Social Performance with regards to Business Ethics and Labor
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Published: Wed, 26 Jul 2017
When companies strike an outstanding social performance, the community tends to remember the significance of the company’s management and operation. Marriott International Incorporation is recognised as one of the top leading hospitality industry with over 6000 hotels in 120 countries worldwide (Marriott 2017). Marriott’s success comes from their core values, where they believe people comes first and by providing excellent customer service, it will keep the business consistent. This essay will discuss the negative and positive aspect of Marriott’s social performance and examine the impact of its performance upon society and particular stakeholders. The involved stakeholders in this essay are hotel owners, employees, customers, and suppliers. This essay will also highlight Marriott’s achievements for embracing diversity and its required improvement on forced unionisation for the workers. This essay will conclude on evaluating Marriott’s social performance as a whole with regards if it successfully fulfilled society’s expectation and on how the company operates when confronted with labor issues.
A labor case against Marriott International
Many hospitality industries are currently facing challenges to maintain its position in this competitive market. A labor issue that occurred in 2002 made Marriott faced an adverse effect for the company’s development. It broke a promise of its vision statement, where which emphasise its employees should be provided an opportunity to work and feel welcomed to Marriott (Sorenson 2013). In 2001, a case disclosed that Marriott International wanted to secure two of its flagship hotels, Marriott Marquis and Marriott Financial Centre in New York City union free whilst, the less-known Marriott-managed properties were proposed to be an unionised workforce (Randles 2013). Marriott formed this secret agreement with its hotel workers’ union in New York and was sued for over $500 million by a hotel owner (Voris 2013).
In early 2001, the former hotel owner, Madison 92nd Street Associates LLC, of Courtyard by Marriott Madison East (Randles 2013) had a business interest that involves a management agreement with Marriott to manage Madison’s hotels under the Courtyard Marriott name (Meyer 2015). However, at that same period of time, Madison was uninformed about the ongoing secret agreement Marriott had with its New York hotel workers’ union. When Courtyard was opened for business in 2002, Courtyard hotel was classified as a union workforce. According to the lawsuit, Madison had assumptions with regards to the management agreement, where Madison thought Courtyard would have been declared as a non-unionised workforce due to the fact that Marriott was known as a union-free workforce company (Longstrerth 2013).
As a result of Courtyard employees’ unionsised, the post effects were reported that there was an increase in labor and operating costs (Randles 2013). Labor costs are the biggest expense for hotel managers. Hence, Courtyard started facing bad financial performance annually as there was an increase in $2 million on the company’s operating costs (Longstrerth 2013). Courtyard’s economic development was unstable as the hotel started losing big amounts of revenues and profits. By 2011, Courtyard’s managers faced a bankruptcy phase and were desperate for bankruptcy protection (Voris 2014). With the labor unionisation agreement, it led to a drastic impact on Courtyard’s stakeholders. The workers were obliged to union work rules and policies, where they faced any form of heavy labor, while being subjected to poor working environment (Randles 2013). Certain union policies had effects on the satisfaction of its workers and produced low work quality. According to the lawsuit, workers in New York properties (Randles 2013) experienced the benefit as a union-free workforce and gained competitive advantage. The unequal treatment of its stakeholders in different hotel properties showed a misstep to reflect its social responsibility, which was ensuring its employees are comfortable at work. Marriott disregarded its commitment to ethical business practices and neglected their Principles of Corporate Social Responsibility.
Marriott International’s Business Ethics and Cultural Diversity
In today’s business climate, every hospitality company aims to create a positive impact on its employees, suppliers, hotel owners and society. Due to higher expectations from society, hospitality industries that are unable to reach its customer satisfactory level could potentially lead to poor business. However, at Marriott International, the company strongly believes its stakeholders should be valued as Marriot’s first priority and to always feel welcomed (Marriott 2017). The establishment of Formal Diversity Programs on 1989 (Marriott 2015) has made a significant development upon the business’s company today. The outcome from these Supplier Diversity Programs, called Exchanges has shaped Marriott into a diversified hospitality industry, which provides working opportunities predominantly for minorities, women and people with disabilities (Wiggins 2016). By 2002, Marriott observed progress from their Supplier Diversity Programs, where $150 million of its total procurement was spent from Marriott with minority and women business suppliers. (PR Newswire 2003).
The connection between Marriott’s identity and procurement has an important part for the company’s reputation. Marriott is known for strong work ethics with deeply rooted values, where they respect differences and embraces inclusiveness (Marriott 2017). The company’s procurement strategy should then follow that ethical identity. At Marriott, suppliers play an essential role as it provides the products and services customers expect. Suppliers that uphold different values and principles from Marriott would face difficulty cooperating with them. Marriott believes a strong connection with its suppliers will maintain a substantial business liaison between stakeholders while receiving economic growth and a positive image for the company. According to Marriott’s sustainability report, for nearly 9 years, Supplier Diversity Programs has spent approximately $4.5 billion with diverse suppliers, starting from 2003 until 2014 (Marriott 2015). The National Minority Supplier Developmental Council, US Hispanic, National Gay and Lesbian Chamber of Commerce, and the Women’s Business Enterprise National Council are some of the 4000 diverse organisations that are currently in partnership with Marriott (Marriott 2017).
Throughout Marriott’s business years, the company has been constantly recognised for its ethical business standard. With unity in his heart, the Executive Chairman, J.W Bill Marriott, Jr. has earned the Hospitality Industry Diversity Institute (HIDI) award on February 11, 2002 (PR Newswire 2003). From Marriott’s business approach on promoting diversity and value inclusion, its associates was known for their work and was honored with the J.W. Marriott, Jr. Diversity Excellence Award (Marriot 2017). Recently, Great Place to Work® and Fortune acknowledged Marriott for being one of the 50 best workplaces for diversity (Wiggins 2016).
The foundation of Marriott’s success revolves around its dedication to a global diverse workforce and its superior business ethics. For 25 years, Marriott has formally devoted its company towards diversity and inclusion and for 10 years of this commitment was also executed by the Board Committee (Sorenson 2013). Marriott was founded under the philosophy that (Marriot 2012) the value for its guests comes from the value Marriott gives towards its employees. Marriott’s culture made a magnetic impact upon its stakeholders, especially to its customers and society. It attracts its guests to keep coming back to Marriott hotels and the company earns recommendation from our loyalty guests to other new guests. Good ethical policies enable its customers to form long lasting business relations with Marriott and the company will then gain strong loyalties with its stakeholders.
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