Ethical Behavior of Housekeeping Managers

Tom Armenta is executive housekeeper of a mid-size resort in a small town in the Midwest. The establishment has an excellent reputation and no direct competition. As a result, business is good and the income before taxes for the last 5 years has been above the industry average. Tom is considered a very good manager by the company and receives substantial bonuses for achieving, and sometimes bettering, the departmental budgeted bottom line. Tom considers himself very lucky to be operating in an area of abundant worker supply because of the absence of other resorts in the area. The property as a whole has been able to maintain very low expenses in the categories of salaries and employee benefits.

The hourly employees in the department, however, do not consider themselves so fortunate. Those in need of medical care cannot easily cover their health expenses with the wages paid by the resort. Last week, a group of employees representing all hourly workers asked to meet with Tom to request that the company offer medical insurance benefits as part of the compensation package. After making the necessary calculations, the executive housekeeper determined that the departmental profit before income taxes would diminish from 27 to 23 percent. This reduction would prevent Tom's receipt of his 12 percent bonus.

After consultation with the resort's general manager both decided that the supply of local workers would guarantee a sufficient number of applicants willing to work for the compensation the resort currently offers. Tom's thinking was that as a manager, his job is to maximize profit while complying with existing labor laws.

1) You are to decide whether Tom Armenta behaved ethically.

2) Did the resort general manager act ethically by denying the housekeeping workers medical benefits to maintain the 27 percent departmental income?

3) What would the reaction of the employees be?