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Effect of Social Responsibility on Organisation Productivity

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Published: Tue, 27 Feb 2018

Can social responsibilities effect the productivity of organisations in the Hospitality and catering

Public thinking and opinion are the contents of the crucible from which the social fabric of a community, town, region, nation and international community are borne. The very nature of this arena (social consciousness), is an on-going evolutionary process which is reflective of the era one chooses to examine. Within the European Union legislation in varied areas has been enacted to improve the overall quality of services delivered to the public at large as well as for the benefit of workers. And while the United Kingdom is not a member of this body, the reforms, legislation and policies enacted become known and thus places the government under social pressure to enact changes in response to the overall public welfare.

The progressive foundation of the United Kingdom’s social policies provides a climate whereby the public expects that government stay abreast of new socially oriented developments as they develop and with such progress comes cost. The cost of enacting and overseeing same is borne by either the government, which translates is its people, and or by business.

Sometimes referred to as the ‘welfare state’ the United Kingdom has demonstrated historically demonstrated sensitivity to social issues and reform and this underlying foundation is comprised of three key elements which;

  • Guarantees a set of minimum standards which includes a minimum income
  • Provides for social protection
  • And that services will be carried out in the best possible manner.

The social welfare consciousness in the United Kingdom is extensive in terms of its embracing a broad spectrum of initiatives, thus private enterprises are bound by regulations and laws in keeping with this responsibility as established by the public trust. Those organizations that engage in extensive contact or service to the public and are particularly scrutinized and susceptible to implementation of both required (meaning legalized or regulated social policy mandates) and generally accepted norms of behaviour as well as conduct, and rightly so.

Such public mandates carry with them implementation as well as ongoing maintenance costs which can manifest themselves in wage, compliance, training as well as standards in delivering and providing services. Such is the cost to the government, its populace and businesses to live in an environment which is in keeping with and reflects our modern society. These standards are particularly important when industry directly services the public as the impact of said services is immediate and on a mass scale.

Given the relatively high content of labour intensity in the hospitality and catering industries, regulated or legislated changes can result in additional costs and thus reduce productivity as a result. New legislation which has been enacted for the hospitality and catering sector as ‘…essential regulatory guidance…’ with such having an effect that it encompasses ‘some 1,500 pages ‘ of information. The sheer volume of this data can be overwhelming to an industry sector which is primarily composed (80%) of small sized firms (SME’s) employing 10 or fewer people.

The new legislation sets standards in wages, the workplace, food preparation mandates, equipment and facility requirements which are in the public’s interest as well as its employees which is the social responsibility of both the government and the industry sector (hospitality and catering), with the cost in time, expense, upgrades, modifications and compliance resulting in net expenditures that affect bottom line performance.

Chapter 1 – Introduction

1.1 Historical Social Climate

The centralized governmental structure that is utilized in the United Kingdom nationalizes a social implementation process that can be traced back to the ‘Poor Laws’. These reforms, the first of which was enacted in 1598 and which drew to an end in 1958, started with;

1. the establishment of a poor rate foundation (meaning the level which established this as a social phenomenon),
2. utilization of ‘overseers’ to administer relief,
3. and provisions designed to put the poor to work

The ‘Poor Laws’ were replaced by the passage of the;
1. 1946 National Insurance Act, which ushered in the foundations for social security
2. 1946 National Health Service Act
3. 1948 National Assistance Act that eliminated the ‘Poor Law’
4. and the 1948 Children Act

The preceding developments effectively placed the country’s social policy on the path that defines its present day terms. The manner in which social policy is viewed in Europe, and its influence on the United Kingdom is an important variable in understanding why consistent changes and modifications to existing regulations, legislation and laws is necessary to keep pace with progressive developments that are in the interest of all concerned (government, citizens and the business community).

This mood and historical climate help to shape the psychological parameters that act upon this area. Anderson (1983) has postulated that the ‘social bond of deep horizontal comradeship’ is a key foundational element in nationalism and the corresponding socio-psychological ideology. Connor (1993) adds that ‘the idea of nation’ is an emotional process and in global terms it forms an aspect of an individual’s identity.

The devastation in Europe that was a result of World War II created the social climate for ‘welfares’ which was adopted as foundation for social policy in many European countries, including the United Kingdom. The mass scale of fragmentation as a result of refugees, displaced persons, the destruction of towns – cities and the breach of national security created what leaders termed a lack of ‘social cohesion’ which needed to be reinforced to provide the populace with the belief that circumstances would indeed improve as a result of policies and programs being put into place.

To make this work, leaders believed that the establishment of a base level of political and economic provisions for citizens would provide assurances of the foregoing. In order to implement such policies they had to be introduced on a national level through institutions and agencies that needed to be created to administer a uniform code of social and financial services. The preceding was a major factor in why social policy in Europe is more liberalized and generous than in the United States.

World War II also resulted in an elimination and or erosion of historical European monarchies and the formation of constitutional frameworks reflective of20th century thinking. The foregoing historical, political, economic and social variables are the key components blended into the European term which is the called ‘the welfare state’. The British Labour Party platform after winning the election in 1945 stated ‘Jobs for all’ along with ‘Social insurance against the rainy day…’ and included plans to attain said goals. The victory by the Labour Party was unforeseen and helped to establish a tone not only in Great Britain, but the rest of Europe as the public’s vote heralded the beginnings of heightened social consciousness.

1.2 Sector Ramifications – Hospitality and Catering

The preceding understanding of the United Kingdom’s social fabric is important in equating the recent legislation affecting the hospitality and catering sector. Both sectors are highly dependent on labor and as a result any new regulations or legislation have a deeper impact due to the labour dependant composition that characterizes its makeup. Said changes must not only be communicated, but overseen as well and these changes cannot be simply written into a software program or changes in assembly line methods, they are by and large done by individuals.

Additionally the general low wage composition of this sector for a good percentage of its employees means that additional compliance slows productivity as it is primarily manual in nature. The new legislation is estimated to affect and estimated 81% of the business in this sector

Economically the increase of compliance and legislative changes in the service sector as a factor of a country’s GDP decreases the economic growth rate with a corresponding decline in productivity rates due tithe costs involved. The hospitality and catering sectors are within the broader classification termed ‘Travel and Tourism’ and this industry is projected to become the largest classification globally during 2005.

As such the major issue facing the hospitality and catering sector is increasing productivity so that it will affect the profitability of operations. With this industry sector (hospitality and catering)representing an estimated 1 out of 12.4 jobs throughout all industry classifications the implications of increased productivity represents sizeable gain in economic strength and the corresponding effect upend (Gross Domestic Product).

The composition of the companies within this industry (hospitality and catering) forms a critical component in equating the influence of social responsibility and the resultant impact on productivity as a result of expenditures to comply. It is important to understand that fully 94% of the 2.7 SME’s within the travel and tourism sector are comprised of what is termed ‘micro-enterprises’ that employ less than ten (10) individuals, and 94% of this total represents approximately fifty present (50%) of the labour force.

The newly enacted legislation encompasses social responsibility in that it seeks to standardize not only the delivery of services within this sector, it also benefits the individuals employed therein as well. An examination of the varied factors comprising productivity in the hospitality and catering sector to correlate the effect of social responsibilities requires an understanding of the structural as well as staffing variables within each sector along with any new regulations, laws and or legislation which might act upon bottom line performance.

Chapter 2 – Methodology

2.1 Gaining a Perspective

As the subject of this paper asks the complex question of how social responsibilities act upon productivity, the logical point to first understand is the nature and breathe of where social responsibility emanates from and what it indeed means. The preceding broad context was undertaken to permit the gathering of information on an ad hoc basis rather than utilizing the blinders of preconceived notions or understandings which might not reflect actual circumstances or conditions as they transpired. Research methodology, regardless of personal knowledge, demands that one look at the subject with a clean mental slate in order to maintain objectivity. This means exploring the process from all conceivable angles.

As understanding the implications of the foregoing formed the starting point, delving into searches via the internet was determined to be the point of origin from which to gain a perspective. The subject of social responsibility is a fluid rather than static subject. It is based upon the point in time one is looking at as social changes reflect human consciousness and awareness which is consistently evolving.

However, it also based upon what preceded it in the past. The area of social responsibility has its roots in the temper and climate of the society it is borne into and how that idea was/is expounded upon. The ‘social bond of deep horizontal comradeship’ as put forth by Anderson (1983) forms an important base element in the formation of nationalism as well as the corresponding socio-psychological ideology. As the historical significance of all the component parts required background information, secondary research was conducted utilizing Internet search engines to gather data from journals and articles as well as to determine what literature sources (books) to be explored.

The nature of the subject is well suited to secondary research ahistorical events held the factual records of the evolution of the social policy process. Secondary research provides the benefit of obtaining detailed facts, dates and information which can be analyzed against the subject matter at hand.

And while primary research gathers opinion, viewpoints and information first hand, it is a structured process that requires prior experience with the subject to formulate the basis for questions, interviews and information which form the prevailing view but not necessarily the answer. Following the historical timeline of events in society, the industry sector, government and labour provided the inputs that revealed the sources and underpinnings which contained the answers.

While there are varied voluntary aspects and areas that a firm can undertake which qualify as ‘social responsibility’ said measures would be difficult to equate in terms of their application, use and affect unproductivity. Therefore, the ‘source’ of any social responsibly issues needed to consist of something that applied on a broad basis and was identifiable as well as fit the parameters. In this instance the ‘source’ is the legislation adopted by the United Kingdom from the European Union such as the Employment Rights Act 1996) which set forth a broad spectrum of regulations, compliance and rules as well as catering legislation and regulations that have been enacted.

Chapter 3 – Literature Review

3.1 A Broad Spectrum of Inputs

As the United Kingdom is connected by history and geographic location to the European Union, even though it has not become a member, it recognizes the broader implications of keeping in step with the developments, rules and regulations this body enacts. Within this context the United Kingdom’s recent legislation affecting the hospitality and catering sectors finds its roots in said organization. Organizations such as:

1. The European Federation of Trade Unions in the Food, Agriculture and Tourism
(EFFAT), and
2. HOTREC (Hotels, Restaurant and Cafes in Europe,

were two contributors to the EU Commission from which the broad compendium of laws, rules, regulations and policy was adopted. The following summarizes those organizations:

1. The European Federation of Trade Unions in the Food, Agriculture and Tourism (EFFAT)

This organization is a federation that represents 120 trade unions throughout Europe in 35 countries (European Union and non-European Union nations). With a membership roster in excess of 2,600,000 it utilizes their input and consensus to investigate and formulate policies in a multitude of areas. EFFAT’s policy statement mentions that the organization is committed to sustainable development in areas such as pollution, drinking water quality and availability as well as ecological problems through dialogue and cooperation and recommendations.

The organization is also cognizant of migration and immigration issues in the industries it represents and how these types of individuals form a good portion of the labour pool for the sectors it represents, thus indicating the need for effective training techniques and the associated laws and regulations to protect the interests of these groups as well as turning them into productive workers.

2. HOTREC (Hotels, Restaurant and Cafes in Europe)

As one would assume the hotel, restaurant, and café sectors are governed by strong social laws, externally (for the protection of the public), and internally (for the protection of employees). The extensive numbers of measures (in excess of fifty [50]), has been identified as a source of concern by this organization as these industries are labour intensive that compliance will increase the operating costs and potentially affect employment as well as growth.

Milton Friedman explains that since individuals run businesses, the social responsibility of these firms is an outgrowth of the management culture and their understanding as well as identification with the notion of social precepts. Friedman poses the question that the ‘…first step toward clarity..’ entails understanding the context of social responsibility in terms of what it ‘..implies for whom.’ Friedman explained the fit of social consciousness in business should not become lost in the complexity as the process is simple, people run enterprises and as individuals they are influenced by society as well as being a part of it.

Thus as one’s influence and responsibilities increase, so does the need to expand their vision in terms of the effects of that influence and act accordingly. The requirement that individuals thinking terms of the implications and ramifications of the sphere of influence exerted by a company as well as the generation of profits. The reminder and assertion being put forward is that regardless of the profit motive, business has an obligation to other individuals as a result of the humanity of our global community.

The acts of labour, government and the industry has shown that the concept of social responsibility is an active component of the hospitality and catering sector as evidenced by the following organizational meetings which included or focused on social responsibility issues as an important part of their agendas;

A. World Summit for Social Development, International Labour Organization’s Sectorial Activities Programme
B. Convention for the Protection of Human Rights and Fundamental Freedoms
C. Ministerial Conference on Human Rights of the European Social Charter
D. International Labour Organization’s Sectorial Activities Programme
E. Tripartite Meeting on Human Resources Development, Employment and Globalization in the Hotel, Catering and Tourism Sector

The following organizations helped to set the framework for the European Commission and are examples of governmental, industry, jaborandi social consciousness which provided the specifics concerning social responsibility and its effects upon productivity, as well as means to harness this in a method which is positive for employers and employees;

A. World Summit for Social Development, International Labour Organization’s Sectorial Activities Programme

The World Summit for Social Development meeting of March 1995 in Copenhagen pledged to reduce poverty, work toward the objective of full employment, and to foster social integration. As a United Nations organization the importance of the influence of this program is obvious, making the issues a global concern via utilization of a formal stage under the aegis of the U. N. The conference convened in Geneva in2000 to review the commitments made in Copenhagen in 1995. The importance of this initiative has moved the sphere of social policy tithe forefront of global attention.

B. Convention for the Protection of Human Rights and Fundamental Freedoms

Organized under the Council of Europe, the name of the Convention explains its origins as well as purpose. As a natural outgrowth, social policies were tabled and have helped to shape the social responsibility concerns which business needs to embrace as part of the broader human community.

C. Ministerial Conference on Human Rights of the European Social Charter

This Conference put forth an extensive list of employment related social and legal accords which were agreed to by the countries comprising Europeans a foundation for commercial regulations ensuring fundamental as well as progressive social rights. This list forms the underpinning of all social responsibility areas in the public arena and thus sets a standard for social corporate behaviour. The extensive list shall be elaborated on in Chapter 4.

D. International Labour Organization’s Sectorial Activities Programme

As a separate organization devoted to labour issues the International Labour Organization segments its ‘Sectorial Activities Programme’ into industrial classifications. This organization brings together business, government and people, Tripartite, so that initiatives undertaken have balance due to all entities being represented. The policies implemented by this organization have a binding effect as a result of this tripartite mixture. It actualizes discussion at other levels (meaning organizations and programs), into working realities.

E. Tripartite Meeting on Human Resources Development, Employment and Globalization in the Hotel, Catering and Tourism Sector

This is the industry ‘Programme’ specifically devoted to the Tourism classification.

The policies and areas identified by these organizations helped to form parts of the European Union enactments which was then adopted by the United Kingdom and subsequently resulted in the 1,500 pages of legislation for the Hospitality and Catering sectors which covers:

1. The Employment Rights Act of 1996
2. Working Time Regulations of 1998
3. Employment Relations Act of 1999
4. Part-Time Workers Regulations of 2000
5. 1990 Food Safety Act and subsequent amendments
a. General Product Safety Regulations
b. Hygiene Legislation
c. Food Control Regulations
d. Food Law Guide

The extent of the foregoing is so extensive that they shall be discussed under the following section.

Chapter 4 – Analysis of Data

4.1 Social Responsibility in Modern Society

In order to understand the aspect(s) of ‘social responsibilities ‘with regard to their effect on the productivity of firms within the hospitality and catering sector of the travel and tourism industry classification, one must first be cognizant of the broader spectrum from which this emanates, social policies which evolve from public opinion. This is also termed as a ‘social contract’ which is a term that has been derived from political science and sociology to signify both real as well as hypothetical understandings or agreements within country concerning the rights and responsibilities of citizens as well as the nation.

Jean Rousseau (1762) stated that the ‘social contract ‘is an understanding that in order for individuals to live in a society they must agree that in exchange for this society (nation) giving them certain rights such as the right to live, they also must give up certain aspects such as harming others, and that as a result the society (nation) is obligated to administer laws and rights equally as well as fairly.

This social contract is a living entity that is modified, amended and adjusted by public opinion that changes the context of laws and regulations as the social consciousness of the society (nation) evolves. The implication of the foregoing is that if individuals demand and require more rights these rights carry with them the caveat that the individuals within said society (nation) also must agree to and take on more responsibilities and the nature and weight of these responsibilities increase with more rights. Simply stated, more rights mean more responsibilities and less responsibility mean fewer rights.

The prior statement has been utilized to provide a foundational point of understanding to illustrate that social responsibility factors are an outgrowth of said social contract and the process is evolutionary in nature. Individuals within a society become familiar with the implications of this ‘contract’ through the educational process, media, elections, voting and other communication forms. Most of the contents of this ‘contract’ are understood by high percentage of the population which know that voicing said opinions through activist groups and contacting elected officials is the process by which newer theories and or applications of social practice and behaviour are updated to contemporary terms.

As companies and corporations are an inherent part of the societal fabric they are bound by social codes of conduct and behaviour both legislated as well as those that are considered part of progressive thinking and behaviour. Governmental reforms and acceptance on an official basis of new theories, understandings and precepts of social conduct and responsibility is necessarily a slow process because it must weigh and consider the ramifications of each aspect and how this affects existing and accepted social norms, as well as the negative impacts and how such affect all aspects of the social fabric.

This simplified summary explanation is neither in defence of or a comment on government reaction to new inputs. Not all forms or aspects of this social contract(understandings) are formalized, meaning being a part of laws or regulations, they can tend to be rules of accepted conduct or progressive thinking (and living) which become an expected part of these progressive circles.

4.2. UK Legislation

As stated by Bob Cotton, Chief Executive of the British Hospitality Association, the number of the regulations enacted by the United Kingdom covering the hospitality and catering sectors, some 1,500pages, represents a compliance maze has become a time, cost and administrative burden for an industry primarily comprised of smaller firms. He indicated that even with amendments to reduce the total number it would still ‘…impose new cost burdens which are just as onerous.’

The European Laws introduced since 1997 under this and other legislations has increased the compliance and administrative cost to businesses by 46% (currently £30 billion), in what the Derby Council calls ‘…red tape…’

A survey by the British Chambers of Commerce has stated that the laws covering the protection of data, maternity as well as paternity leaves and other areas are costing businesses billions of pounds, and in a study conducted by the Burdens Barometers this figure was calculated as being in excess of £10 billion since being put into effect in 1999. In all the total bill for areas indicated as ‘red tape’ have been estimated as adding £9 billion in costs just in 2003.The following will summarize the extensive nature of the preceding:

1. The Employment Rights Act of 1996

Consisting of 245 segments under Chapter 18 the ‘Act’ sets forth ‘Employment Particulars ‘which are the foundation for a broad number of areas affecting the hospitality and catering sectors within the context of this paper. This Act also forms the framework for the ‘Working Time Regulations of 1998which contains a number of amendments that represent part of the new legislation. Some highlights of this Act are:
a. Employment Particulars
b. Protection of Wages
c. Guarantee Payments
d. Sunday Working for Shop and Betting Workers
e. Protection from Suffering Detriment in Employment
f. Time Off Work
g. Suspension from Work
h. Maternity Rights
I. Termination of Employment
j. Right not to be Unfairly Dismissed
k. Remedies for Unfair Dismissal

2. Working Time Directive

The additional paperwork, regulations, new benefits and associated measures comprising the amendment to the Working Time Directive which specifies minimums for health and safety under Article 2 of Directive89/391/EEC and Article 17. The Directive amendment sets forth provisions for the following in the private and public sectors:
a. rest period minimums for a days, weeks and annual vacation as well as break periods, maximum weekly hours
b. aspects covering certain areas concerning night shifts, shifts and work patterns.

The following sets forth provisions under the preceding sections:
a. Minimum Rest Periods:
1). Article 3 – Daily rest
Specified as a minimum daily period of rest between working periods of 11 hours
2). Article 4 – Breaks
Specifies that when the shift exceeds six hours each employee is entitled to a rest break as specified and laid out in collective agreements
3). Article 5 – Weekly rest period
During a seven-day period each worker is entitled to the indicated11-hour daily rest and a minimum 24-hour rest period which is specified as Sunday
4). Maximum weekly working time
This is subject to the prevailing country law and the total working time for the seven day period shall not exceed 48 hours (in the United Kingdom), which includes overtime

b. Night Work Shifts and Patterns of Work
1). Workers on the night shift are to receive a health assessment free of charge prior to being assigned and any worker who is determined to have a health problem that is diagnosed as connected to night work shall be transferred as soon as possible to day work shifts
2). The indicated health assessment must conform to medical terms of confidentiality
3). Employers compliance with the indicated health assessment can be performed via the national health system

c. Night work guarantees
Certain night worker categories shall receive guarantees as specified by legislation of that country concerning risks at work to their health and or safety
1). Article 11 – Notification concerning the regular utilization of night employees health and safety protection
If so requested by authorized agencies and or individuals information concerning night workers shall be provided by the company
2). Article 12 – Pattern of work
Countries shall see that regulations are in place to guide employers in setting procedures for night employees that minimize repetitive patterns and set a rate that provides safety and health specifications
3). Article 13 – Safety and health protection
Countries shall see that night employees as well as shift employees have the appropriate safety and health protection applicable to the work being performed

The preceding are provisions that are applicable in this instance for the hospitality and catering sector concerning social responsibility aspects whereby costs are incurred as a result of their enactment.

The Employment Relations Act of 1999 sets forth those provisions that are cost additives for businesses under social responsibility:

a. Maternity and Parental Leave 1999

Maternity leave is granted to employees who meet certain criteria and conditions:
1).That said employee notify the employer of the maternity leave period 21days prior to the date said leave shall commence as long as she has notified the employer of said pregnancy, the expected day of delivery and the date of maternity leave commencement.

2). Said employee shall provide the employer with documentation on said pregnancy from a licensed medical practitioner, or midwife and that such be in writing if so directed. That the employer shall allow foresaid maternity leave be at least 18 weeks. The cost additive under ‘social responsibility’ in this instance is that said provision applies to all workers. In the past part time workers were not entitled and thus their return to their positions was subject to the discretion of the employer and not a right.
3). Parental Leave
If an employee has been with the firm on a continual basis for a period of not less than 1 year and has direct legal responsibility for amino, then said employee shall be entitled to 13 weeks parental leave(not consecutive) and shall not lose their job as a result.
a. Time off for domestic incidents
Employees are entitled to paid time off for domestic incidents as set forth in collective agreements.

b. Part-Time Worker Regulations of 2000

Under this provision part-time workers shall be paid at the same rates full time employees for comparable work and shall also be paid for overtime under the same understanding. The seasonal as well as temporary workers within the hospitality and catering sectors are benefited by the Act, however employers who formerly utilized this category as a justification to pay lower wages now have this as a cost additive. Part-time workers are entitled to the same coverage and other provisions of full time workers on a pro-rata basis.

c. 1990 Food Safety Act and subsequent amendments

The importance of regulating and ensuring the public safety is a function of government and the Food Safety Act of 1990 was enacted


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