27 June 2017

Is a global breach of ethics underway?

By Georges Panayotis - President & CEO - MKG Group

In this era of scandals popping up one after the other in specialized media, it comes as a surprise that students passing the French baccalaureate this year did not have a moralistic subject for their philosophy exam. I have a suggestion for the Economics and Social Sciences Baccalaureate: "Are ethics and business compatible terms?" You have four hours!

All the economic actors are asking for rules to guarantee that competition develops on healthy foundations. It is an essential principle that should not be subject to exceptions because any bending of the rules necessarily results in eliminating deserving businesses, through a distortion of the market to the detriment of the client as consumer, through a misappropriation of market shares… This does not get in the way of a certain propensity towards rule bending in favor of family in a call to tender to treat directly with a close partner without without ever making the call, and towards friendly arrangements to ensure personal decisions.

But let's not be naive, the conduct of business is not a long quiet river; it is important to know, at the right time, how to develop alliances, to block initiatives, to apply enough pressure to win over those who are reticent and be able to reward involvement from partners. Does the end justify the means? "Yes," will implicitly answer those who have achieved their goal and were convinced of the pertinence of their strategy. "No," will respond the others who have been eliminated en route by marginal - but not immoral - practices...

And yet, while the goal is to become established for the long term, and create a relationship of trust that is much more efficient than a power struggle, to be able to justify the mutual benefit at any given moment of actions taken, there is nothing like respect for rigorous code of conduct, or for an ethic that will make a better impression than an ephemeral success.

Times have changed, although practices have not yet been totally adapted to this new atmosphere. Transparency has become an essential criteria in business relations for customer loyalty. Those who have not yet integrated it are frequently reminded of it by shareholders, service providers and even clients, without necessarily needing "whistle blowers". Not everyone is motivated by public well-being and the virtuous concern for business morals. Disclosure is never totally innocent, nor devoid of ill intentions to the detriment of a competitor.

The market sanction is the most efficient and often the most painful. Recent examples show that there is no longer any guarantee for impunity. Nike and its manufacturers in countries where child labor is commonplace, Volkswagen and its accommodating antipollution software, BNP and its Iranian contracts, Lafarge and its jihadist funding are just a few instances that resulted in losses of market shares, crashes on the Stock Exchange and heavy fines. If it is more imposed than spontaneous, the moralization of business is supported by a global state of mind that favors fair trade, social responsibility, commercial honesty. More than ever, businesses are considered citizen organizations, which are no longer free to do as they please.

But business and ethics are fully compatible because good practices have never slowed development. It may take a bit longer, and require more conviction, lead to some disappointment when the effort is not enough, but the result is much more solid and convincing.

Today, politicians seem to want to do away with "old practices" that are not all necessarily legally condemnable but morally reprehensible. These include, albeit a bit late, the terrible sword of Damocles that weighs on their legitimate ambitions. They would do well to take advantage of this moralizing trend to fill in a few holes in the legislative racket, by getting the so-called stateless behemoths that operate offshore, by strengthening cooperation between responsible governments. It is a step in the right direction to sweep off our doorstep, although I am aware that we will never prevent rogue states from playing the financial egoism card.

Georges Panayotis

Georges Panayotis is President of MKG Consulting. Born in a family of hoteliers for three generations, Georges Panayotis, 51, left Greece at the age of 18 to pursue his studies in Political Sciences and to obtain his Master in Management at the French University of Paris Dauphine. He then joined the Novotel chain, which will become the Accor Group, to manage the International Marketing Division. After developing specific marketing tools for the hotel industry, he left the group in 1986 to start his own company, MKG Conseil, now MKG Group. In twenty years, the group has become the European leader in studies and consulting for the Hospitality industry. The company employs over 70 people in four departments: marketing studies, database, quality control and trade press, with two publications HTR Magazine and Hotel Restaurant Weekly. The company helped the development of over 2,000 hotels in France and in Europe, with offices in Paris, Cyprus and London. Georges Panyotis is the founder of the Worldwide Hospitality Awards and the Hotel Makers Forum, and the author of several publications on Marketing and Operations in the hotel business, He is a regular consultant for several television channels, among which Bloomberg Television, and radio networks.

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