"The World’s Most Ethical Companies designation recognizes companies that truly go beyond making statements about doing business “ethically” and translate those words into action. WME honorees demonstrate real and sustained ethical leadership within their industries, putting into real business practice the Institute’s credo of “Good. Smart. Business. Profit.” *
I'm very unhappy to report that Marriott International was dropped from the 2010 Most Ethical Companies list.* Amidst staunch industry competition, Marriott was the proud recipient of this award in 2007, 2008 and 2009.
There's a high correlation between ethical business leadership and customer loyalty and satisfaction. Ethical business leadership is about keeping your customers engaged, and your stakeholders informed.
Where Marriott failed exactly is unknown, but I'm on a mission to find out. If the experience over the past month is representative, did Marriott deliver upon Insiders expectations?
Whatever your answer, it's disappointing that a company held in such high esteem for so long fails to make the grade. Comments?
I would be highly skeptical of any competition like this one that lists Nike as an ethical company, given their track record of using third world factories filled with low paid workers in the past.
Marriott has nothing to apologize for in terms of ethical behavior in my opinion. Contests like this one may make headlines but they do not necessarily make sense.
Marriott received this award* three years in a row out of the five since inception. Marriott being dropped from the 2010 list is a disappointment.
Given the state of the economy which is rooted in unethical practices by financial institutions, it's not easy to shrug this off. Rather than overreact, stay tuned, several e-mails are pending reply....
I would not be surprised if Marriott Vacationclub practices had a negative impact on Marriott's ethics perceptions. This division has always had some questionable activities, but the devaluation of rewards points with no compensation to MVC owners pushed it over the edge in my opinion.
I highly question GE's inclusion on this list, given the practices of some of their divisions and their borderline political activities.
TJ, et al:
Not an argument but a clarification here: Much like push polls, Wine ratings over 90 (where an ad is expected to achieve the loftiest of the lofty levels) and consumer surveys that prove something (in the eyes of the poll taker and payer), the methodology is only as good as the poll. The margin of error seems to be missing here as well since it was done by a panel not a general survey of a representative sample of the national population.
In a contest to determine something as squishy as ethics (we know when it's not there, I would assert, more than the obverse), the rationale for any voting has to be subjective.
I agree that GE is not one of the most favored among many of us, and that some of its affiliates (nameless of course) do nothing but skew information over the airwaves.
Shoeman, thanks. Nike needs more PR to correct the impression that they are lagging in doing ethical business around the world, I suppose, because there continue to be recent protests over alleged practices overseas.
well, perception is reality. So, I think I will bow out of this conversation. I still love you all, just don't agree that Nike turned OU sports teams into gangsters. And regarding aclu-type reporting, I don't give it a moments thought. I guess we need to get obama a pair and all will be right in the world.....
After doing a little digging via Google I discovered that these study results in the Most Ethical Companies are based solely on answers to questions that companies send back when mailed a questionnaire. Thus, it is self-reported ethical behavior that is then somehow massaged by the experts using a (magical) formula (not sure what and how) to determine the ranking of companies.
As far as I can tell, and this is ironic, there is no checking of the answers for truthfulness.
Most unethical study thus revealed: Poor survey research techniques and questionable results I would say.
Interesting comments! When first named in 2007, a Marriott press release explained the methodology succinctly,"The process included reviewing companies’ codes of ethics, litigation and regulatory infraction histories" *
Proud of its achievement, a 2008 report states, "Marriott’s Internal Audit Department conducts an annual Legal and Ethical Conduct survey of a broad cross section of employees, including all officers and senior managers, to determine compliance with the company’s Ethical Conduct policy." **
In 2009, Marriott was among 44 companies that were "three-peats"; but a year later, among the 24 companies that dropped,"These “drop offs” generally occurred because of litigation and ethics violations" W/o having to speculate, at least one case reached national headlines.
As stated at the onset, I am disappointed. My hope is that the legacy of Marriott as an award-winning hospitality company will continue.
"these study results in the Most Ethical Companies are based solely on answers to questions that companies send back when mailed a questionnaire"
That's partially correct. Ethisphere compares the answers against several measures in the public domain. Toyota, for example is among the 24 dropped.
Taking a very different approach, I examined how Wyndham Worldwide may have outperformed Marriott. Using vacation ownership as one yardstick, it was quite startling to see this investor presentation:*
Above: Competitive landscape in vacation ownership revenue, number of owners, and units.
Marriott's 4th Qtr 2009 earnings are public domain, n'est pas? If "ethics" and "profits" have a high correlation, Superchief's point about the MVCI's role or lack thereof merits very serious scrutiny, IMHO.
"After doing a little digging via Google"
While loyalty-based skepticism is healthy, Superchief's point appears to have some validity. It's very challenging to explain the reactions of surprise and disappointment along with serious questions regarding "ethics, transparency and unfair tactics" that surfaced at the May 7th Stockholder Meeting.* Rumor has it that a reorg is underway.
"Could be the way they modified point levels to qualify Marriott vacation stays....very hard to qualify and the points required went way up."
Could be. The World's Most Ethical index [WME] is a measure that correlates integrity to profits. With 32 million + Marriott Rewards stakeholders many of which had hundreds of thousands to millions of points, modifying point levels to qualify for Marriott vacation stays upwards by 20% - 30% and proclaiming 'No Blackout Dates' w/o that policy being fully implemented until 1st Qtr 2009 could have had an impact on Marriott's integrity. At Insiders we saw a number of messages relating to Platinum Elite trying to get into the Grand Flora in Rome on points only to discover that no rooms were available and that the hotel, a Category 8 did not participate in the No Blackout Dates policy!
In 2006, Marriott declared smoke-free hotels in the USA. But, in Orlando, FL the two largest hotels the Orlando World Center and the JW Marriott Grand Lakes permit smoking across the pool deck and at the OWC smoking on the balconies. While the hotels are responsible for implementing policy, the lack of doing so reflects poorly on guest perception of Marriott's integrity / ethics. Word of mouth travels quickly when you do something right or otherwise. With occupancy at 35% in the OWC and refusal to implement a 100% smoke-free environment, financial performance will suffer because perception of integrity is poor.
Closer examination of the Ethisphere's mantra, 'it pays to be ethical' speaks volumes. As shown below, the WME is no "slippery slope" and not about a "beauty contest" or "popularity" poll. Far from it. The top 100 companies selected in 2010 have been performing above the widely accepted Standard & Poors 500 and Financial Times 100 financial indices since 2005. Congratulations to Wyndham Worldwide for outperforming Marriott in 2010. To those Marriott executives and hotel managers who skipped ethics class, there's a remedial ethics and integrity class available. Ethisphere is presently accepting nominees for 2011:
Above: World's Most Ethical (WME) company nominee financial performance since 2005 compared to widely accepted indices including the Standard & Poors 500 Index (USA) and the Financial Times / London Stock Exchange 100 or FTSE (UK).
"Interesting metric--where would Marriott be on that graph?"
Yes it is! Not only interesting, but substantive. Your question is excellent. According to the most recent, May 1st Corporate Governance Quotient, Marriott is performing about 28% above S&P500 range (blue line) compared to Wyndham Worldwide with a CGQ of 15.3%
That said, as of May 1 financially Marriott is tracking above Wyndham. So, there are other factors which contribute to Marriott being dropped from WME.
About a month ago, S&P raised Marriott International's rating to positive from stable. You may recall that the Q3 2009 Earnings Report, Marriott disclosed a $760 million write-down in the timeshare segment.
As the announcement about the new office in Brazil and plans to double properties in Europe suggest, reorganization is well underway.
Let's hope that Marriott stays on track, retains a positive outlook and makes the WME list in 2011.
"Most unethical study thus revealed: Poor survey research techniques and questionable results I would say."
Self-reporting on the subject of ethical practices has it's merits and demerits. To your point, there appears to be a major flaw in the methodology. Apparently, the panel of legal experts who placed Wyndham in the lead position failed to connect the dots and overlooked a Class Action Suit by Wyndham Owners.*
Now, the internet is buzzing with news of a recently reached settlement on June 22, 2010 : RCI Weeks Exchange Program Settlement. FYI - RCI is Wyndham Worldwide's vacation exchange company.** (Marriott uses Interval International, but does not own II.)