Industry Integrity

Does integrity have a chance in the construction industry?

Anthony Brabazon is a professional architect, CEO of Dublin based ABA Architects and founder of HelpMyHouse.ie.  He served as Honorary Secretary in the Royal Institute of Architects of Ireland and sat for four years on their Professional Conduct Committee.  Anthony is known for his integrity in a construction sector not universally applauded for the highest ethical standards.

Anthony opened by stating that “Ethics is the oil that flows between business relationships to stop sparks flying.” He suggested that ethics are regulated by two policemen:

The first is the internal policeman or conscience, which may or may not be effective depending on how the conscience is informed and the second is the external policeman comprising Contracts, Regulations and Enforcement as well as the fear of reputation loss.

He observed the effect of regulatory failures with the quotation: “When the sentence for a crime is not carried out, the hearts of the people are filled with schemes to do wrong” and then noted that ‘light-touch’ regulation is not a recent development, as the quotation was taken from the Book of Ecclesiastes written by King Solomon a few millennia earlier!

Anthony then contrasted the construction industry with manufacturing where a tested product can be seen before purchase.  In construction the outcome, in most cases, is not seen until the end of the process, which raises the requirement for trust between parties involved in each project.  The architect applies professional judgement on matters of quality at each stage to get the end ‘product’. While construction may not be a precise business, it can be a fair business.

He then discussed a variety of ethical issues facing the construction industry.

Ethics of tendering Due to costs associated with preparing prices it is important in an open economy to limit the number of tenderers in a transparent manner.  He noted that the depressed economy has been exploited by some clients in casting the net too wide when seeking tenders.

Ethics of architects Until recently anyone in Ireland could call themselves an ‘architect’.  The title ‘architect’ is now protected after a long campaign, the final push coming after a TV documentary concerning a fake architect exploiting customers.  While the ‘function’ has yet to be protected the ‘title’ protection is a good first step.

Architects are independent of Contractors and operate under a professional Code of Conduct which outlines duties to the public, clients and the profession.

Ethics of contractors A number of issues arise with building contractors.  One is tax compliance and Anthony explained that  tax inspectors have started inspecting plant hire firms to build true profiles of contractors’ output compared to declared accounts.  Another issue is sub-contractor payments.  He said ethical relationships must pass down the line as payment delays can prove dangerous to sub-contractors. He cited the collapse in Ireland of a major main contractor which affected over 1,000 sub-contracting firms.  The final example was customer care which the industry isn’t always renowned for.  Anthony said clients know when they are being “looked after”… but it is a two-way street requiring fair behaviour from all parties.

Ethics of clients  Anthony discussed a number of ethical issues relating to clients of architects, the first being tax compliance and “cash” deals which he described as not only being ‘illegal and immoral’ but also ‘foolish as they remove legal protection in an attempt to save 13.5% value added tax’. Another issue is ensuring that projects are adequately funded, both for construction and for professional services.  This, sadly, is often not the case.  He also said a clarification of roles was required, especially when a first-time, non-expert client was engaging an architect.  It can happen that the client has unrealistic expectations of the architect’s duties, especially in the case where the building contractor fails to perform. Anthony said that ultimately a degree of trust was required between both parties, as he had already stated, the ultimate end product can be ‘invisible’ until the project is complete.

Anthony then proceeded to describe a range of new pressures which had arisen over the last thirty years ranging from the proliferation of new materials, technologies and regulations in buildings, the speed of procurement, a stripping back from full service levels and below cost tendering.  Whilst these issues affect professional architects around the world, he said a number of issues are particular to Ireland, some as a result of the construction industry now accounting for only 8% of the overall economy, a recent fall from around 25%.   More difficult economic times have resulted in a high proportion of work, notably residential and small commercial projects, being directly procured with contractors without professional advice from architects, engineers or surveyors.

The final issue Anthony discussed was the question of how professional architects view themselves – do they see themselves as stewards or owners?  He suggested that, if the answer was as stewards, they were accountable to someone else, but if as owners then they do not see themselves as accountable.  Employees of large firms like IBM or GM, BBC or NBC are like stewards and have their ethical behaviour guided and regulated by the ethics of their companies.  Small business owners are without this constraint. However, even without accountability fear of loss of reputation can be a compelling influence.

Anthony concluded with a photo of the Empire State Building in New York which he cited as an example of what ethical co-operation could achieve, even in difficult circumstances such as the prevailing depression in 1930. He included a copy of a note typed at the time whereby the project was described as having been completed in 21 months from inception of design to completion. Co-operation indeed, the very essence of business being conducted with integrity!

Does integrity have a chance in commercial hospitality?

 

Ruud Welten is both professor of Ethics and Corporate Social Responsibility in Hospitality Business at Saxion University of Applied Sciences in the Netherlands and assistant professor at the Philosophy Dept of the Faculty of Humanities of Tilburg University in the Netherlands where he teaches business ethics, consumer culture and contemporary philosophy.

Consequently it was not surprising that he spoke about integrity in the hospitality industry particularly from the Aristotelian perspective. Ruud’s was the final presentation of the conference and, like the wedding feast at Cana, those present could not have doubted that the quality of wine at the end was every bit as good as earlier!

Ruud described the Hospitality Industry (including hotel management, restaurants, tour operating and the tourism industry) as being one of the world’s leading industries which had been booming since the second half of the twentieth century. Many regional and even national economies largely depend on tourism.

Tourists typically expect a warm welcome and the hospitality industry develops strategies to guarantee tourists that kind of hospitality. But the industry has found itself self-contradictory from the outset: on the one hand, it is a business sector with its own economic responsibilities, while on the other a term like ‘hospitality’ refers to social and moral attitudes that are not typically bound by those same economic criteria. Jean-Jacques Rousseau complained in the 18th century that Europe was ‘the only place where hospitality is for sale’.

To be hospitable basically means ‘to open one’s house to a guest’, and it is this receptivity that is typical of hospitality.

The hospitality industry finds itself in a double bind: on the one hand the excellence in the behaviour toward others is to be founded on hospitality as a moral value, characterised by the talent to make guests feel welcome.

On the other hand, in our consumer society, hospitality is a business like other businesses, with aims including the maximization of profit. This situation requires a clear view on the practice of hospitality that is marked by integrity.

Ruud strongly asserted that integrity is the key to business ethics in all the hospitality sectors. He posed the situation when thousands of people were doomed to stay in the city due to an Icelandic ash cloud, as happened around Europe during May 2010. He asked was this an opportunity to make money and increase the price for a night, or to show genuine ‘hospitality’ and reduce prices? What does the balance lie in such a situation?

This tension between the moral attitude of hospitality and the economised concept of hospitality is an important feature of tourism and requires a considered view on integrity which Aristotle could provide. His description of the truest ideals of hospitality and Aristotle’s worldview appeared a good fit.

Ruud referred to the ‘homeric’ ideal of hospitality notably philoxeinoi being the love for strangers. In this sense hospitality refers to a world of human relationships not mediated by the pursuit of profit, with hospitality being extended to those who really need it.

A key question is how a business ethics of the hospitality industry should be framed. Since this sector is based on the implicit ethics of hospitality, its business ethics has to start with the core business, which is hospitality itself.

Ruud suggested that the typical viewpoints of both ‘the market’ and ‘hospitality’ could be mistaken.

He referred to Aristotle’s notions of oikonomia, Greek meaning “management of household” allowing a discretionary deviation from the letter of the law in order to adhere to the spirit of the law and charity. This is in contrast to legalism, or akribia (Greek: ακριβεια) a strict adherence to the letter of the law.

“Oikonomia” is a wider and broader concept of understanding the caring economy. It is a way of organizing life as a whole and comprises all the activities that keep daily life functioning. A caring economy is about communities experiencing life together, of relationships, mutuality and reciprocity, and not about individual satisfaction and competition.

On the other hand Ruud referred to the the notion of chremastitike relating to money-making [from khrēmatizein to make money and khrēma money]. Chrematistics (from Greek: χρηματιστική) according to Thales of Miletus is the art of getting rich.

Aristotle established the fundamental difference between economics and chrematistics. Ruud alluded to the Aristotle’s belief that the accumulation of money itself is an unnatural activity that dehumanizes those who practice it.

Like Plato, he condemns the accumulation of wealth. Trade exchanges money for goods and usury creates money from money. The merchant does not produce anything: both are reprehensible.

According to Aristotle, the “necessary” chrematistic economy is licit if the sale of goods is made directly between the producer and buyer at the right price; it does not generate a value-added product. By contrast, it is illicit if the producer purchases for resale to consumers for a higher price, generating added value. The money must be only a medium of exchange and measure of value.

Ruud suggested the notion of chremastitike was more akin to what Max Weber referred to as profit for profit.

The ‘better’ view of ‘the market’ Ruuud saw as being encapsulated by Kenneth Dayton, CEO of a retail empire: “We are not in business to make maximum profit for our shareholders. We are in business for only one reason: to serve society. Profit is our reward for doing it well. If business does not serve society, society will not tolerate our profits or even our existence.”

Hospitality is understandable only if it aims ‘to serve society’ as a matter of principle. The proposition that doing business will corrupt any hospitality of integrity presupposes that the term ‘economics’ refers to ‘trade for profit’.

Likewise Ruud asserted that people often held the wrong view of ‘hospitality’ – meaning economic – rather than being closer to the Aristotelian notion of φιλία – or Friendship which Ruud saw as the kernel of Aristotelian ethics.

Ruud suggested the notions of φιλία and ξενία or Friendship and Hospitality were closely related.

Doing business with integrity means doing business the way one would towards and especially with ones best friend.

Consequently integrity is certainly NOT the separation of Friendship and Business, despite people ability to ‘compartmentalize’ or ‘artificially separate moral virtues in different circumstances’.

Ruud also asserted that citizenship contributed to the true role of business in the Polis, the active participation in the social life of oikos and polis, as suggested in more modern times by Robert C. Solomon: “The first principle of business ethics is that the corporation is itself a citizen, a member of the larger community, and inconceivable without it”.

However the larger community consists of both friends and strangers and hospitality was easier to extend to friends than strangers. For Aristotle xenos refers to both “hostile stranger” and “ritual friend”.

Ruud said the essence of hospitality is precisely that strangers and we do not inhabit the same, familiar ‘house’ (or oikia). A man who strictly speaking was an enemy (perduellis) was earlier called a hostis. The sombre reality was thus softened by understatement, for our ancestors used the word hostis for the person whom we now call an alien (peregrinus) (Cicero). Strangers are people whose language we do not speak and whose customs we do not understand but who we nevertheless provide with accommodation (guests).

Ruud concluded by querying what is a successful hospitality business manager? And what is an excellent hospitality business manager?

Someone capable of finding the correct balance between operating profitably and providing a service in the truest sense of ‘hospitality’.

Ruud suggested Virtue was the mean, the in between which helped strike the correct balance.

The mean is the right balance between two extremes, the extreme of excess and the extreme of deficiency. Ruud again referred to Solomon: “It is managerial virtue that needs to be examined, and not the mere consequences or short-term products of management”.

The notion of integrity is of importance to hospitality business because it brings back the attention to hospitality as a moral attitude toward the other, the guest or the traveler.

Integrity here is based on the Aristotelian notion of balance and excellence. The excellent hotel manager is a business man or woman who is able to make the right choice in management in which hospitality is the compass.

The same should apply well beyond the hospitality sector.

Doing business with integrity means doing business the way one would towards and especially with ones best friend, while extending the same level of service and ‘hospitality’ to the total stranger.