BUSM4499 Key Concepts In Human Resource Management - Ethical Leadership Essay

Introduction 

Ethical leadership is important in the current global business environment as it is one of the major components required in creating value for the business by shaping the actions and behaviour of the whole organisation. A successful organisation consists of ethical leadership which builds an atmosphere of trust, respect, dignity and principled culture among its workers. Failure to adopt ethical leadership can have negative consequences which can affect the business in the long term. Based on these notions, this essay will discuss how the ethical leadership in Human Resource Management is failing the organisations of the Hospitality Industry, County Fire Authority (CFA) and the Banks, their staff and other stakeholders. The focus is to identify the key problems in these sectors/industries arising due to bad ethical leadership and then propose recommendations that would enable the HRM to effectively resolve these problems evident in these organisations. The academic literature research will help in identifying the issues that exist in these industries and the AHRI HRM model will help in providing recommendations for each industry. 

Lack of Ethical Leadership in the Australian Hospitality Industry

It is the responsibility of every employer to show leadership qualities for the workers, especially ethical leadership to form a pattern of acceptable behaviour. It means hat the employers need to be unbiased, fair, assign authorities and responsibilities, pay fair salaries, and maintain a safe and respectful environment in the organisation (Kiliç, Pelit and Altunöz 2011). However, as the hospitality industry is known to be competitive and full of challenges, it would not be surprising to know that the increase in these challenges may raise issues of unethical management behaviour. Managers assert their own ethical perceptions and beliefs in the business operations rather than following the codes of conduct (Robertson, Gilley, and Street 2003). The key issues that arise in the hospitality industry include underpayments of wages, non-payment of overtime wages and exploitation of the workers through their visa conditions, gender discrimination, race discrimination, targeting migrants and young workers (Cavanough & Blain 2019). 

According to the articles published by Schneiders and Millar (2018) in The Sydney Morning Herald, there are several issues that exist in the hospitality industry regarding the ethical leadership. The famous and huge restaurants of Rockpool Dining Group and by Heston Blumenthal have been exposed of practicing unethical managerial behaviour with the staff. The unfair wages, long working hours, unpaid overtime, underpayments and exploitation of the immigrant workers, in spite of the huge profits and tax havens, are the recent issues of the eatery business. “It is a breach of workplace laws for an employer to require excessive unpaid overtime that pushes wages below minimum legal rates” (Schneiders 2018). 

Wage theft is one of the major issues arising in the hospitality industry which deprive the workers from their legal entitlements (Queensland Council of Unions, 2018). It occurs when the employer pays the workers less than the minimum wage, refuses to pay overtime, fails to give meal breaks to the workers, demands off-the-clock work from staff and pays the workers with tipped minimum wage for non-tipped or side works (Hatic 2018). Carey (2017) also talks about the insecure nature of the work in hospitality industry and quotes Will Barsby, a lawyer, who states that the workers in the hospitality industry do not have unions similar to other labour industries, therefore, they are open to exploitation by the employers as working might be the condition to their visas. Non-compliance with the ethical codes is becoming common nowadays in the eatery business, where the Fair Work ombudsman audits found out that ‘38% of the business who had breached the law, underpaid their staff, while 28% failed to keep adequate employment records and pay slips’ (Houses & Holes 2018). 

The newspapers like, The Sydney Morning Herald and The Age are full of the examples of the famous Australian restaurants and eatery businesses that are practicing these unethical behaviour with the staff or chefs. In spite of their huge earnings, why they do not pay the workers their legal wages, is a matter of concern. The workers are deprived of thousands of dollars per week. There is also some discrimination based on the gender of the workers. The survey conducted by the Department of Sociology and the Center on Policy Initiatives in the San Diego State University (2015), shows that the wage theft is targeted on women more often: 37% of female respondents and 28% of males in the sample were found in the year 2014. Moreover, the employers force the employees to break laws, practice violations and fraud and record the details of the meal breaks and overtimes falsely (Center of Policy Initiatives 2015). The act of wage theft and other related issues and frauds should be considered seriously and action should be taken in response to it. 

Although there should be serious and ‘…stronger penalties and enforcement capacities (that) should reduce the incidence of wage violations’ (Galvin 2016), but because the employers do not obey the government imposed penalties seriously, there should be other ways to cater to this problem, such as, considering ‘…the value of the market wage relative to the minimum wage, the elasticity of demand for labor, and the employer’s ability to pass increased labor costs onto consumers’ (Galvin 2016). The Human Resource Professionals can intervene and reduce the issues arising in the hospitality industry due to wage theft. They can raise awareness, review job descriptions and duties, monitor the requests from the volunteers or new staff, report violations when against competitors if they are not complying with wage and hour laws and conduct and audit (Krell 2014). There should be amendments in the state and government criminal codes to criminalize wage theft, Fair Works Act 2009 should be amended to increase the penalties for wage theft and the Australian Law Reform Commission should be asked to investigate how to establish wage theft as an anticompetitive practice, administration should be streamlined, audit should be carried out and enforcement should be improved (Cavanough & Blain 2019).

Lack of Ethical Leadership in the Australian County Fire Authority

In today’s advanced environment, the ratio of women working in all professions is increasing day by day. Likewise, the women working in fire services also are increasing in number and appointed at all ranks in the fire service departments (FEMA 2019). This has increased concern on the issues of gender discrimination and sexual harassment. As the women are still being discriminated and unaccepted in non-traditional professions, such as, military, police and fire services, they face several difficulties in their workplace, like, underpayment, assaults, sexual harassment, discrimination, lack of opportunity for career advancement, demands of the job, exclusion, and hierarchical social relations of the job (Branch-Smith 2009). It can be seen that CFA physical entrance requirements are prohibitive for women, there is gender segregation in the division of labour and the concepts of masculinity and physical strength are deep-rooted in the organisation (Batty & Burchielli 2011). All the issues in fire services arise due to unethical morals and lack of negligence on part of the management (Quirk 2017).

Moreover, the globalization has given birth to multi-cultural environment in organisations, which makes it complex to manage ethical differences (Robertson, Gilley, and Street 2003). Also the misuse of alcohol is another issue in the County Fire Authority which can lead to the same unethical behavior practiced by both the leaders and the subordinates. Hazing in the fire services is another common and persisting issue in today’s time. Female firefighters are disadvantaged with respect to promotional opportunities and always felt pressure to work harder due to the negative attitudes from men, along with problems of acceptance (Russo 2013). 

 ‘The 1996 Australian Bureau of Statistics Survey of Women’s Safety showed that where women had been physically or sexually assaulted in the previous 12 months, approximately 40% reported the involvement of alcohol’ as alcohol use can lead to the occurrence of violence, or may be used to handle a violent incident, or it may worsen the violent nature of an incident (National Drug Strategy 2001). 

Leadership in the CFA sector has recently been jeopardized by the immoral and unethical and non-serious behavior of the managers or captains of the teams. Bowden (2018) mentioned in an article in The Age that the Eaglehawk FireBrigade in Bendigo had cultural problems, alcohol abuse and a lack of discipline and respect which resulted in cases of assaults. According to The Age (2018) and the ABC News (2017), the captain was involved in an incident of an assault of a young volunteer at Eaglehawk, who was dragged by hair and treated harshly, while other men watched. Brisbane Times mentioned in 2014 that Premier Mr. Newman pointed out it was the workplace culture that needed improvement, the structure and hierarchy of the fire services department needed amendments and complaints about sexual harassments and inappropriate use of social media needed to be investigated and acted upon immediately (Remeikis 2014).  

There is a need of education and training for women for the ease of mobility up the ranks in the fire services and the women need to take ‘…formal legal action against a department to accept a settlement so they may get on with their careers or leave the fire service altogether as part of their settlement agreement’ (Russo 2013). Russo (2013) has provided strategies that women can adopt to gain promotion and career advancement and acceptance in the fire services department. He state that apart from education and training, women should continuously work towards changing the organisational culture, avoid isolation to be an active member of the team and perform best while finding a mentor. 

On the other hand, the HR should focus more towards ethical leadership and train the recruits according to new and advanced concepts, so that there are cultural changes and the masculine domination is erased. Ethical code of conduct should be enforced on management and it should: i) Educate the public from the beginning that there are firewomen as well as firemen, ii) Provide a pre-assessment training program to educate potential female and male recruits about what is required of them and allow sufficient time for them to improve their capabilities and other tested qualities prior to assessment, and iii) Use creative “targeted recruitment promotional strategies” such as focusing on women’s sporting associations in order to get physically capable women as applicants (Quirk 2017). 

Lack of Ethical Leadership in the Australian Banks

Research by Wheeler et al. (2016) shows that the banking sector was jeopardized due to the unethical transgressions and illegal activities of the banking management in Australia and New Zealand, such as, market rigging, miss-selling, risk-based profiling, tax avoidance, not maintaining privacy of customers data and adding a service or commission fee onto the price of a product sold by someone else. The factors that lead to such forgeries and illegal practices include structural problems, regulatory gaps, cultural dynamics and competitive pressure of industry. The Sydney Morning Herald mentioned in 2017 that there were a few scandals that were related to forgery and fraud which the management covered and people also lost their life savings and/or had their life insurance claims rejected at the hands of dishonest and immoral financial advisers, who cheated and pushed clients into products to earn commissions or forge signatures to access their money (Ferguson 2017). The focus in the banking sector is more towards managing risks instead of managing the outcomes meaning that there is “lack of ownership of outcomes in favor of following process” (Tadros 2018). The consumer lending practices and dodgy financial advices were the focus of the public hearings held by The Royal Bank Commission in March 2018 (Chung 2018). 

There is a need to change the culture of the banks by enforcing strict management policies which focus on the consequences and secondly, there is a need to appoint leaders who set new norms and ensure strict reinforcements (Tadros 2018). There should be strict rules for the enforcement of the code of conducts so that the regulators supervise the governance, culture of the banks and the remuneration, such as, i) the assessment of the culture and its governance, ii) identification of problems with culture and governance, iii) dealing with those problems and iv) monitor the changes and their effectiveness (Neische & Gergis 2019). 

Conclusion 

The literature review above shows that Australia has recently been facing unethical behavior and practices in the hospitality industry, fire services and the banking sector, which notifies the HR professionals to play an important role in changing the values of the organisations involved by enforcing policies and practices based on ethics. The scandals of the banks practicing fraud, the sexual harassment and gender discrimination in the fire services and the wage theft in the hospitality industry show that these sectors fall short of ethics and compromise their values and image for money. The AHRI Model of Excellence can help the HR to evolve the unethical transgression in these sectors in Australia. After the Training Need Analysis, the HR practitioner would first gain all the related information of the existing problems and then decide and make a plan for what it should do and what it should be according to expectations of others. Firstly, the HR professionals would act as collaborators, who critically analyse the situation and resolve the issues. It would follow ethical practices and strategies keeping in mind the organisation’s culture, objectives and context. It can then focus on the organisational capabilities by workforce and workplace designing and change leadership. 

Likewise, the HR should gain all information about the respective problems occurring in the three sectors in Australia: Hospitality, CFA and Banking, then act accordingly. It is important to note that all the three sectors under observation in this essay lack ethical leadership which brought the respective organisations in jeopardy with respect to engagement, creativity and productivity. Even if one individual is practicing unethical practices, it can block the success of the whole organisation. The HR should set clear standards of behaviour and hold the management accountable for their doings. It should find the best fit solutions. A survey conducted to gain perspectives of accountants and HR practitioners showed that “…leadership was vital in improving ethical behaviour and that the greatest ethical motivator was the expectation set by leaders. Reflecting on their own professional role, respondents cited unfair treatment of employees and bullying as the two most common forms of ethical misconduct they had observed” (Ethics in Business Research Report 2017).

For ethical leadership it is important that the HR sets strict polices and codes of conducts which should be monitored. It should introduce reinforcement of policies and standards and accountability for developing ethical behaviour in the management of each organisation. It is the job of the HR to ensure that ethics are being followed at all levels, which can be done though strict screening, recruitment and hiring policies through technology and educate and train the employees of the respective organisations to develop advanced skills. It should be able to apply expertise at the right time by incorporating technological changes and involving all the employees for organisational success. The above mentioned organisations/ industries under study could have avoided the complications, as discussed in this essay, by: i) applying business knowledge to the specific problems, ii) maintaining employee relations and engaging them in organisational success, and iii) determining, communicating and implementing accountability to bring organisational change. In short, HR professionals could recruit and promote ethical leaders who can become role models for the organisations by creating environment of ethical behavior and they should be held accountable despite their status or rank and involve the employees at all levels to foster respect among all (Schmidt 2018).