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Ethical Leadership

Executive Summary of Industry Case Studies Report

This report deals with the unethical conduct of the HRM in three different organizations of Australia. These include hospitality, aged care and banking organizations. The three case studies are based on the unethical conducts like employee underpayment issue, staff shortage and cost-cutting issue and fraud and corruption issue. The chefs of the hospitality industry are suffering from the issue of underpayment. The aged care industry is suffering due to a shortage of staff and cost-cutting. The case of banking is related to the fraud activities of the employee. Also, the report describes a way to solve these matters with the assistance of applying AHRI HRM model.



Hospitality Industry and underpayment issue.

Aged Care and Staff shortage.

Banks and fraud.


Introduction to Ethical Leadership

Ethical leadership is that which is led by admiring ethical philosophies and standards. It also focuses on the rights and dignity of others(Csillag 2019). Ethical leadership in HRM practices is linked with thoughtslike honesty, trust, personality, consideration and fairness. Fair leadership, care and honesty come under ethical leadership which is when combined with the human resource management provide a powerful contribution to the employee’s sense of well-being(Simões et al. 2019). It can serve as a replacement for each other. Ethical leaders in HRM are worried about the matters of justice, equality, and fairness(Sutherland et al. 2019). They feel it as the main concern to treat their assistantsequivalently. It will necessitate that the ethical leaders and the subordinatesdecide and work cooperatively with each other. There are different problems due to which ethical leadership fails in HRM(Guerci et al. 2017). These issues includevarious problems which can worsen the situation like underpayment or employee shortage. The things which a leader does or not and the companies do or not helps to fix a positive instance and contribute the ethical thoughts and behaviour. The report elaborates three different case studies and the failures of HRM practices. Also, it describes a way to resolve those issues with the help of applying AHRI HRM model.

Hospitality Industry and Underpayment Issue

The selected case study deals with the hospitality industry of Australia and the selected restaurant is “A Dinner by Heston Blumenthal” which is an Australian restaurant. It is an international restaurant which is underpaying its staff at the Australian eatery. This act is ethically wrong and is linked with the unethical behaviour of the Human resource management of the restaurant. As per the news, the main concern is the chefs at the Heston Blumenthal's restaurant works around 25 hours without getting paid for their overtimework(Myung, 2018). This is an exploitation of the employees of the Heston Blumenthal’s restaurant. The restaurant is earning high revenues but the payslips of the middle-level skilled chef show that the payment is very less. The actual payment is around $15 to $17 an hour(Tavitiyaman et al. 2019). The human resource management of the restaurant never paid attention towards this underpayment of the employees which was ethically a wrong act. Instead of this, the spokeswoman of the restaurant claimed that there were no underpayment issues in the restaurant. The company is going through a review process.

If cases with underpayment are found to be true then it should be resolved on an immediate basis. A similar case of underpayment was with Neil Perry’s Rockpool Dining Group Empire who paid back $1.6 million of the employees after the examination. The amount of the payback was about one year of underpayment. It has been observed that there are numerous cases of underpayment in the Australian hospitality industry and restaurant kitchens and the nation's eateries. This has been agreed upon by the restaurant industry association. It became known that “A Dinner by Heston Blumenthal” has paid no company tax in the year 2015(Davies and Roper 2016). This is another unethical act done by the restaurant. The permanent chefs of the restaurants were paid only for 40 hour week but they were forced to work for 60 to 65 hours. As per the discussion with the chefs of the restaurant it became known that sometimes they are forced to work for around 80 hours per week. This can be explained as if the day starts at 11 am it will end at 1 am in the next morning. The chefs were underpaid around hundreds of dollars per week.

It can be observed that the HRM is failing in the hospitality industries of Australia since the Australian eateries are underpaying the employees which can be regarded as wage theft (Vanderstraeten 2012). This is an unethical behaviour as well as a punishable offence. The human resource management is not taking any action to such an offence therefore it is failing in the hospitality organizations of Australia. The recommendations which can be made are to consider the underpaying of the chefs as a crime which should be punishable up to 10 years of jail. This will enable HRM to efficiently solve the difficulties that are obvious in these hospitality organisations. According to the AHRI HRM model, HR could have avoided the circumstances of underpayment initially. As per the AHRI HRM model, the HR of the “A Dinner by Heston Blumenthal” should have awareness about the Fair Work Amendment bill 2017 which assists to reinforce the FWO’s capability to examine and punish serious occurrences of underpayment (Brien 2017). Once it has been confirmed that the chefs were underpaid, the HR should have checked the time in which the chef was underpaid, checked the actual paid amount to the chef, calculated the amount which should be paid to the chef, calculated the amount which is underpaid to the chef. Once the amount becomes known the HRM should back pay the chef and should update the future wage increments. The HRM should have behaved ethically as per the leaders.

Aged Care and Staff Shortage

The selected case study deals with the Aged Careof Australia and the selected aged care is “Bupa's aged care homes" which is Australian aged care(Fitzpatrick 2018).The aged care is passing through a stage of cost-cutting due to which it is not recruiting sufficient staff. Due to this scenario, people are suffering. There were issues like neglecting people, malnourishment, mismanagement in medication etc. This act is ethically wrong and is linked with the unethical behaviour of the Human resource management of the aged care. Due to the cost-cutting, the management of the aged care forgot that the residents are living beings. Because of this, the aged care got a notice from the federal health department in October 2018. This notice was for the non- compliance of the aged care(Palmer et al. 2018). The HRM department did not take interest in recruiting more staff to resolve the issues. This was an unethical behaviour from the HR team of the aged care. Bupa aged care was one of the largest aged care of Australiawhich was getting greatly criticised at the royal commission into the aged care sector due to the unethical conduct.

It became known that due to non-compliance Bupa aged care have depicted a poor record than the other aged cares. The conditions of the services of Bupa were decreasing day by day and the residents were at great risk. Aged care is always rated on a scale of 44 benchmarks. It covers everything from the management to the IT problems. Bupa aged care was having the lowest score as 40.38 out of 44(Haines et al. 2020). There were around 25 facilities which were at serious risk. There were bans on taking the new residents. Since Bupa became incompetent therefore the children's started worrying for their parents to leave them over there. There were numerous issues other than a shortage of staff. These included the absence of handovers in between shifts, medication mismanagement, management issues etc. Bupa had a very attractive and clean garden but due to the staff shortage, the residents were not taken to the garden. The managers of Bupa were focussing on cost-cutting by limiting the overtime, curbing the food bill and deploying low level four trained carers. The main concern was to sell bed but not provided with the services the aged person requires(RESIDENTIAL 2016).

Human Resource management was failing in the Bupa aged care as the department was least interested in recruiting new staff and training them. The main reason for this was the cost-cutting policy. The human resource management did not take any action to such an offence therefore it is failing in the aged care organizations of Australia. The recommendations which can be made are to consider the staff shortage seriously and take necessary actions to resolve it(Pha 2018). This will enable HRM to competently resolve the problems that are noticeable in the aged care organisation.According to the AHRI HRM model, HR could have avoided the circumstances of staff shortage initially. As per the AHRI HRM model, the HR of the “Bupa aged care” should have awareness about the consequences which can arise due to the shortage of staff at the aged care. Once it has been known then the HR should have started training the existing staffs, utilising contingent staffs, re-assessing the recruiting practices, adapting the staff as per the situation. The HR should make a positive environment; work on new models and technologies to know about the resident’s needs (Rowley et al. 2016). Also, the HRM should make partner with the nearby educational institute and invest in training and educational opportunities.This is an ethical behaviour which the HRM should have followed initially to deal with the situation.

Banks and Fraud

The selected case study deals with the banking industry of Australia and the selected bank is “National Australia Bank” which is an Australian bank. An executive of the bank was charged for doing fraud of $40 million (Kia et al. 2019). The HRM of the bank did not notice this case and a whistle-blower gave the information regarding this. This was unethical behaviour on the part of the HRM of the bank. The bribes which were taken by the employee named Rosemary Rogers, out of which about $5.4 million worth was in the form of paying personal expenses from a contractor which assisted to maintain the agreement with the business. As per the police, the bribes also included lavish tours to Sydney and luxurious resort at Wolgan Valley in New South Wales. Other than these there were a month's long stay at the US and a private helicopter transfer was also included. Ms Rogers also had a boat and she handed herself to the police at Surry Hills Police Station on Tuesday at 11:00 am(Montague et al. 2016). She was charged later in the afternoon. She was bailed with some strict rules by the magistrate in the court. As per the magistrate, if the claims will be true then the employee will be jailed. As per the court, there were around 20 search warrants, 100 witness statements and proofs which include computers, phone numbers, forensic accounting and emails. The employees have committed the crime due to greed and benefits for her and her family for living a luxuries life. This can be explained as a serious breach of trust by an employee of the bank.

As per the investigation, it became known that only the CEO of the National Australia Bank is under examination. Other than that no one has been accused of any kind of wrongdoing in the bank. There was a previous case of Helen Rosamond who was claimed for bribery and gaining benefit by dishonesty amounting to $6 million (Krambia-Kapardis 2016). She was the director of event management organization which was a supplier to the bank for 12 years. Lastly, the investigation revealed that the amount of fraud was about $40 million in five years.This was the responsibility of the HRM to deal with these kinds of issues in the first place. These kinds of breaches can inculcate heavy losses to the banking organizations. Since the HRM was not aware of the misconduct of the employee and did not take any necessary action to such a crime therefore it is failing in the banking organizations of Australia.

This kind of failures of the HRM practices is a serious cause for employee misconduct. The recommendations which can be made are to become more aware of the on-going activities in the bank and take necessary actions to resolve it. This will allow HRM to proficiently solve the issues that are visible in the banking organisation(Bartlett et al. 2019).As per the AHRI HRM model, the HR of the “National Australia Bank” should have awareness regarding the clarity of the protocols and for this, open communication should be fostered. The HR of the bank should motivate over sighting the financial transactions (Sanders and Yang 2016). The HR of National Australia Bank should also creates a review system and seriously take corruption claims. This is ethical conduct which the HRM should have followed initially to resolve the issue.

Conclusion on Industry Case Studies Report

It can be concluded that a caring, honest and fair type of leadership is considered as ethical leadership. It is very important to follow ethics whether it is any organization. This report discusses three case studies which are linked with hospitality, aged care and banks. There are three different types of ethical issues explained in the cases studies which can be resolved utilising the AHRI HRM model. The HRM must work considering ethical behaviour. Ethical leadership and HRM are related in a manner that when HRM is absent then the ethical leadership assists employees in feeling supported by providing a sense of psychological and emotional safety to employees. Similarly, if the ethical leadership is on the lower side then HRM can increase the insights of employee’s contribution with the help of communication of HR practices and assisting the employees in feeling supported. If the employees feel supported then they will have sufficient emotional resources to invest their resources in the company in the form of organizational behaviours. It means that the employees can go farther than formal job roles. There are various ways to avoid failure in the HRM which includes talking about the significance of the ethics, keeping employees sufficiently informed about problems which influence them, upholding commitments to workers and shareholders, acknowledging and rewarding ethical conduct, holding those who disrupt ethical standards, particularly leaders.This will help to build a culture of honesty from the top to bottom in a company.

According to the case study of the hospitality industry, it became known that the chefs were underpaid and the HRM did not pay any attention to this issue. The chefs were forced to work for overtime and they were never paid for that. The chefs were forced to work for about 60 hours per week as per the roster or in actual 80 hours per week but were paid for 40 hours per week only. This was an unethical behaviour shown by the Australian eatery and the HRM. For resolving this issue,AHRI model was used which made the HRM realise about the expectations derived from them. If those procedures were followed before then these issues would not have arisen.

According to the case study of the aged care industry, it became known that there was a shortage of the staff as the aged care decided to do cost-cutting. Because of this reason, the residents of the aged care were suffering a lot in terms of medication mismanagement, low care, neglecting attitude of staff etc. This was an unethical behaviour shown by the Australian aged care and the HRM. For solving this matter, AHRI model was utilised which made the Human Resource Management understand the potentials derived from them. If the HR would have followed the process earlier then these issues would have resolved in the first place.

According to the case study of the banking organization, it became known that the employee was accepting bribes for her and her family’s luxurious life. This information was given by a whistle-blower and not the HRM of the bank. This was unethical conduct shown by the HRM. To solve the issue, AHRI model was used which made the HRM recognise about the aptitudes expected from them. To solve these kinds of issues in future the HRM should take safety measures initially.

References for Industry Case Studies Report

Bartlett, R., Cain, M.D., Fisch, J.E. and Solomon, S.D. 2019. The Myth of Morrison: Securities Fraud Litigation Against Foreign Issuers. The Business Lawyer74.

Brien, D.L. 2017.something diabolical but delicious’: Heston Blumenthal’s ‘Gothic Horror Feast. Australasian Journal of Popular Culture6(2), pp.203-217.

Csillag, S. 2019. Ethical dilemmas and moral muteness in the HRM profession. Society and Economy.In Central and Eastern Europe ǀ Journal of the Corvinus University of Budapest41(1), pp.125-144.

Davies, P. and Roper, M. 2016. Dinner by Heston Blumenthal. Artichoke, (54), p.36.

Fitzpatrick, L. 2018. Victorian Bupa strike makes history. Lamp, The75(3), p.14.

Guerci, M., Radaelli, G., De Battisti, F. and Siletti, E. 2017.Empirical insights on the nature of synergies among HRM policies-An analysis of an ethics-oriented HRM system. Journal of Business Research71, pp.66-73.

Haines, T.P., Palmer, A.J., Tierney, P., Si, L. and Robinson, A.L. 2020. A new model of care and in‐house general practitioners for residential aged care facilities: a stepped wedge, cluster randomised trial. Medical Journal of Australia.

Kia, N., Halvorsen, B. and Bartram, T. 2019. Ethical leadership and employee in-role performance. Personnel Review,p.1.

Krambia-Kapardis, M. 2016.Financial Crisis, Fraud, and Corruption. In Corporate Fraud and Corruption (pp. 5-38). Palgrave Macmillan, New York.

Montague, A., Larkin, R. and Burgess, J. 2016. Where was HRM? The crisis of public confidence in Australia’s banks. In Asia Pacific Human Resource Management and Organisational Effectiveness (pp. 67-86). Chandos Publishing.

Myung, E. 2018. Progress in Hospitality Ethics Research: A Review and Implications for Future Research. International Journal of Hospitality & Tourism Administration19(1), pp.26-51.

Palmer, A.J., Si, L., Haines, T., Tierney, P. and Robinson, A. 2018. Cost Analysis of Changing A Model of Care and Employing General Practitioners within Residential Aged Care Facilities Based on A Prospective, Stepped-Wedge, Cluster Randomised Trial in an Australian Setting. Value in Health21, p.S58.

Pha, A. 2018. Aged care: Abuse from profit. Guardian (Sydney), (1841), p.1.

RESIDENTIAL, P.S. 2016. Bupa needs to catch up. LAMP, p.19.

Rowley, C., Nankervis, A. and Salleh, N.M. 2016. Conclusion: The human resource management–organisational effectiveness link: overview and the role of HR practitioners. Asia Pacific Human Resource Management and Organisational Effectiveness: Impacts on Practice, p.231.

Sanders, K. and Yang, H. 2016. The HRM process approach: The influence of employees’ attribution to explain the HRM‐performance relationship. Human Resource Management55(2), pp.201-217.

Simões, E., Duarte, A.P., Neves, J. and Silva, V.H. 2019.Contextual determinants of HR professionals’ self-perceptions of unethical HRM practices. European Journal of Management and Business Economics.

Sutherland, K., Freberg, K. and Driver, C. 2019. Australian employer perceptions of unprofessional social media behaviour and its impact on graduate employability. Journal of Teaching and Learning for Graduate Employability10(2), pp.104-121.

Tavitiyaman, P., Zhang, A., Ko, H.C.A. and Ng, A.W. 2019. Effects of the hospitality industry’s code of ethics on organizational performance. Journal of Quality Assurance in Hospitality & Tourism20(1), pp.66-88.

Vanderstraeten, M. 2012. " Dinner": lifestyle restaurant review. Without Prejudice12(10), pp.70-71.

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