Sample Management Report Paper on Stakeholder Engagement in CSR at Element Java Hotel by Westin

Stakeholder Engagement in CSR at Element Java Hotel by Westin

Introduction

Element by Westin is part of the larger Starwood Chain of Hotels that is supposed to be opened in Java, Indonesia. In a company such as Element Java Hotel, there are various human elements that contribute to the sustainability of the hotel operations. Some of those stakeholders include contractors, investors, suppliers, customers and employees. Each group of stakeholders has different levels of responsiveness towards the company goals and operations depending on the level of interaction between the stakeholders and the hotel. It is thus critical for the hotel to satisfy the needs of each of these stakeholder groups wholesomely in order to avoid dissatisfactions. Since the Hotel cannot operate optimum without any of the stakeholders, the viability of the hotel may be reduced due to dissatisfaction of any of the stakeholders (Wheeler, 2003). Creating satisfaction can be achieved through many ways. One of the most essential ways of achieving satisfaction among all groups is through consciously accomplishing all the corporate social responsibilities according to the hotel’s management program and the societal requirements. Element Lexington in the US can be used by Element Java as a benchmark for effective and sustainable operations with regards to the involvement of various stakeholders.

            Corporate Social Responsibility (CSR) is an instrumental element in the success of any business. In the hospitality industry, the impacts of CSR are even more pronounced due to the prevalence of interactions between various stakeholders. Performance of CSR is inseparable from ethical operations in the industry hence is directly linked to sustainable development. Although the key objective of any business is to gain economically, the diversity of stakeholders in businesses makes it imperative to engage in other non-economically directed activities to achieve long term sustainability. Applying ethical rules in operation indefinitely leads to the accomplishment of economic goals of the organization. According to Bowie (1991) failure to operate within the ethical constraints leads to inevitable failure. At Element by Westin, it will be essential to engage all stakeholders in the organization and accomplishment of CSR objectives to achieve the desirable level of long term competitiveness and sustainability.

Stakeholder Engagement in CSR at Element Java

            The Relationship between CSR and organizational performance can be connected to various aspects of performance. CSR can directly be linked to organizational aspects such as reputation management, risk management, investor relations, competitiveness and learning (Hopkins, 1999). In terms of organizational reputation management, CSR can help organizations to boost their reputation among different stakeholders and subsequently gain greater profitability. Through engagement in activities considered ethical and welcomed among the stakeholders, companies get to boost their reputation leading to greater economic advantages. However, the requirements from different stakeholders vary. Similarly, the requirements vary across industries. For instance, the stakeholder expectations from hospitality industry CSR are quite different from expectations from other sectors.

Similarly, the effects on competitiveness, learning and innovation and risk management all lay within the opportunities brought about by stakeholder engagement in the organizational CSR activities. Hopkins (2004) asserts that engagement of stakeholders in the CSR process planning and implementation is a key step towards organizational performance. From the report of Amato et al (2005), there are two main ways in which organizations can choose to engage stakeholders in the CSR process. The first approach is through an inside out approach where the organization selects the CSR activities and only brings the stakeholders on if and as necessary. On the other hand, an organization may choose to engage the stakeholders entirely throughout the entire process involving idea generation, planning and implementing the CSR activities. This is proposed by Boutilier (2007) who asserts that the inside out approach could produce disastrous results in the long term as various stakeholders feel they are excluded from the decision making process. According to Boutilier, the intentions of the organization in using an inside out approach may be honorable but still produce disastrous results. Based on these arguments, it is recommended that Element Hotel by Westin should engage all stakeholders at all stages of CSR as this is bound to give more sustainable results from CSR.

Engaging Customers

Customers are the greatest asset to a hospitality industry business. Because of this, the way the hotel treats its customers will determine its potential for long term success. The customers develop different perceptions about the hotel depending on its CSR efforts. Different industries treat their customers differently regarding the aspect of CSR. However, ethical treatment of customers in an organization is a common concept since the primal objective of economic achievement cannot be accomplished without the customers. Gaining from a business depends wholly on the interaction between the business and its customers. The choice of customers at the hotel depends on aspects such as the service and product qualities, the safety of the hotel and the availability of all the required services (Toyota, 2012).

In order to acquire, retain and grow their customers, Element Java Hotel needs to focus on innovation in their provision of food items. This could be achieved through aspects such as new recipes, high quality food items, and effectiveness in food delivery. By always making sure that the hotel serves best quality foods through customer friendly employees, it will be possible for the hotel to create lasting impacts on the customers. Distinctive menus and recipes can serve as key points of marketing to the international market. Since the hotel intends to serve tourists, creating a culture that intertwines tradition with the modern Indonesian cultures can help create exceptional impression on customers hence increasing competitive advantage. Sustainable food production can be applied by the hotel through learning from Indonesian cultural practices. Currently, Indonesians are changing in terms of their eating habits towards the preference of more agricultural food materials. Through taking this stance in food production, the hotel can lure more customers as they identify with the Indonesian culture. In addition to this, adopting a sustainable food provision objective, the hotel will also boost its profits while fulfilling its responsibilities to the customers.

Innovation in recipes can also help the hotel to address customer need effectively. It is the responsibility of the hotel to bring the customers a touch of the Indonesian culture. This can be achieved through incorporation of the surrounding communities in service delivery. One of the ways through which the hotel can achieve this is by partnering with local communities to have the customers dine at the homes of some of the locals. Besides enabling the customers to feel incorporated into the cultural practices of the community, it will also give them an exceptional experience concerning the cuisine of the Indonesian people. In addition to this, the hotel can use their green practices to entice more environmentally conscious customers into the hotel.  Provision of materials that eco environmental friendliness such as the recycled bins, carpets and other house hold products made from eco friendly raw materials can help the hotel to attract and retain more customers. This will not be difficult for the hotel as it will learn from Element in Lexington on how to accomplish this.

Government

The government is another key stakeholder in the hotel operations and the hotel thus holds some CSR obligation towards the government of the day. The hotel has to accomplish the obligations it holds towards the Indonesian government in order to be capable of sustainable operations in the long terms. The support of the government is crucial as it determines the reputation of the company to a great extent. Wheeler (2003) suggests that all organizations have the obligations to adhere to government regulations on various business operations. This is an ethical requirement that is inevitable in the business context. Compliance with tax regulations and other mandatory business startup regulations is essential to business sustainability. In addition to this, the government has well laid down structures for the registration of a business as well as the requirements of any business entity. During operations, the hotel will be obliged to remit annual tax returns besides paying the taxes (Wheeler, 2003).

Other obligations include compliance with environmental conservation principles such as by ensuring minimum pollution and reducing environmental impacts of the hotel’s operations. This could be achieved through the use of eco-friendly products such as the use of recycling bins in all the rooms, carpets made from recycled materials and low VOC paints for the interiors. Such measures will be recognized by the government as contributing to environmental conservation hence the government will be more likely to provide financial support as motivation for the company to continue engaging in environmentally friendly purchases and operations. The hotel will also comply with safety laws with regards to the operations of the employees. This is taken as a form of CSR towards the government in that it is the government that sets the regulations to provide protective equipment to all workers and to subject employees to fair working conditions that do not jeopardize their safety. Adherence to anti-trust laws will also be instrumental to building the hotel reputation and subsequently increasing shareholder value (Toyota, 2012). The government can help the hotel to achieve these aspirations through provision of guiding policies on the implementation of labor laws, compliance with green building requirements and upholding human rights in the work place.

Community engagement

The business community also forms an essential component to the success of the hotel. With regards to this, the community is not only the people living around the hotel. It extends to include the local government in the general essence, the natural and physical environment, special interest groups, special action committees and consumerists. The hotel has ethical and social responsibilities towards these groups in different measure and different points of interaction. The characteristics described by Etzioni (1996) as pertaining to the community include: the presence of true needs of all members (collective needs), there is a balance of autonomy and order; there is a system of defined values without which living results in inferiority impression. Furthermore, Selznick (1994) posits that communities can be defined through their common commitment to shared values. These characteristics explain the rationale behind having some of the distinct groups as part of the hotel community. The aspect of autonomy and order in the community relates to the fact that the community may comprise of certain units that are distinct in their operations yet have shared values and commitment to those values like the whole community. Based on these characteristics, it is important for the hotel to recognize the points of interest in the hotel community and subsequently to embed their CSR practices to the community needs and values.

Failure to adhere to the values that the community holds in high esteem may result in failure and lowered reputation. For instance, in an environmentally conscious society like that in Indonesia requires the hotel to be environmentally conscious too. Failure to comply with this leads to a dip in the reputation of the hotel. The relationship between the hotel and the community is symbiotic in that the hotel fulfils the needs of the community while the community provides a favorable business environment. The obligations of the company towards the community involve investing in operations that provide favorable future returns to ensure business sustainability. The hotel is bound to provide benefits to the communities through availing new employment opportunities, sustainable environmental practices and adhering to societal norms (Clarkson, 1995).

In terms of providing employment opportunities, the hotel should concentrate more on local labor capacity in Java. Although it may not be possible to obtain all skilled labor sources from the area, it is possible to get sufficient labor for the hotel since the education levels in Java are higher than the rest of Indonesia (Kuipers, 2011). This implies that through recruitment and in- service training, the hotel will be able to build the labor capacity in the area. Locals can work effectively in areas such as housekeeping, service and routine maintenance areas with minimum training. Through added experience in the hotel, the workers will eventually be capable of tackling more demanding responsibilities.

The community which supports environmental conservation requires the businesses to operate with environmental sustainability as the motivating factor behind their purchases. By engaging local distributors and suppliers, it will be giving back to the society socially. Social contribution by the hotel to the community comes through engagement in practices that uplift the community while also upholding their autonomy and values. Ethical treatment of employees, motivation of the community members through actions such as providing support to local artistes, actual physical involvement of the community in aspects such as environmental cleaning and charity activities directed to children and the poor also form part of social contribution to the community (Toyota, 2012). For the hotel, focus should be on how to maintain profitability through the use of locally available resources.

Marketing strategies employed by the company should thus allude to the benefits that the start-up will give to the community as well as the practices that will enhance the symbiotic relationship between the hotel and the community. Providing a favorable business environment implies that the community will support the growth of the hotel through provision of positive criticism, providing impetus for law compliance and providing the necessary resources such as land and labor, at a price of course. This thus contributes to the community’s economic growth.

Investors and Owners

The investors and the owners of the hotel are key stakeholders in its operations due to the fact that they are the power behind the idea itself. As such, the driving motivation behind every business, which is profit making lies squarely with them. The investor decisions determine the continuity of the business. However, the business itself has to fulfill the needs of the investors and owners to be considered viable. Economic needs surpass all other needs but cannot be fulfilled without the accomplishment of other needs such as the CSR needs of the investors. The business is considered to be the property of all those who invest in it. The investment can be through outlay of money, time and other resources towards the success of the business. All the investors in any company expect an outcome which depends on the relationship established between the investors and other stakeholders in the business (Etzioni, 1998; Freeman, 1984).

For the Element Java Hotel, the outcome to the investors can only be favorable depending on the interactions with customers. The hotel has the social responsibility of producing favorable profitability to the investors. This can only be done through engagements that enhance the hotel reputation among potential customers and which also lead to the realization of the hotel objectives in sales. Profitability must be achieved ethically through procedures that do not violate any ethical expectations. For instance, investors are only attracted to businesses that have the capacity of providing a return on investment.

In addition to this, the hotel owes the investors the CSR to select investors through a just process that gives an opportunity to all the potential investors. While the investors need the hotel to gain economically, the hotel also needs investors who are worthy of the opportunity. This implies that there has to be a rigorous process of selecting the most suitable investors. It is the responsibility of the hotel to select investors who are conscious of the community needs, whose goals align with the business objectives and who will help the hotel to accomplish its CSR obligations towards other stakeholders. The investors are thus entitled to a fair and just process of selection devoid of any corruption. Furthermore, the hotel has to practice honesty and integrity with respect to dealing with investors, particularly in aspects such as payment of dividends among others (Etzioni, 1998).

The hotel owners, like the investors has the need for economic benefits which is associated with the hotel operations. This can also be achieved if the hotel operates profitably. To achieve this objective, the hotel has the responsibility of dealing fairly with the owners, maintaining accountability and transparency in dealings and carrying out constant communication with the owners (Freeman, 1984). Similarly, the owner, working under the guidance of the Starwood Hotel code of ethics, is obligated to provide sufficient capital assistance. In addition to this, moral decision making guided by the code of ethics is a mandate of the hotel owner. The decisions made should be based on information provided by the hotel management for the benefit of the hotel and its sustainable growth.

Employee CSR

The employees are also part of the resources held by the hotel that will help the business achieve its objectives. The hospitality industry is particularly crucial because how the employees are treated is reflected on their interactions with the customers who are the key stakeholders in the hotel. CSR drives organizations towards maintaining employee engagement to the organizational goals. The employees at the hotel will judge the CSR efforts based on three major aspects. Sciarelli recognizes the fact that employees will perceive the ethical efforts of any organization based on the procedural aspects of CSR, the interactional aspects and the distributive aspects of CSR (1991). This outline is also given by Aguilera et al (2004) who describe the procedural aspect as involving the way in which the CSR concept is embedded in the organizational operations. The distributive aspect includes the outcomes from the CSR efforts while the interactional aspect refers to how the organization treats all those with whom it interacts (Aguilera et al., 2004).

As a way of internal marketing, employee CSR goes a long way in achieving the organizational goals since it results in high productivity; customer satisfaction and increased revenue among other outcomes. To gain from these benefits, Element Java Hotel will have to incorporate aspects of CSR such as providing equitable employment and remuneration opportunities, engaging the employees in essential operational decision making and providing fair working conditions (Toyota, 2012). Fair working conditions in this case are characterized by lack of physical, verbal abuse or sexual harassment, favorable working hours and safety in the work place. Additionally, the hotel can also raise its reputation among the employees through understanding and fulfilling their needs, ensuring that the employees are engaged in direct community CSR activities such as charitable events and strengthening the employee identification with the hotel (Bhattacharya et al., 2007). Practices such as the use of forced labor, child labor, violation of workers’ rights, and violation of human rights contravenes the obligations of CSR towards the employees hence the hotel should focus on eliminating such activities that lower their reputation. Through initiatives that indicate that the hotel is against such practices, it is possible to send a positive marketing message to potential and existing employees as well as to the society.

Suppliers

While dealing with suppliers, the hotel has to be very careful. This is because of two main reasons. First, the suppliers hold the key to effective hotel performance. Secondly, the suppliers deal with perishable goods in most instances. Tripathi and Singh (2014) suggest that businesses should be aware of the environmental impacts of their operations prior to engaging any suppliers. Although the hotel is socially responsible to the suppliers for maintaining a fair process for the selection of suppliers, it also has to critically evaluate each of the suppliers. Being in an environmentally conscious community, it is critical for the hotel to engage only suppliers that are similarly environmentally conscious. Suppliers who produce recycled products should have an upper hand for consideration. Moreover, the hotel should also try as much as possible to consume local products in their operations rather than importing the products.

According to Tripathi and Singh, maintaining price competitiveness is one of the obligations of the suppliers towards any business. Moreover, the suppliers also have to form a habit of accomplishing timely deliveries and accuracy. In response to the accomplishment of all these, the hotel is responsible for providing a corruption free trading environment for the suppliers and protection of the confidential information in relation to suppliers (Toyota, 2012). Communication between the hotel and the suppliers also has to be two ways to enhance effectiveness.

Contractors

The Element Java Hotel will have to hire the services of renowned contractors. The hotel intends to use the standards of Element Lexington Hotel in the US to attain ‘green’ construction standards. The Lexington Hotel is a leader in this segment having been awarded certification by the Green Building Council for Leadership in Energy and Environmental Design. Element Java thus intends to only acquire the services of contractors who are capable of designing and constructing every aspect of the hotel in compliance with LEED standards. This will require the contractors to be capable of demonstrating to the owner and the investors that they will be capable of addressing issues of energy and water. The energy consumption in the building will have to be at least 20 percent less than that in conventional buildings since the hotel intends o follow in the footsteps of Element Lexington (Vamosi, 2011). Other aspects of the LEED certification requirement that the contractors are expected to satisfy are well described in the attached appendix. Since compliance with LEED requirements implies that additional costs will be incurred in construction, the hotel is required to supply the capital requirements for the project. The quality control process for the construction project will be undertaken by the Starwood group of hotels and will be in compliance with the group’s policies and regulations.

Conclusion

The hospitality industry involves a lot of interpersonal interactions. This implies that engagement in the hotel business will demand proper application of ethical values. The various stakeholders at the Element Java Hotel, created by Westin expect the hotel to address different CSR expectations. However, the expectations of the stakeholders differ and so does the range of actions that the hotel can use. The customers are crucial to the profitability of the business hence have to be treated with utmost care. For instance, the customer information has to be kept confidential. They also expect quality in service delivery at the hotel. The government expects compliance with various laws and regulations as well as with tax requirements. The investors on the other hand expect to be treated with respect, fairness and justice and to be provided with a return on their investments. The hotel owner is deserving of constant communication with the hotel as well as transparency and accountability in all dealings. Since the employees are the key organizational resource, the hotel has to work in conformity with the workers’ rights, to provide fair working conditions for all employees and to apply fairness and equity in employment and remuneration. The suppliers on the other hand expect constant two-way communication, anti-corruption practices and price competitiveness among other factors.

Apart from the discussed stakeholders, the hotel will also get to interact with others such as contractors and casual laborers. In all dealings, the most important ethical aspects in CSR compliance include maintaining integrity, honesty and upholding dignity and respect for all humans. This will help the hotel to maintain long term sustainability.

References

Aguilera, R., Rupp, D., Williams, C. & Ganapathi, J. (2004). Putting the S back in Corporate Social Responsibility: A Multi-Level Theory of Social Change in Organizations.Champaign, Urbana: University of Illinois Press.

Amato, A., Henderson, S. & Florence, S. (2009). Corporate Social Responsibility and Sustainable Business: A Guide to Leadership Tasks and Functions. Center for Creative Leadership.

Bhattacharya, C.B., Sen, S. & Korschun, D. (2007). Corporate Social Responsibility as an Internal Marketing Strategy. Sloan management Review.

Bowie, N.E. (1991). ‘New Directions in Corporate Social Responsibility.’ Business Horizons, July- August Issue.

Boutilier, R.G. (2007). ‘Social Capital in Firm Stakeholder Networks: A Corporate Role in Community Development.’ Journal of Corporate Citizenship, 26, 121- 134.

Clarkson, M. (1995). A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance. Academy of Management Review, 20, 92-117.

Etzioni, A. (1996). ‘The Responsive Community: A Communitarian Perspective.’ American Sociological Review, 61.

Etzioni, A. (1998). A Communitarian Note on Stakeholder Theory. Business Ethics Quarterly, 8(4).

Freeman, E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pittman.

Hopkins, M. (1999). The Planetary Bargain: Corporate Social Responsibility Comes of Age. Basingstoke: MacMillan.

Hopkins, M. (2004). Corporate Social Responsibility: An Issues Paper. Policy Integration Department, Working Paper No. 27.

Vamosi, S. (2011). The True Cost of LEED- Certified Green Buildings. Retrieved from http://hpac.com/archive/true-cost-leed-certified-green-buildings

Kuipers, J. (2011). Education. In Frederick, W. and Worden, R. (Eds.) Indonesia: A Country Study. Library of Congress Federal Research Division.

Sciarelli, S. (1991). ‘Corporate Ethics and the Entrepreneurial Theory of Social Success.’ Business Ethics Quarterly, 9(4).

Selznick, P. (1994). The Moral Common Wealth. Berkely, CA: The university of California Press.

Toyota (2012). Supplier CSR Guidelines. Toyota Motor Company.

Tripathi, R. & Singh, V.P. (2014). Corporate Social Responsibility (CSR) and Ethical Issues in Marketing. International Journal of Management and International Business Studies, 4(3), 297- 308.

Wheeler, D., Colbert, B. & Freeman, R. E. (2003). ‘Focusing on Value: Reconciling Corporate Social Responsibility, Sustainability and a Stakeholder Approach in a Networked World.’ Journal of General Management, 28(3).

Appendix: Literature on LEED Certification

  1. Environmental and Human Health, Inc. LEED Certification: Where Energy efficiency Collides with Human Health, An EHHI Report Summary. Accessed at: http://www.ehhi.org/reports/leed/
  2. Vamosi, S. (2011). The True Cost of LEED- Certified Green Buildings.

Accessed at: http://hpac.com/archive/true-cost-leed-certified-green-buildings