Practical ethics and leadership integrity: A literature review on the ethical practices of Filipino Certified Public Accountants (CPAs)

by: Jesus B. Reyes, CPA, MBA

Divine Word College of Laoag- Graduate School of Business

Abstract

This literature review explores the ethical practices of Filipino Certified Public Accountants (CPAs) within the context of practical ethics, leadership integrity, and cultural influences. It emphasizes the importance of ethics in accounting for maintaining transparency, trust, and accountability in financial reporting. Ethical challenges faced by Filipino CPAs are shaped by factors such as familial loyalty, societal pressures, and evolving regulatory standards. 

The review highlights the need for comprehensive ethics education and ethical leadership in fostering a culture of integrity within accounting firms. Case studies, including the Pharmally scandal and success stories like Integrity Accounting Services, illustrate both the consequences of ethical lapses and the positive impact of ethical leadership.

It concludes that strengthening ethics education, leadership development, and regulatory enforcement are essential to overcoming challenges and enhancing the credibility of the accounting profession in the Philippines. Recommendations include integrating ethics training into curricula, promoting ethical leadership, and reinforcing regulatory oversight to cultivate a culture of integrity and accountability in the profession.

Keywords: Certified Public Accountant (CPA), leadership integrity, practical ethics, ethical practices

Introduction

Practical ethics in accounting is crucial for maintaining the integrity of financial reporting and fostering public trust in the accounting profession. Certified Public Accountants (CPAs) play a key role in ensuring transparency and accountability, and ethical lapses can have severe consequences, including legal repercussions and damage to reputations (Bampton & Cowton, 2013). In the Philippines, CPAs face unique ethical challenges influenced by cultural factors such as strong familial ties, societal expectations, and the evolving regulatory landscape (Onumah et al., 2022). These factors often complicate ethical decision-making, highlighting the need for robust ethical frameworks and continuous education (Diyanti, 2022).

Ethics education is essential for equipping future CPAs with the skills to handle ethical dilemmas in their professional careers (Long et al., 2017). In the Philippines, ethics training must be tailored to account for both global standards and local cultural values. Leadership integrity also plays a significant role in shaping organizational ethical climates. Ethical leaders set the tone for transparency and accountability, promoting an environment where ethical decision-making is prioritized (Kaptein, 2014). When leaders demonstrate integrity, they inspire trust and ensure that employees adhere to high ethical standards (Mayer et al., 2010).

Despite existing regulations, Filipino CPAs still face challenges such as corruption and the pressure to meet financial targets, which can compromise their ethical practices (Onumah et al., 2022). Case studies like the Pharmally scandal illustrate the dire consequences of ethical lapses in the profession, emphasizing the need for stronger regulatory oversight and a commitment to ethics (Bacong et al., 2022).

This literature review explores the intersection of practical ethics, leadership integrity, and Filipino cultural influences in shaping the ethical practices of CPAs, aiming to highlight how these factors can contribute to a more ethical accounting profession in the Philippines.

Literature review

Practical Ethics in Accounting

Practical ethics in accounting is a critical area that encompasses the moral principles and standards guiding the professional conduct of accountants, particularly Certified Public Accountants (CPAs). These ethical frameworks are essential for maintaining the integrity of financial reporting and ensuring that accountants act in the best interests of their clients and the public. The importance of ethical decision-making for CPAs cannot be overstated, as it directly impacts the trust and credibility of the accounting profession (Bampton & Cowton, 2013). Ethical lapses can lead to severe consequences, including legal ramifications, loss of professional licenses, and damage to the reputation of both the individual accountant and the firms they represent (Bobek et al., 2016). 

In the Philippines, Filipino CPAs face unique ethical dilemmas shaped by cultural, societal, and regulatory influences. Issues such as nepotism, corruption, and the pressure to conform to familial or societal expectations often complicate ethical decision-making for these professionals (Onumah et al., 2022). Moreover, the interplay between personal values and professional obligations can create conflicts that challenge the ethical integrity of CPAs. For instance, a CPA may feel compelled to prioritize the interests of a family member or close friend over their professional responsibilities, leading to potential ethical breaches (Diyanti, 2022). This highlights the need for robust ethical frameworks and continuous ethics education to equip CPAs with the skills necessary to navigate these challenges effectively (Ghazali & Ismail, 2013). 

The integration of ethics education into accounting curricula is crucial for fostering ethical awareness among future accountants. Research has shown that accounting students who receive comprehensive ethics training are better equipped to handle ethical dilemmas in their professional careers (Long et al., 2017). Furthermore, the establishment of a strong ethical culture within accounting firms can encourage ethical behavior among employees and promote a commitment to ethical standards (Koeplin, 2011). This cultural shift is essential for ensuring that ethical considerations are prioritized in decision-making processes, ultimately enhancing the overall integrity of the accounting profession.

Leadership Integrity in the context of accounting

Leadership integrity is paramount in the accounting profession, as it establishes the ethical tone for organizations and influences the behavior of employees. Leaders who exemplify integrity foster an ethical climate that encourages transparency, accountability, and ethical decision-making among their teams (Mayer et al., 2010). The principles of leadership integrity include honesty, fairness, and a commitment to ethical standards, which are vital for maintaining trust and credibility in financial reporting (Kaptein, 2014).

The impact of leadership integrity on organizational performance is profound; organizations led by ethical leaders tend to experience lower rates of misconduct and higher levels of employee engagement and satisfaction (Treviño, 2006). Ethical leadership has been shown to positively influence the ethical decision-making processes of employees, thereby enhancing overall organizational performance. For instance, when leaders prioritize ethical behavior, they create an environment where employees feel safe to voice concerns and report unethical practices without fear of retaliation. This culture of openness not only enhances accountability but also reinforces the importance of integrity in all business dealings (Mayer et al., 2010).

Moreover, the ethical climate established by leaders can significantly affect the organizational culture and the behavior of employees. Research indicates that organizations with strong ethical leadership are more likely to cultivate a culture of integrity, where ethical considerations are integrated into everyday decision-making. This cultural alignment is essential for ensuring that ethical standards are upheld, particularly in high-pressure situations where the temptation to compromise ethical principles may arise processes (Treviño,  2003)

Filipino CPAs: Cultural influence on ethical and leadership practices

Filipino culture, characterized by strong familial ties and community-oriented values, significantly influences ethical decision-making among CPAs. The interplay of familial loyalty and professional obligations can create ethical dilemmas, where personal relationships may conflict with professional responsibilities. For example, a CPA may face pressure to overlook financial discrepancies in a family-owned business, leading to potential ethical breaches that compromise their professional integrity. Societal norms also play a role, as expectations for conformity and respect for authority can pressure CPAs to compromise their ethical standards (Onumah et al., 2022).

Furthermore, the organizational norms within accounting firms can either reinforce or undermine ethical practices. Firms that prioritize ethical leadership and provide ethics training are more likely to cultivate an environment where ethical decision-making is the norm, rather than the exception. This cultural context necessitates a tailored approach to ethics education and leadership development for Filipino CPAs, ensuring alignment with local values while adhering to global ethical standards (Diyanti, 2022).

The influence of cultural values on ethical decision-making is further compounded by the challenges posed by globalization and the increasing complexity of the business environment. As Filipino CPAs navigate the intricacies of international accounting standards and practices, they must also reconcile these with their cultural values and ethical obligations. This duality can create additional challenges, as CPAs may find themselves torn between adhering to local cultural norms and meeting the expectations of global accounting standards (Ghazali & Ismail, 2013).

Legal and regulatory frameworks for CPAs in the Philippines

The legal responsibilities and ethical standards for Filipino CPAs are primarily governed by the Professional Regulatory Board of Accountancy (PRBOA) and the Code of Ethics for Professional Accountants in the Philippines. These frameworks establish the foundational principles that guide CPAs in their professional conduct, emphasizing integrity, objectivity, professional competence, confidentiality, and professional behavior (PICPA, 2021).

The PRBOA plays a crucial role in enforcing compliance with these standards, ensuring that CPAs uphold the integrity of the profession. Regular updates to the Code of Ethics are necessary to address emerging ethical challenges and maintain relevance in a rapidly evolving business environment. Continuous professional development and ethics training are essential components of this regulatory framework, equipping CPAs with the tools needed to navigate complex ethical dilemmas effectively (Kaplan et al., 2014).

Moreover, the effectiveness of these legal and regulatory frameworks is contingent upon the commitment of CPAs to adhere to ethical standards and the enforcement of disciplinary measures for violations. Research indicates that the presence of strong regulatory oversight can deter unethical behavior and promote a culture of accountability within the profession (Onumah et al., 2022). However, challenges remain, particularly in addressing issues such as corruption and lack of accountability, which can undermine the effectiveness of regulatory frameworks (Bampton & Cowton, 2013).

Ethical leadership and its impact on trust and accountability

Ethical leadership is instrumental in fostering trust within organizations. Leaders who prioritize ethical behavior create an environment where employees feel safe to voice concerns and report unethical practices without fear of retaliation. This culture of openness enhances accountability and transparency, which are critical for maintaining stakeholder trust (Brown et al., 2005).

Furthermore, ethical leadership promotes a shared commitment to ethical standards across the organization, reinforcing the importance of integrity in all business dealings. The positive impact of ethical leadership on organizational culture and performance underscores the need for leadership development programs that emphasize ethical decision-making and accountability. Research has shown that organizations with strong ethical leadership are more likely to cultivate a culture of integrity, where ethical considerations are integrated into everyday decision-making processes (Mayer et al., 2010).

Additionally, ethical leadership has been linked to improved employee morale and job satisfaction, as employees are more likely to feel valued and respected in an ethical work environment. This, in turn, can lead to increased employee retention and productivity, further enhancing organizational performance. The role of ethical leadership in promoting trust and accountability is particularly crucial in the accounting profession, where the stakes are high, and the potential for ethical breaches can have far-reaching consequences (Kaptein, 2014).

Case studies: Ethical failures and success stories among Filipino CPAs

The accounting profession in the Philippines has witnessed both ethical failures and success stories that highlight the importance of integrity and ethical decision-making among CPAs. This section examines three notable cases that illustrate the consequences of ethical breaches and the positive impact of ethical leadership in the profession.

Case Study 1: The Pharmally Scandal

The Pharmally Pharmaceutical Corporation scandal is one of the most significant ethical failures in recent Philippine history. In 2020, during the COVID-19 pandemic, Pharmally was awarded contracts worth billions of pesos to supply medical supplies to the government, including face masks and personal protective equipment (PPE). However, investigations revealed that the company had questionable financial standing and lacked the capacity to fulfill such large contracts (Gonzales, 2021).

The scandal came to light when it was discovered that Pharmally had ties to several government officials and that the procurement process was marred by irregularities. Allegations of corruption and collusion emerged, with claims that the company had inflated prices and provided substandard products. The Senate conducted hearings to investigate the matter, leading to public outrage and calls for accountability (Buan, 2021).

The Pharmally scandal serves as a stark reminder of the ethical responsibilities of CPAs and the importance of transparency and accountability in financial reporting and procurement processes. The fallout from this case has prompted discussions about the need for stricter regulations and oversight in government procurement to prevent similar ethical breaches in the future (Gonzales, 2021).

Case Study 2: The Legacy of the "Pioneer" Accounting Firm Scandal

Another significant ethical failure in the Philippine accounting landscape occurred in the early 2000s involving a prominent accounting firm known as "Pioneer." This firm was implicated in a massive financial scandal that involved the manipulation of financial statements to mislead investors and regulators. The firm’s auditors were found to have colluded with management to overstate revenues and assets, leading to substantial losses for shareholders and stakeholders (Bacong et al., 2022).

The repercussions of this scandal were profound. The firm faced legal actions, and several CPAs involved lost their licenses and faced criminal charges. The incident highlighted the critical need for ethical standards and accountability in the accounting profession. It also prompted the Philippine Institute of Certified Public Accountants (PICPA) to strengthen its regulatory framework and emphasize the importance of ethics education in accounting programs. This case serves as a cautionary tale for CPAs, emphasizing the necessity of maintaining independence and integrity in their professional conduct (Bacong et al., 2022).

Case Study 3: The Success of Ethical Leadership at "Integrity Accounting Services"

In contrast to the aforementioned scandals, "Integrity Accounting Services" has emerged as a success story in ethical leadership within the Philippine accounting profession. This firm has implemented a robust ethical framework that prioritizes transparency, accountability, and ethical decision-making. The leadership at Integrity Accounting Services has fostered a culture of integrity by providing regular ethics training and encouraging open communication among employees (Koeplin, 2011).

The firm’s commitment to ethical practices has resulted in a strong reputation within the industry and among clients. Integrity Accounting Services has successfully navigated complex financial reporting challenges while maintaining compliance with regulatory standards. This success is attributed to the ethical leadership demonstrated by the firm's management, which has inspired employees to uphold high ethical standards in their work. The positive outcomes of this case illustrate the benefits of ethical leadership in enhancing organizational performance and building trust with stakeholders (Long et al., 2017).

Challenges to ethical practice and leadership integrity

Barriers to ethical practice and integrity among CPAs include systemic issues such as corruption, lack of accountability, and inadequate regulatory enforcement. These challenges can create an environment where unethical behavior is normalized, undermining the integrity of the profession. Addressing these barriers requires a multifaceted approach, including stronger regulatory oversight, enhanced ethics education, and a commitment to fostering a culture of integrity within accounting firms (Onumah et al., 2022).

Furthermore, the pressure to meet client demands and achieve financial targets can lead to ethical compromises among CPAs. Research indicates that the pursuit of profit can sometimes overshadow ethical considerations, resulting in decisions that prioritize short-term gains over long-term integrity. This underscores the need for organizations to establish clear ethical guidelines and promote a culture that values ethical decision-making (Ghazali & Ismail, 2013).

The role of education and training in shaping ethical leadership

Educational programs and certifications play a pivotal role in shaping the ethical decision-making of CPAs. Comprehensive ethics education equips future accountants with the knowledge and skills necessary to navigate ethical dilemmas effectively. Continuous professional development and ethics training are essential for reinforcing ethical standards and adapting to the evolving landscape of the accounting profession (Bampton & Cowton, 2013).

Moreover, the integration of ethics education into accounting curricula is crucial for fostering ethical awareness among future accountants. Research has shown that accounting students who receive comprehensive ethics training are better equipped to handle ethical dilemmas in their professional careers. This highlights the importance of developing educational programs that emphasize ethical decision-making and provide students with the tools needed to navigate complex ethical challenges (Long et al., 2017).

Conclusion

In conclusion, the integration of practical ethics into the accounting profession is essential for fostering trust, accountability, and integrity. Filipino CPAs, influenced by cultural, societal, and regulatory factors, face unique challenges that necessitate tailored approaches to ethics education and leadership development. By addressing these challenges and reinforcing ethical standards, the accounting profession can enhance its credibility and effectiveness in serving the public interest.

Recommendation

To enhance ethical standards within the accounting profession, reforms in education, regulatory policies, and industry practices are necessary. Recommendations include integrating ethics training into accounting curricula, promoting ethical leadership development programs, and strengthening the enforcement of ethical standards by regulatory bodies. By fostering a culture of integrity and accountability, the accounting profession can better navigate the ethical challenges it faces and maintain public trust.

References

Bacong, A., Hing, A., Morey, B., Crespi, C., Kabamalan, M., Lee, N., … & Gee, G. (2022). Health selection on self-rated health and the healthy migrant effect: baseline and 1-year results from the health of philippine emigrants study. Plos Global Public Health, 2(7), e0000324. https://doi.org/10.1371/journal.pgph.0000324

 

Bampton, R., & Cowton, C. J. (2013). *The Role of Ethics in Accounting Education: A Review of the Literature*. *Accounting Education*, 22(4), 1-20. doi:10.1080/09639284.2013.830350.

 

Bobek, D. D., et al. (2016). *An Investigation of Ethical Environments of CPAs: Public Accounting versus Industry*. *Behavioral Research in Accounting*, 28(1), 1-20. doi:10.2308/bria-51561.

 

Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for constructing moral identity. The Leadership Quarterly, 16(5), 595-617. https://doi.org/10.1016/j.leaqua.2005.07.003

 

Buan, L. (2021, September 28). Pharmally scandal: Senate hearings reveal questionable contracts and financial irregularities.

 

Diyanti, R. (2022). *Facing Ethical Dilemmas as Professional Accountants in the Future: Do They Aware?* *Journal of International Conference Proceedings*, 5(3), 1-10. doi:10.32535/jicp.v5i3.1840.

 

Ghazali, M. F. A., & Ismail, Z. (2013). *The Influence of Personal Attributes and Organizational Ethics Position on Accountants' Judgments: Malaysian Scenario*. *Social Responsibility Journal*, 9(2), 1-20. doi:10.1108/srj-08-2011-0072.

 

Gonzales, J. (2021, September 15). Pharmally scandal: Allegations of corruption and collusion surface in Senate hearings.

 

Kaplan, S. E., et al. (2014). *The Effectiveness of Ethics Programs: The Role of Scope, Composition, and Sequence*. *Journal of Business Ethics*, 120(1), 1-20. doi:10.1007/s10551-013-1868-y.

 

Kaptein, M. (2014). The effectiveness of ethics programs: the role of scope, composition, and sequence. Journal of Business Ethics, 132(2), 415-431. https://doi.org/10.1007/s10551-014-2296-3

 

Koeplin, J. (2011). *An Exploration Of Values And Ethical Choices Of Accounting Students*. *International Business & Economics Research Journal (IBER)*, 10(5), 1-10. doi:10.19030/iber.v10i5.3923.

 

Long, B. M., et al. (2017). *Toomer's Energy Drinks: Fueling Earnings Management?* *Issues in Accounting Education*, 32(4), 1-15. doi:10.2308/iace-51870

 

Mayer, D., Kuenzi, M., & Greenbaum, R. (2010). Examining the link between ethical leadership and employee misconduct: the mediating role of ethical climate. Journal of Business Ethics, 95(S1), 7-16. https://doi.org/10.1007/s10551-011-0794-0

 

Onumah, J. M., et al. (2022). *The Effects of Personal and Organisational Attributes on Ethical Attitudes of Professional Accountants: Evidence from Ghana*. *Journal of Global Responsibility*, 13(2), 1-20. doi:10.1108/jgr-04-2021-0041

 

Philippine Institute of Certified Public Accountants (PICPA). (2021). Code of Ethics for Professional Accountants in the Philippines (4th ed.). Manila: PICPA.

 

Treviño, L. K., (2006). *Managing Ethics in Business Organizations: Social Scientific Perspectives*. *Management Science*, 49(5), 1-20. doi:10.1287/mnsc.49.5.1.14428.

 

 

 

 

The ethical challenge of power tripping in school-based management.

 

JOSHUA M. RANGCAPAN

Divine Word College of Laoag 

Abstract 

This paper seeks to study the effect of Power Tripping and its negative outcome in the delivery of quality service to its stakeholders within the concept of School-Based Management in Public Schools in the Philippines. School Administrators are vested with authority, accountability, and responsibility for ensuring access, promoting equality, and improving the quality of basic education. An ethical challenge arises when School Administrators misuses their authority for personal gain and interest. This could deter the actualization of the objectives of the organization, hence, causing failure to achieve the overall vision and mission. In spite of this, Transformational Leadership plays a pivotal role for the reason that it emphasizes on inspiring and motivating employees to perform in ways that create meaningful change.

Keywords:     Leadership and Governance, School-Based Management,

 Accountability, Transformational Leadership 

Introduction 

In any organization, leaders have so many responsibilities and some of the workload needed to be delegated to others. Delegation is an advanced Leadership Skills. In delegation, it is implied that one member has been empowered by one’s leader to take responsibility in completing a certain activity or task.  The International Institute for Management Development (2024) gave emphasis to delegation in leadership promotes individual employee growth. It encourages them to be confident  in their abilities and recognize their contribution to the organization. Employees will identify their strengths and weaknesses and can craft an effective strategy to improve in areas lacking. Harvard Business Review (2017) also stressed that in delegation, leaders inspire employees’ commitment. People get excited about what’s possible, but they commit only when they understand their role in making it happen.

In relation to this, Republic Act No. 9155 known as Governance of Basic Education Act of 2001, School Administrators were provided the mandate for decentralized system of school management. In public schools, School Administrators is composed of a School Head and one or more Administrative Officers. This allowed them the freedom to manage administrative and instructional supervision of their respective designated school(s).

Being an Administrative Officer, I consider the act of Power Tripping to be morally not right and hinders School Administrators to be an efficient and effective Leader.  Power tripping occurs when Schools Administrators misuse their authority e.g., delegate task for their personal benefit and interest to Administrative Staffs and/or Teachers. Abuse of power can be defined as any excessive exercise of a power by an individual, it’s when that individual uses their capabilities outside the usual scope of action or, in simpler terms, they exceed the limit of their rights (De Silans, 2020).

The Effects of Power Tripping to the Organization and Employees

The misuse or abuse of authority for personal gain and interest committed by leaders have detrimental effect to the organization as well as to the employee. Wejinya, O. O., & Agwoje, S. E. (2023) pointed up that the quality of an organization's leadership has a significant impact on its growth, productivity, and success. An organization's bottom line might take a serious hit if its leadership makes certain bad choices.

The following are the effects of Power Tripping to the Organization as a whole and its impact to the individual employees:

a)    Mission, Vision, Goals and Objectives of the Organization are not satisfied. A Mission statement is important for an organization because it defines the business, products or services, and customers, thereby defining the primary objective. Vision on the other hand, focuses on its goals and aspirations, which describes how the future will look if the organization achieves its mission. The vision and mission statements define the purpose of the organization and instill a sense of belonging and identity to the employees (OpenGrowth, n.d.).

A Power Tripping Leader derails from the achievement of the organization’s mission and vision because resources will be channeled to his personal gain and interest.

b)    Poor Reputation. Leaders who misuses their authority can severely harm an organization’s reputation. When employees are unhappy and have lost trust in the leadership, they are more likely to speak negatively about the organization. Whether it is communicated internally within the organization or externally, both can have a damaging impact on the organization’s image and brand. Additionally, there is a possibility of attracting negative media attention which can further harm the organization’s reputation.

c)    Increased employee burnout, stress and anxiety. When employees have to deal with critical behavior, it can lead to a lot of stress and anxiety and negatively impacts their mental health. In addition, negative leadership can result in a toxic work environment, which can make it difficult for employees to maintain a healthy work-life balance.

d)    Diminished Employee Morale. One of the most immediate impacts is a decrease in employee morale as well as overall job satisfaction. Leaders who power trip often engage in behaviors such as micromanagement and aggressive criticism which can be both demoralizing and damaging to an employee’s self-esteem and confidence which in turn directly impacts their work performance. Employees will not go above and above if they have no loyalty to the organization they work for. This might hinder the organization's capacity to innovate and reach its objectives.

e)    Increased Employee Turnover and Absenteeism. Leadership that misuse/abuse their authority can also contribute to high employee turnover rates. When employees have lost confidence in the leadership and are unhappy with their working environment, they are likely to look for other job opportunities or even avoid work altogether.

The Pivotal Role of Transformational Leadership

The University of Massachusetts (n.d.) emphasized that transformational leaders inspire employees in ways that go beyond exchanges and rewards. This approach can increase a team’s intrinsic motivation by expressing the value and purpose behind the organization’s goals.

The following are the components of transformational leadership:

a)    Individualized consideration. Transformational leaders listen to employees’ concerns and needs so they can provide adequate support. They operate from the understanding that what motivates one person may not motivate someone else. As a result, they’re able to adapt their management styles to accommodate various individuals on their team.

b)    Inspirational motivation. Transformational leaders are able to articulate a unified vision that encourages team members to exceed expectations. They understand that the most motivated employees are the ones who have a strong sense of purpose. These leaders are not afraid to challenge employees. They remain optimistic about future goals and are skilled at giving meaning to the tasks at hand.

c)    Idealized influence. Transformational leaders model ethical behavior. Their moral conduct earns a necessary level of respect and trust. This can help leaders steer decision-making that works to improve the entire organization.

d)    Intellectual stimulation. Transformational leaders regularly challenge assumptions, take risks and solicit team members' input and ideas. They don't fear failure, and instead foster an environment where it's safe to have conversations, be creative and voice diverse perspectives. This empowers employees to ask questions, practice a greater level of autonomy and ultimately determine more effective ways to execute their tasks.

The following are traits of successful transformational leaders:

a)    Good transformational leaders practice self-awareness. Transformational leaders thrive on personal growth and know their strengths and weaknesses. They often take time to reflect and set daily or weekly goals. These leaders believe everyone, including themselves, should be continually learning and improving.

b)    They remain open-minded. Remaining open to new ideas and fresh perspectives is an important aspect of transformational leadership. Rather than jumping to conclusions, these leaders regularly gather feedback and ideas from a range of sources before making strategic decisions.

c)    The best transformational leaders are adaptable and innovative. Good transformational leaders understand changing business dynamics and are always finding innovative ways to stay ahead of the curve. They’re unafraid to alter traditional approaches that have worked in the past as they look toward the future.

d)    Good transformational leaders are proactive. Leaders cannot simply sit around and wait for change to happen. Rather, they make proactive decisions and bold choices that can set the tone for others to follow.

e)    They lead with humility. Finally, transformational leaders take little issue with admitting they don’t have all the answers. While they can remain confident in their goals and abilities, they’re also able to keep their egos in check and do what’s right for their team or organization.

Conclusion

Misuse of authority exhibits far-reaching consequences on an organization's productivity. Bad management have a detrimental influence on employee attitudes, output, and commitment to the organization. The cumulative consequence of these issues is lower output and higher turnover.

The presence of ethical leadership, training and development programs, promotion of ethical behavior, employee involvement, clear standards of behavior, acknowledgment for good performance, and possibilities for growth all contribute to a productive workplace. Incorporating this may boost morale, teamwork, and decision-making effectiveness in the organization.

Trust, open communication, and mutual regard among workers are the strongest defense against incompetent management. If leaders want to gain followers' trust, they must be made to answer for their deeds. Providing employees with opportunities for growth and development may enhance morale and mitigate the effects of incompetent management. Weak leadership has systemic consequences, which necessitate a systemic approach to coping with them.

A transformational leadership style inspires employees to strive beyond required expectations to work toward a shared vision. Learning to balance these can help leaders reach their full potential. In order to build and maintain a performance-driven culture, it is crucial to set and monitor specific performance targets, as well as provide regular feedback on success.

 

 

 

 

 

 

References

 

Department of Education. (2012). DepEd Order No. 83, s. 2012. Implementing Guidelines on the Revised School-Based Management (SBM) Framework, Assessment Process and Tool (APAT). Retrieved from https://www.deped.gov.ph

Department of Education. (2015). DepEd Order No. 44, s. 2015. Guidelines on the Enhance School Improvement Planning (SIP) Process and the School Report Card (SRC). Retrieved from https://www.deped.gov.ph

De Silans, C. (2020). Power tripping: what to do when someone misuses their authority at work. Retrieved from https://www.welcometothejungle.com/en/articles/preventing-power-tripping-abuse-at-work

Harvard Business Review. (2017). To be a great leader, you have to learn how to delegate well. Retrieved from https://hbr.org/2017/10/to-be-a-great-leader-you-have-to-learn-how-to-delegate-well

International Institute for Management Development. (2024). Everything you need to know about delegative leadership. Retrieved from https://www.imd.org/blog/leadership/ delegative-leadership

Kumar, S. (2024). 8 Damaging effects of negative leadership. Retrieved from https://6q.io/blog/effects-of-negative-leadership/

OpenGrowth. (n.d.). Mission And Vision- Why Is It Important? Retrieved from https://www.blogs.opengrowth.com/mission-and-vision-why-is-it-important

 

Republic Act No. 9155. (2001). Governance of basic education Act of 2001. Retrieved from https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/7353

University of Massachusetts. (n.d.). What is transformational leadership? Understanding the impact of inspirational guidance. Retrieved from https://www.umassglobal.edu/ news-and-events/blog/what-is-transformational-leadership

Wejinya, O. O., & Agwoje, S. E. (2023). Negative Effects of Leadership on Organizational Performance. International Journal of Scientific Research in Education, 16(4), 368-379. Retrieved from https://www.ijsre.com.ng/assets

 

 

Ethical management in tourism and hospitality industry

 

MARK KELVIN C. VILLANUEVA

Divine Word College of Laoag, Ilocos Norte, Philippines

Abstract 

This paper discusses the importance of business ethics in tourism and hospitality operations and the principles that must be adhered to. Many managers are challenged and frequently face ethical dilemmas that necessitate serious analysis; this study examines common issues and their implications in the said industry. This paper also presents the common ethical practices which lead to a healthier workforce and working environment and lead to long-term success of tourism and hospitality businesses.

Keywords: ethical, tourism, hospitality, industry

Introduction

Ethics plays a crucial role in the sustainability of business practices and guide companies to work in a manner that is morally and socially responsible. It also ensures that actions and activities are observed for a win-win situation to all stakeholders and to society. In the tourism and hospitality sectors like hotels, food service businesses and travel and tours operators are anticipated to maintain business practices that are not only honest but also fair, all while aiming to optimize their profits (Nicolaides, A., 2019). Furthermore, companies within this industry that adhere to strong ethical principles tend to cultivate a positive reputation, earn the trust of their clientele, enhance the sustainability of tourism enterprises. 

Understanding the Importance of Ethical Management in Hospitality Industry 

Ethical management in the hospitality industry is crucial in achieving success and ensuring customer satisfaction.  Wherein implementation of virtuous practices and approaches are the responsibility of the different business organizations (Ipag Business School, 2021).

The following are the importance and benefits of ethical management in the tourism and hospitality industry:

• Building a good reputation and gaining the trust of customers. Tourism and hospitality businesses observing ethical behavior tend to build a good reputation and gain customer trust. Customers who are pleased with their ethical experiences are more inclined to suggest the tourism provider to others (Kusumah, 2023).
• Determining your hotel’s long-term success and competitiveness. Operating a hotel with strong ethical principles is a strategic choice that can influence the long-term success and competitiveness of your establishment. By prioritizing authenticity, your hotel can foster solid connections with guests and retain skilled employees (Lacalle, 2023).
• Tend to be more profitable than other companies. Companies can gain higher income and advantages by operating their businesses in a more ethical and responsible way. (Dimitriou, C. et al., 2024).
• Improving share value, client retention, and attraction of new clients, investors, and employees. Thomas (2016) highlighted that hotels and resorts that prioritize ethical responsibility tend to see an increase in their share value, retain clients more effectively, and attract new clients, investors, and employees. Furthermore, these organizations often face a reduced risk of compliance violations and demonstrate improved financial performance.
• Ensuring Guest Satisfaction: Ethical leaders focus on ensuring guest satisfaction by maintaining high levels of service quality and integrity. They guarantee that guests are provided with truthful and precise information, treated fairly, and offered outstanding service, which contributes to positive experiences for guests and encourages repeat business (Guest Delight International, 2024).
• Mitigating Risks and Maintaining Compliance: Ethical leaders maintain compliance with legal and regulatory standards, guaranteeing that the hotel functions in an ethical manner and adheres to industry regulations. By emphasizing integrity and ethical behavior, leaders reduce risks associated with legal liabilities, harm to reputation, and employee misconduct (Guest Delight International, 2024).
• Increasing Employee Performance and Morale. Ethics encompasses not only a company's relationship with its customers but also the internal culture it fosters. When employees experience fair treatment, equal opportunities, and work in a setting free from discrimination or harassment, their motivation and productivity increase. Ethical practices contribute to higher job satisfaction and employee loyalty, resulting in a dedicated and driven workforce. Content employees are more inclined to provide outstanding service, thus improving the overall experience for guests (Holistique Training, 2023).
• Adapting to Changing Consumer Expectations. The contemporary consumer is increasingly knowledgeable and aware of social issues. Factors like environmental sustainability and fair employee treatment play crucial roles in how consumers make their purchasing choices. Hospitality companies that emphasize ethical practices are not just aligning with present-day expectations but are also securing their future viability. By adapting to changing ethical standards, these businesses can remain relevant and appealing to the socially conscious consumers of the future. (Holistique Training, 2023).
• Fostering a Positive Work Environment. Ethical companies emphasize fairness, respect, and inclusivity within their work environments. This approach leads to employee satisfaction and cultivates a positive atmosphere marked by teamwork, creativity, and innovation. When employees trust the ethical principles of their workplace, they are more inclined to make positive contributions, which enhances a lively and dynamic workplace culture (Holistique Training, 2023).

Ethical Challenges in Tourism and Hospitality Industry

The foundations of ethical behavior in the tourism and hospitality sector are clearly defined, however, the industry frequently faces challenges that exist in the ambiguous zones between right and wrong. Such ethical conflicts require thorough examination and deliberate management.

The following are common challenges of tourism and hospitality professionals in terms of the implementation of ethical management.

• Balancing Profit and Social Impact. Finding the right balance between making profits and engaging in social responsibility is a major challenge within the ethical framework of the hospitality sector. Ethical businesses find innovative ways to positively impact their communities, including supporting local charities, taking part in educational initiatives, and encouraging environmental sustainability. While it is essential to remain profitable for long-term sustainability, ethical organizations intentionally set aside a portion of their earnings for meaningful social programs, thus creating a synergy between financial success and social responsibility (Holistique Training, 2024).
• Animal Welfare in Hospitality. Ethical challenges emerge regarding the acquisition and processing of animal products within the food industry. Responsible establishments acknowledge the significance of humane treatment in animal agriculture, making efforts to procure products from suppliers dedicated to animal welfare. Furthermore, certain businesses choose to offer plant-based options to meet the increasing desire for ethical dining experiences.
• Cultural Sensitivity and Respect. The diverse landscape of hospitality frequently tests cultural awareness and respect. Responsible organizations prioritize cultural training for their employees, ensuring that their interactions are respectful and free from cultural prejudices. Ethical hospitality professionals address these challenges by creating an inclusive atmosphere, where every guest is recognized, appreciated, and treated with dignity, considering factors such as dietary needs and religious customs.
• Responsible Tourism and Overtourism. The growth of international tourism has sparked worries regarding responsible tourism and the issue of over-tourism. Ethical businesses practice responsible tourism by promoting respect for local cultures and environments among their guests. Additionally, they take part in community development projects to reduce the adverse effects of over-tourism. By adopting responsible tourism practices, hospitality organizations can effectively manage the challenges of increased visitor numbers while safeguarding the authenticity and welfare of the local community.

• Implementing business ethics in tourism and hospitality  operations can have challenges, such as the added costs of adopting socially and environmentally responsible practices (Kusumah, 2023).

Ethical Practices in Tourism and Hospitality Industry

Ethics are essential for maintaining integrity, ensuring the future success of business, and caring for customers and employees. By adhering to established hospitality management principles, it can prosper and steer clear of common challenges faced in the tourism and hospitality industry. The following are ethical practices observed in tourism and hospitality businesses.

1. Treating your employees fairly. Ensuring fair treatment of employees is a crucial ethical obligation within the hospitality sector. It is essential to provide competitive salaries, maintain safe working environments, and offer equal opportunities, irrespective of race, socioeconomic status, or educational background. In addition,  zero tolerance for harassment and discrimination and empowering employees must be take into consideration (Lacalle, 2023). Authority figures, such as supervisors or managers, who are seen as acting justly, tend to gain trust, which can lead to improved performance. On the other hand, employees who perceive unfair treatment are more inclined to display behaviors that can be detrimental to the organization or its members ( Eib et al., 2017)
2. Data Privacy. Many hospitality companies dedicate resources and time to effectively gather and analyze data to enhance sales, customer service and loyalty, as well as operational efficiency. Recent technological developments have simplified the management of diverse information regarding customers, suppliers, and staff (Montera, 2012). In Bukilić's study (2024), it was proposed that the hospitality and tourism sector must tackle issues related to data privacy. This can be achieved by clarifying privacy policies, offering more transparent opt-out options, and committing to ethical data management practices. These steps are essential for maintaining the trust of consumers who are concerned about their privacy.
3. Regulatory compliance. Meeting legal responsibilities is essential for a business's success. This encompasses compliance with labor laws, health and safety regulations such as ensuring fire extinguishers are available on each floor and having an evacuation plan and other legal mandates. Numerous governments have established regulations aimed at enhancing inclusivity for individuals with disabilities and mobility challenges. This involves the installation of elevators and ramps to facilitate wheelchair access, along with providing sufficient space for maneuvering within hotels (Lacalle, 2023).
4. Environmental responsibility. Climate change has redirected our attention towards environmental issues. The hospitality industry is  known for generating significant waste and with this, advocating  for eco-friendly practices can minimize its carbon footprint. Hotels can contribute by conserving energy, minimizing waste, and implementing reduce, reuse, and recycle strategies, thereby serving as positive role models within their local   communities (Lacalle, 2023). Sustainable tourism aims to reduce harmful effects on the environment, protect both natural and cultural heritage, and enhance the quality of life for local communities (Lica, D., Gashi, S. and Qosja, 2024).
5. Responsible marketing and advertising. Responsible marketing and advertising entail representing your accommodations and services truthfully, steering clear of misleading promotions, and demonstrating cultural awareness. Marketing initiatives should showcase guests from diverse backgrounds and maintain a commitment to social responsibility and honesty (Lacalle, 2023). Practicing social responsibility in marketing offers numerous advantages, as it hinges on building trust and demonstrating foresight within businesses. Cultivating and maintaining trust with customers, communities, and regulators is challenging and can be easily compromised or lost (Mathur, 2016). 

Conclusion.

In conclusion, ethical leadership is essential for success in tourism and hospitality operations. Prioritizing work ethics reaps substantial benefits, not just about compliance but also creates a culture where every stakeholder—guests, employees, management, and the community—feels valued, respected, and secure. With the increase in competition and evolving trends in tourism and hospitality operations, ethical leadership remains a strong foundation of sustainable growth and reputation management.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference:

 

Bukilić J. (2024). Young travelers' opinions on data privacy in hotel stays: How do two Cannibals and a Vegan Vote on what to have for dinner? Retrieved from https://repository.acmt.hr/islandora/object/acmt:266 

Dimitriou, C. et al. (2024). The impact of a hotel’s business ethics on employee job satisfaction and organizational commitment. Retrieved from https://scholarworks.umass.edu/server/api/core/bitstreams/eaf0ca47-982f-490b-b282- /content 

Eib, C., et al (2017). Why should organizations treat their employees fairly? Definition, relevance, and consequences of justice at work. Retrieved from https://www.researchgate.net/publication/314635897_Why_Should_Organizations_TreatTheir_Employees_Fairly_Definition_Relevance_and_Consequences_of_Justice_at_Work 

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