Things couldn’t get much worse for sporting retailer Sports Direct. Last year concerns were raised over working practices including the company’s over-reliance on agency workers and zero hours contracts.
The company was criticised for using a strike-out system of automatic dismissal following a certain number of employee minor transgressions (such as spending too long in the loo or taking a sick day).
In addition, workers were allegedly kept behind after their shifts for such rigorous unpaid security checks that in some instances the company was failing to meet the National Minimum Wage.
This was all happening amongst a report that ambulances were called to the headquarters at Shirebrook, in Derbyshire, 76 times in two years – as a result of workers attending work whilst unfit out of fear of losing their jobs.
All of this negative publicity has caused shares in the sporting retailer to drop 45% in the last year. To top it all off Sports Direct founder Mike Ashley has been called to Parliament to face questioning by MP’s.
The surprise in all of this: Mike Ashley appears to have been disarmingly honest about his own failings and those of the company, admitting that the company had ‘outgrown him’ and pledging to make changes within 90 days.
It was the right move. Ashley needed to come clean and confront the issues.
We are operating in a time of ultimate transparency – the public are no longer in the dark over what goes on between an employer and their employees behind closed doors.
This trend towards transparency is being reflected in recent legislation.
The gender pay gap reporting regulations which are expected to be brought in by October 2016 will require large employers to publically report any gaps in pay between men and women.
There are also the new requirements under the Modern Slavery Act 2015 – requiring large companies to publish a statement on slavery and human trafficking – setting out the steps that the company has taken to avoid inadvertently supporting these crimes. In addition, smaller companies can expect scrutiny if they are part of the supply chain of a larger company.
Dangers to business reputation
No company is immune from possible reputational damage – the popularity of social media means that world wide scrutiny can be focused on almost any company within a matter of minutes.
Nicola Thorpe – the agency worker who was sent home from a placement for refusing to wear high heels – is a perfect example of this new type of transparency. Thorpe’s case has garnered so much backing that the issue will now be considered for Parliamentary debate.
The most resilient companies will be those who treat their employees fairly, which is different than treating them lawfully.
But its not game, set, match just yet for Sports Direct – in fact the open admissions made by Mike Ashley might be enough to set the retailer back on the slow road to recovery – but only if they are willing to make changes and embrace transparency.
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