Denny’s is one of the franchises owned by the Flagstar Corporation. The troubling finances of Flagstar caused their leadership to be so concerned on the numbers of their corporation that they forgot about the management of their employees and their actions. Even though corporate management can’t control all the actions of their employees they can help shape their actions through training and education in the workplace. Therefore the leadership of Flagstar failed and was unethical, as they did not properly address the problems with racism that some of their employees had working for Denny’s.
They also didn’t complete these tasks in a timely matter or even do enough to prevent them. These problems of racism, specifically with the employees’ relations with the customers continued to keep piling up for Denny’s management. This created even more than just financial problems for Denny’s, but also a new public image that they were not fair to all races and were in the restaurant industry where customer service plays a huge part in making money.
Denny’s had a problem with the way in which its employees dealt with serving its customers. They dealt with a federal lawsuit in California where they agreed to stop the alleged discriminatory treatment of black customers. (pg. 309) On the same day on the settlement another similar situation happened across the country in Maryland. However, these customers were secret service agents where fifteen white agents were served their food in a timely manner and five black agents waited almost an hour before asking where their food was. The agents filed a lawsuit against Denny’s, where it made national headlines and caused uproar throughout the country. (pg. 309) Denny’s now faced a huge problem as their public image was greatly declining and had a senior management that was completely unprepared to deal with the huge issue that the company faced.
There is great competition in the fast food industry. Denny’s tried to separate themselves from others by putting emphasis on sit-down service and creating a welcoming atmosphere for its customers. (pg. 310) For a company to be accused of having employees that discriminate on customers based off
of race does not help a company establish this type of atmosphere. Out of the whole Flagstar staff, thirty-six percent are minorities where twenty percent are black, which is twice the proportion of the U.S. population. (pg. 310) However, there are no senior black managers or minority officers at Flagstar and there is only one minority-owned franchise. Flagstar doesn’t have a problem employing minorities, but they do have a problem promoting them. This shows the failed leadership of Flagstar.
There were some diversity experts that defended Flagstar such as Marilyn Loven, who said, “Discrimination results from employees acting individually without the approval of management.” (pg. 310) This might be true as leaders that have the right intention can be “undercut” by low-level front line employees however it is the leaders that must spend a lot of time educating employees about discrimination. She also said that, “No Company can eliminate racism.” In the case of Denny’s they had not one or two cases of discrimination but more than five in pretty short time period.
Denny’s would settle a case one-day and then the next day a new case of discrimination would come up. Denny’s and the Department of Justice worked out settlements where Denny’s would reinforce polices of equal treatment to customers however it showed that those policies weren’t fully pushed by leadership. (Exhibit 1) This lack of leadership showed that the leadership was “unethical” in their handling of their employees and discrimination.
The head of Flagstar, Jerome Richardson took some of the responsibility for the problems that Denny’s faced. He said that dealing with finances “blinded” him to other aspects of running the corporation that he was in charge of. (pg. 311) However, a corporation needs to cover all aspects of the company besides its finances. Its “unethical” for a company to allow continued discrimination and not push programs to educate employees on discrimination.
The company was so focused on making money that they public image went in the drain as the company did nothing to make sure their employees were educated and making a good name for the company. In the case of Denny’s the lack of minority leadership showed corporate discrimination, which reflected on employees discriminating against the customers. This discrimination could happen anywhere but continued to happen at different locations all over the country for Denny’s and reflects on the company itself. It also raises the question of the ethical practices of by the company and how the company responds to cases of discrimination in this case. The continued cases of discrimination by employees showed that the Denny’s leadership was “unethical” as they did not cover all aspects of their corporation.
Courtney from Study Moose
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