OYO Rooms
Business Ethics, Law, and Sustainability — MM5001
Final Exam
Group 6
Gelischa Presticha H. 29119179
Eric Matheus T. Y. 29119192
Bardian Adhitya 29119195
Ayunda Utari 29119196
Nunung Nurhayati 29119199
Gracelia Maharani 29119209
Faishal Aulia D. 29119211
SCHOOL OF BUSINESS AND MANAGEMENT
MASTER OF BUSINESS ADMINISTRATION
INSTITUT TEKNOLOGI BANDUNG
2020
1. Organization’s Profile
OYO Rooms (stylized as OYO), also known as OYO Homes & Hotels, is an
Indian hotel chain. It is the world's third-largest and fastest-growing hospitality chain of
leased and franchised hotels, homes and living spaces. Founded in 2013 by Ritesh
Agarwal, OYO initially consisted mainly of budget hotels. Over a span of six years, the
startup expanded globally with thousands of hotels, vacation homes and millions of
rooms in hundreds of cities. Through its vacation home business, the company offers
travelers and city dwellers access to over 130,000 homes around the world. OYO today
operates in over 800 cities in 80 countries. India, Malaysia, UAE, Nepal, China, Brazil,
Mexico, UK, Philippines, Japan, Saudi Arabia, Sri Lanka, Indonesia, Vietnam, the United
States and more. The company's investors include SoftBank Group, Greenoaks Capital,
Sequoia India, Lightspeed India, Hero Enterprise, Airbnb and China Lodging Group.
OYO started operating in Indonesia from September 2018, starting with a view
hotel. Now OYO has around 850 hotels spread around 100 cities in Indonesia. OYO
currently has a multi-brand approach with offers that adjusted with consumer needs and
category, that is:
OYO Rooms : 3 stars below hotel management
OYO Capital O : High-End Hotel
OYO Life : Boarding House
OYO Home : Houses & Villas rent
2. Overview of Ethical Climate Results (Evaluation of Condition)
Ethical Climate
According to Cullen and Victor (1988) in Beeri et. al. (2013), an ethical climate is
an organizational climate in which ethical content is embodied in organizational policies
and regulations, and in employees’ behaviors and perceptions.
Manpower
Based on Zulkarnaen (2018), manpower is any person capable of doing work to
produce goods and/or services either to meet their own needs and for the community.
Further, the author explained that when it is associated with the legal arrangement of
labor law the definition of manpower is included in pre-employment operations, such as
activities of mobilization and placement of labor in an effort to fulfill the need for labor
in one area.
Indonesia’s Manpower Laws are quite different from other countries. Engaging
employees, employee entitlements, termination and outsourcing are all arguably more
complex. Moreover, the sources of Manpower Laws in Indonesia are widely dispersed
among national laws and regulations, presidential decrees and ministerial decrees.
Therefore, in 2013 Indonesia Government-issued Law No. 13 of 2003 concerning
Manpower (“Manpower Law”) to guide all stakeholders (employers and employees) to
create harmonious, dynamic and fair industrial relations, where companies/business can
grow and develop sustainably, and the welfare of workers and their families can be
continually improved.
Result of Ethical Climate
Based on the result of the ethical climate, we conclude that OYO has a fairly high
level of selfishness between individuals. Each individual tends to prioritize the interests
of the group or its division. Concrete examples of this problem based on questionnaires
and interviews from OYO employees are :
1. There is racism in the field of recruitment and the impact on the work
environment.
2. Unhealthy work competition among individuals for personal gain.
3. Some employees who become “apple polisher” for the sake of security of their
work positions.
3. Suggestions from Legal Side (Manpower)
So far, OYO Indonesia has never employed a disability employee. OYO should start
considering hiring employees with disabilities in a position that is within their
capabilities. Based on Indonesia constitution No. 4 of 1997 “Disable Person which
requires companies to recruit a person with disabilities.” The government has set a 1%
quota for disabled people. It is also to prevent discrimination by companies due to their
disability requiring work.
● OYO Indonesia has flexible working hours where the company forces its
employees to work towards targets. So far, OYO Indonesia has freed working
hours for its employees, but the work target and high pressure have caused many
employees to work more than the standard working time. According to Indonesia
constitution no. 13 of 2003, Article 77, (1) Every entrepreneur shall implement
the provision on working hours. (2) The working hour as meant in paragraph (1)
shall include a. 7 (seven) hours in one day and 40 (forty) hours in one week in the
case of the working period being 6 (six) days in one week; b. 8 (eight) hours in
one day and 40 (forty) hours in one week in the case of the working periods being
5 (five) days in one week. (3) The provision on the working hour as meant in
paragraph (2) shall not apply to certain business sectors or jobs. (4) The provision
on certain business sectors or jobs as meant in paragraph (3) shall be stipulated by
a decree of the minister. Based on this regulation, we recommend OYO to
manage the working hours for their employees. Thus, it can increase the
employee’s loyalty for the long-term because employees feel joyful while
working.
● To create a balance between employee rights and obligations towards his
work, companies need to ensure overtime policies. The government has issued
several provisions to protect both parties, both workers and companies; so no one
will feel wronged. These rules include:
a. Law No. 13 of 2003 concerning Manpower;
b. Decree of the Minister of Manpower and Transmigration of the Republic
of Indonesia Number KEP. 102 MEN / VI / 2004 concerning Overtime
and Overtime Work Wages
c. Government Regulation Number 78 of 2015 concerning Wages
Overtime wages are compensation that must be paid by employers who employ
employees beyond work time, on weekly breaks or on official holidays. In the
Decree of the Minister of Manpower and Transmigration of the Republic of
Indonesia Number KEP. 102 MEN / VI / 2004 Article 1, the company must pay
overtime pay for employees who:
a. Work more than 7 hours a day and 40 hours a week for 6 working days.
b. 2. Work more than 8 hours a day and 40 hours a week for 5 working days.
c. 3. Work on weekly rest days and national holidays.
OYO Indonesia doesn’t give overtime wages to the employees. Companies
assume that overtime working is a form of loyalty to the company, since
companies also give a flexible time for employees. Actually, OYO Indonesia
doesn’t require the employees to work overtime, employees can finish their work
anytime or continuing their work anytime and anywhere. But the work pressure,
the deadline, and work competition that give to the employees force them to do
the overtime, company makes overtime become a desires that arises from the
employees themselves, so they don’t need to pay for the overtime wages. Based
on the state law/constitution, There’s no reason for OYO for not paying the
overtime wages. If the employees work more than the hour that should be, it
become OYO responsibility to pay its overtime wages.
Reference
Cullen, J. B., & Victor, B. (1988). The organizational bases of ethical work climates.
Administrative Science Quarterly, 33(1), 101-125.
Beeri, I., Dayan, R., Vigoda-gadot, E., & Werner, S. B. (2013). Advancing ethics in
public organizations: The impact of an ethics program on employees' perceptions
and behaviors in a regional council. Journal of Business Ethics, 112(1), 59-78.
Zulkarnaen, A. H. (2018). The implementation of criminal sanction in corporation of the
labor law perspective (case study on corporations in Cianjur district, Indonesia).
Journal of Legal, Ethical and Regulatory Issues, 21(2), 1-13.
