Elizabeth Lapsik listened to the monotonous rattling of the train. She was travelling to her parents' home from the city, Demerest, where she worked in a four-star hotel, Le Moulin Blanc. Lapsik was facing a difficult decision: she was considering leaving her job and rethinking her ideas about management and business operations. There were pressing concerns about the hotel and the behaviour of its management staff that bothered Lapsik. "It started so well," she thought. "What went wrong?" As she stared out of the train window, she recalled the events, starting in the summer of 2009, that had led to her present situation.

Lapsik remembered how happy she had been when she received the first call from her current employer. She had graduated with distinction from a prestigious business school, spoke two languages (English and German) in addition to her native language and was committed to working in the hotel industry. She had started to look for a job well before graduation, since she had heard from other students that employers seldom replied to applications responding to advertisements. Almost a month had passed before she received a telephone call from the future front office manager of a hotel that had been bought by an investor who already owned a chain of hotels in the city. The company had received her application through the Internet. Lapsik completed her interview and was immediately hired as a reservations assistant for Le Moulin Blanc. She started work a week after her interview while still completing her final exams.

INTO ACTION: OPENING THE HOTEL

Le Moulin Blanc primarily employed people in their twenties. Only the director was older in his forties. Initially, the atmosphere at the hotel was one of adventure, which all the employees shared. The building was a derelict and inconveniently planned old mill; however, even in its run-down condition, the building had potential. The hotel's opening was scheduled for the end of June and management had started to advertise for personnel in late April. When Lapsik first visited the future hotel site, she was shocked: construction was still underway even though it was early June. The kitchen did not exist, the rooms still had to be finished and there were no offices in which to work. One of the new receptionists told her that many things that had already been finished had to be redone due to poor workmanship. Doors had to be changed since they did not fit the frames and items of bathroom equipment were stolen every day even though the company employed a security firm to guard the premises. Furthermore, following a heavy spring rain, the entire 10th floor was flooded when the pipes sprang leaks, ruining the newly laid carpets.

Lapsik attended a training course in the first week to familiarize herself with the hotel's software (branded "The Guest"). She rapidly came to know her fellow employees. Her immediate superior in the sales and marketing segment of the company was a young woman named Melinda Korda; three other employees made up the sales department. Le Moulin Blanc employed six receptionists, a front office manager (Robert Tilt) and a chief financial officer (CFO). There was also a senior director and his secretary in addition to the maids and housekeeping staff. Lapsik wondered why the hotel had no one specializing in human resource management (HRM) but she was told that there was a human resources (HR) office at the group's headquarters; consequently, a secretary was delegated to deal with administrative issues and all other HR matters were handled by the head office. Lapsik had met the front office manager at her initial interview and, at her second and final interview, the director although only briefly.

Throughout June, everyone worked hard since the website was operational and reservations were being taken for the end of June and the beginning of July. There was a positive atmosphere and people were very friendly towards each other, creating a sense of camaraderie and enthusiasm. However, the hotel employees never saw the owner, Samuel Smith, on site and only the CFO, director and sales manager met with him occasionally.

Most of the hotel was ready by the end of June: only the 15th floor remained unfinished; however, it was decided that the bar and fitness room on the 15th floor would be ready two weeks after the opening. Ultimately, both of these facilities took until November to complete.

Employees were asked to produce ideas for the hotel's grand opening and Lapsik's was chosen. She had thought of having the hotel open as an old traditional mill with a large number of the staff dressed in period costumes. On the big day, employees were allowed to sleep in the hotel guest rooms. The party was a huge success and Lapsik thought she was fortunate to work in this environment, where everyone was motivated and committed towards making this hotel a success; nevertheless, the construction problems, the frantic rush to fix mistakes and the loss of money involved concerned her. However, Lapsik waved these concerns away with the thought that the hotel managers were experienced and probably knew more about these matters than she did.

THE FIRST WARNING SIGN: FEW GUESTS

Summer arrived and Le Moulin Blanc expected many guests for the annual festivities that took place during the main holiday season in Demerest; however, although the sales and corporate sales departments worked very hard, there were only a few guests. The hotel director dismissed these disappointing results, saying, "Do not worry, eventually people will find the hotel and, as we are near to conference and festival sites, they will come." Patience, however, was not one of the main characteristics of the company's owner and the CFO conveyed the news to the hotel staff that he was extremely disappointed.

At the same time, one of the sales managers began complaining to the reservations staff that he could not support himself on his current salary at the hotel. The reservations staff earned a similarly insufficient salary but accepted it in the hope of an increase once business improved. When the sales manager talked to the hotel's CFO about his salary, the CFO explained, "We cannot afford to increase your salary because business is bad right now; wait a little." The young man said nothing but a month later Lapsik heard that he had left the company.

It was difficult to accurately evaluate the hotel's financial position because the managers who dealt with strategy issues did not disclose any information on the subject; however, soon it became clear to the employees that unless something was done soon, the hotel would slide towards bankruptcy.

Lapsik worked very hard at Le Moulin Blanc. She had been used to a heavy work schedule at business school and the concept of putting in long hours to achieve success was nothing new to her; however, she soon noticed that not everyone at the hotel was used to working this way. Although she liked Korda, Lapsik felt that she had no idea of proper time management: whenever Korda felt tired or bored she simply left her desk to chat with other employees. No one mentioned this to Korda. Although the hotel managers cared about control, their use of feedback was occasional and arbitrary. "This makes it difficult to correct ingrained habits," thought Lapsik. She wondered about the future: a constant cycle of firing and hiring employees due to poor performance (without efforts to improve those performances) would be expensive and detrimental to the hotel.

FOOD FOR THOUGHT

Le Moulin Blanc had a large area for the kitchen and the hotel restaurant. Management had decided to follow a recent trend in the industry to outsource the kitchen and restaurant operations; however, two days before the hotel opened, the outsourced catering company reneged on its contract with Le Moulin Blanc, saying that they were unable to handle the order. This was alarming news since the hotel was expecting more than 100 guests for its grand opening party and all additional hotel guests would require food services of some kind as well. Le Moulin Blanc managed to secure another catering company for its grand opening but lost a significant amount of money as a consequence.

As a result of this difficulty, the hotel decided to operate the kitchen in-house, providing breakfast only until another catering company was found; unfortunately, this catering company was unable to start until a month after the opening. Consequently, the director was very worried about a possible inspection, since a hotel restaurant was one of the requirements of a four-star hotel. Temporary staff was hired to provide breakfast; unfortunately, its services were inconsistent and breakfast was frequently inadequate. The serving table was sometimes left unstaffed, which meant that certain items ran out and were not replaced. It was fortunate that the few guests who came to the hotel at this time did not seem to be very demanding or difficult, and it was a great relief when the new catering company finally arrived. The company brought its own staff cooks, kitchen employees and waiters.

The hotel employees ate in a separate part of the restaurant and generally needed to be served quickly as management kept a close watch on how long they were away from their work. Employees were allowed to order their lunch from a staff menu; however, Lapsik soon found that her best option was to bring her own lunch from home because the hotel waiters refused to serve staff if there were any hotel guests in the restaurant. One day she and a fellow employee, Thomas Poplar, went to have lunch in the restaurant and were told to leave because there were hotel guests to serve. "But there is only one family of four there," Poplar protested. "I cannot serve any more people," the waiter replied shortly and left them without another word. When they could eat, the food from the staff menu was not of the best quality and on one occasion, Lapsik was sure her soup was rancid. "It was sour," she told Korda later. "Definitely days old." They eventually realized that hotel leftovers were routinely being served the next day as "staff lunch."

Lapsik could not understand the reason for this. Food was expensive in Demerest but any savings of this kind amounted to an almost unnoticeable sum among the expenses of the hotel.

DISSATISFACTION AND DEBATE

One day, Korda came to the office after her lunch break, clearly furious. "What is wrong?" asked Lapsik. Korda angrily told her that she had just discovered that one of the office assistants earned the same amount of money at the hotel that she did, despite her superior experience and training. This information made Lapsik think. Korda was a capable hotel employee who had graduated from the country's main hotel school and had worked in a four-star hotel in London for a year. She had returned to her home country from England in the hope of succeeding in the local hotel industry and eventually becoming a manager. Contrastingly, the office assistant in question had only a secondary-school certificate and a good knowledge of English but no hotel experience.

The difference in pay arose, it emerged, since Korda and Lapsik were hired by Tilt, the front office manager, while the office assistant was hired by the director. The director had simply given his office assistant the amount that she had asked for; meanwhile, Tilt argued continuously with Korda and Lapsik about pay and kept their salaries to an absolute minimum, despite the fact that their wages did not affect his own salary in any way. Consequently, Lapsik had to be financially supported by both her grandmother with whom she lived and her parents.

Korda was very angry about this salary information for days. Consequently, most of the work at this time was left to Lapsik, who was struggling without help. Tilt reprimanded her regarding some mistakes on a bill and the sales staff argued with her about room rates. They claimed that she quoted a prospective guest a lower rate than the usual in the summer. Actually the rate was emailed to the guest correctly, sales made the mistake. . Lapsik began to feel highly dissatisfied with her job at Le Moulin Blanc.

During the summer, Lapsik overheard Poplar complaining to Tilt about the fact that the hotel did not compensate employees for transport costs, since travel in Demerest was expensive. Later, Poplar discovered that hotel management was paying for bus passes for sales staff and higher-level employees but that it supposedly could not afford to do the same for all employees. He and Korda felt that this was unfair and decided to complain to everyone who might have some say regarding benefits for hotel employees. Eventually, the debate was temporarily resolved by management's offer to compensate front office and reservation staff for transport costs as well as the previously compensated staff.

Adding further strain to the situation, that summer of 2009 was extremely hot and the air-conditioning frequently broke down, making people even more dissatisfied and irritable. Guests complained to reception about the heat. To compensate for the lack of air-conditioning, rates were reduced, bordering on too low to sustain.

ECONOMIC CRISIS

The global economic recession of 2008 did not leave the hotel unharmed. The room utilization ratio was still low so management initiated a downsizing process that involved firing the hotel director, who was an experienced manager. This news shocked the hotel employees. Everyone had respected the director for his knowledge, experience and kind personality. The sales and front office staff organized a farewell party for the director. He was moved by this and promised to help them if they ever wished to find another job. A number of people were thinking of leaving by this time. After the director was fired, the director of sales (DOS) and the CFO at Le Moulin Blanc took over the duties of the former director. The owner did not want to hire a replacement since it was much more cost-effective to increase two salaries as opposed to paying a new director likely at a higher salary than the hotel had previously offered.

In addition to these difficult cutbacks, Tilt was not an easy person to cooperate with, as many employees realized after working with him for some time. He had issued several new working rules that were difficult to comply with. According to these rules, receptionists could not sit down at all during their shifts and could not leave the reception desk at any time. Employees were also not supposed to eat or drink during work, despite the fact that they worked 12-hour shifts. Additionally, one of the staff members became ill with a serious case of joint inflammation and could not work for days, disrupting the work schedule at a time when all available employees were desperately needed at the hotel.

Management continued to attempt to save money on staff and salaries. When business reached an all-time low at the end of summer 2009, a receptionist, a porter and two cleaning staff were fired. However, two weeks later the hotel became unexpectedly busy and actually overbooked. Remaining hotel staff complained about the workload, which increased significantly. The reservations staff worked overtime at least four times a week. Lapsik wondered about how this overtime work would be paid, but the issue was never addressed and by this point she was simply too overworked and exhausted to ask.

At the end of a particularly busy week, Lapsik heard that the DOS, who was now acting director, had had to call in two cleaning employees from other hotels in the same chain since those at Le Moulin Blanc had threatened to leave due to the excessive workload. The new cleaners were paid extra and had only agreed to take on the positions on the condition that their former jobs remained held for them and that their work for Le Moulin Blanc was paid at overtime rates.

NEW YEAR, NEW IDEAS

After a very busy December, Le Moulin Blanc organized a New Year's Eve party for guests with the additional aim of using the party as a marketing tool. The party was a huge success and the hotel was now completely finished, including a bar, fitness rooms and sauna.

Lapsik thought about what the new year might bring. She also wondered about the direction the hotel was taking. At business school, she had participated in many heated debates on strategy issues and management communications. Contrastingly, although Le Moulin Blanc had become quite an elegant hotel, its management seemed to have only short-term focus and goals; employees completed their daily tasks but no one mentioned anything about strategy, profits or how the hotel was positioned in the market.

Employees heard vague rumours about continuous financial problems, and that they would have to be content with little or no salary increases. Management blamed this on economic conditions, which left Lapsik wondering: "What will happen if these conditions are permanent? Will management expect us to work for the same salaries for years?"

In January 2010, new tax regulations came into effect, which stipulated that employers had to pay taxes on employee benefits. The CFO spoke to staff individually and told them that bus passes would be provided only if they could obtain an international student identification card. "But I am 35," said one astonished cleaning employee. "How could I get a student card?" "That is your problem; we are unable to pay for full-priced bus passes," the CFO replied. This meant that many employees, including Lapsik, could not make use of this benefit. The hotel did not provide any other benefits; employees were offered a set salary and any tips that guests provided. Some employees who worked closely with the front office received mobile telephones and Lapsik was also given a (used) model. She was happy to have this link to her colleagues since, in spite of the problems with her job, she liked them. However, the telephone soon became a nuisance since it rang continuously especially when she was not working and was being asked to help with weekends or late evenings.

Korda made no secret of the fact that she was looking for another job. She applied for several jobs and a hotel belonging to a large international chain called her for interview soon after. Korda was happy that she had had the interview and thought that it had gone well. However, one week later, Lapsik saw her crying in the office. "What happened?" she asked. Korda told her that someone from the hotel where she had gone for interview knew the DOS at Le Moulin Blanc and had contacted him regarding Korda's performance. The DOS had recommended against employing Korda and then chastised Korda for trying to find another job, saying that the hotel was disappointed with her attitude. "Now even the salary rise I wanted to ask for here is out of the question," Korda said. She was extremely disappointed and told Lapsik that this unfortunate affair had only encouraged her to look even more intensively for another job.

Lapsik wanted to keep up-to-date with current trends in the hotel sector so she read the business journal that arrived at the hotel every month. In March, she read with great astonishment an article about the DOS of Le Moulin Blanc, who had recently been promoted to the position of new director at the hotel. She showed the article to her fellow employees and everyone was surprised; no one had known about this promotion.

A DIFFICULT DECISION

The first full spring season in 2010 was a success for Le Moulin Blanc. The hotel was fully booked almost every day and there were more problems now with overbooking than with too many empty rooms. Several festivals, conferences and sports events in the city helped fill the hotel and sometimes Le Moulin Blanc was asked to help other less busy hotels in the chain: the owner could no longer complain about room-occupancy rates. Guests started to return and even to ask for the same rooms in which they had stayed before. Yet Lapsik knew how unlikely it was that this success would translate to improved conditions or wages for hotel employees.

Somehow Lapsik had ceased to care about the hotel although she could not remember precisely when it had happened. She still loved the industry and the job but she was no longer enthusiastic about the place where she worked. She did her job conscientiously but did not feel that the problems of her employers were hers as well. She remembered how she had had so many questions and ideas when she arrived at Le Moulin Blanc but no one had made any effort to answer her questions or show an interest in her ideas. Many staff members seemed to focus primarily on avoiding additional work and did not seem to care about the guests or the hotel's image and success.

Lapsik knew that other employees at the hotel were as unhappy as she was. She now heard the sales employees complaining about their conditions as well and she noticed that this resentment was beginning to affect their performance. Although the sales employees managed to attract guests, they neglected to follow up on any of these contacts if their shifts were over. Instead, the already overburdened reception employees were expected to offer concierge services whenever they could manage it. Poplar occasionally took on these responsibilities but since it was not an official aspect of his duties, guests did not receive consistent service. One day he organized an extensive sightseeing tour for an affluent guest but, when she wanted another one the next day, nobody helped her. Poplar was on leave and no one else volunteered to attend to her wishes. Lapsik was sure that the hotel had lost this guest forever as a result. She did not see how the hotel could succeed or continue at all if it developed a reputation of treating guests poorly.

"What should I do?" Lapsik wondered, as she continued to contemplate her possibilities on the train. "Should I leave Le Moulin Blanc and risk that the next hotel I work in will be the same or even worse? Am I just naive and ignorant about the expectations of this industry? Should I confront my current employers about my concerns or should I start looking for a place where business ethics are properly valued and employees are treated considerately?"

Based on this case answer the following questions:

7. What is the approach of management towards employees in Le Moulin Blanc?

8. Which actions show that ethical behaviour is not taken very seriously in this business environment?