Notes

Ethical Behavior of Housekeeping Managers
Tom Armenta is executive housekeeper of a small 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 five vears has been above the industry
average. Tom is considered a very good manager by the companv 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 emplovees 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 emplovees 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.
Assignment
1. Discuss the case and 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?