment policy to save their organization.Their
major problem was that how they could mainain their core values and the spirit of the
employees.

auses of the Problem:

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On 20th April 2010, high pressure methane gas from the well expanded into a drilling
riser and was released onto the drilling rig, owned by Transocean, where it ignited.
In other words, it caused by a wellhead blowout ( A blowout is the uncontrolled
release of oil and gas from an oil and gas well after pressure control system have
failed) .The spill flowed unabated for three months from 20 April-July
It is the largest accidental marine oil spill in the history of the petroleum industry.

Decision Criteria:
Alternative Solution:
Different options are available for the Avari to resolve the problem :
1. Whether they provide retirement to the old employees and revise their core
values.
2. Whether they cut off the salaries of the employees for the time being to cope
up this situation.
1. nd
2.
3.
4.
5.
For
me is
2 better for them.
6.
option
For me 2nd option is better for them. Employees can be taken into confidence. They can
announce salary cut for all the employees. By doing so they will not lose their loyal and
talented employees. If they revise the core values and provide the retirement than this will
create bad image of Avari to employees and as well as to the competitiors.There might be a
chance that the employees are hired by the competitors.So,for me 2nd option is better and
employees must do this for their organization.

Recommendations:
Avari Hotels existing as well as upcoming properties can apply these changes to fill the gap
between vision and reality with the creative tension that will enable the senior management
see the truth in changing circumstances. This timelines is consisted of following phases.

Phase One is to commit to developing, maintaining, and facilitating an atmosphere

that garners learning.

Phase Two is to communicate a change in the company's culture by integrating

human and technical systems.

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Phase Three is to initiate the new practices by emphasizing team learning and
contributions. Employees will become more interested in selfregulation and
management, and be more prepared to meet the challenges of an ever-changing
workplace.

Phase Four is to remember that becoming a learning organization is a long process

and that small setbacks should be expected. It is the journey that is the most important
thing because it brings everyone together to work as one large team. In addition, it has
inherent financial benefits by turning the workplace into a well-run and interesting
place to work; a place which truly values its employees.

Phase Five is to use training and awareness programs to develop skills and
understanding attitudes that are needed to reach the goals of the mission statement,
including the ability to work well with others, become more verbal, and network with
people across all departments within the organization.

Conclusion:

To date, there has been no formal evaluation made by BP to gauge the

effectiveness of how they handled the Deepwater Horizon explosion. This can be viewed as
another misstep in BPs creation of a solid crisis management plan. Evaluations are a good
way to show progress in any public relations campaign. The use of an evaluation can help an
organization to better understand their key publics and in what ways they can improve.
We think that BP should have taken a deontological approach when facing these
ethical dilemmas.
Should be aware of CSR and prioritize the needs of stakeholders over profits.
They need to implement an internal policy to ensure that this does not happen again

Bibliography:
http://ccs.lib.ksu.edu.tw/bitstream/987654321/12429/2/ajomc9-1.pdf
http://www.sinhgad.edu/PDF/SIBARPDFApril2012/Gen.%20Mgmt..pdf
3

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