5 Things We Learned About Management at Sports Direct
09 June 2016 -
THE SPORTS RETAILER’S OWNER MIKE ASHLEY WAS UP IN FRONT OF A HOUSE OF COMMONS SELECT COMMITTEE AND WAS VERY REVEALING ABOUT MANAGEMENT FAILINGS AT HIS COMPANY
The alleged ‘Victorian’ work practices of British retailer Sports Direct were laid bare this week, as controversial owner Mike Ashley was questioned by the House of Commons Business, Innovation and Skills Committee hearing, about the worrying stories emanating about the firm’s treatment of staff.
Over the past two years. investigations by the Guardian newspaper and the BBC found working conditions at Sports Direct’s Shirebrook warehouse in Derbyshire were reminiscent of a ‘modern-day workhouse.’
Allegations of workers being paid below minimum wage, fearing their bosses, experiencing evasive and time-consuming security checks, and health issues were all uncovered.
Flanked by his lawyers and public relations rep Keith Bishop, Ashley finally faced a grilling by MPs on the committee this week, under the glare of the media.
Ashley admitted the retailer had made some mistakes and was reviewing its processes, including the controversial employee security check procedure. Here are five revelations about the firm’s management that came through at the hearing:
A CULTURE OF FEAR
The implementation of draconian policies and systems has led to a sense of fear felt by employees towards their bosses at Sports Direct.
Measures include employees being docked 15 minutes' pay if they were one minute late for their shift, and losing their jobs altogether if they fall foul of the firm’s ‘six strikes’ system - with one strike including anything from spending too long in the toilet to taking a day off sick.
Luke Primarolo from the Unite union told MPs: "People are scared because they are working under a system where they know they could lose their employment at any moment.”
At the hearing, Ashley defended the disciplinary system, saying it was necessary but had to be executed correctly.
STAFF WERE EARNING BELOW MINIMUM WAGE
In front of the committee, Ashley admitted the company had paid workers below the minimum wage. This was previously alleged by the Guardian investigation last year, which found that workers at the sportswear chain's warehouse had been subjected to unpaid, extensive and rigorous searches and surveillance.
Ashley said security guards at the company's Shirebrook warehouse held up staff from leaving – the time spent doing this meaning they were effectively paid less than the minimum wage.
He said: “I accept that when I went to look at issues, such as the bottleneck, it was unacceptable. I’ve hopefully addressed some of those issues.”
Sports Direct is reportedly in talks to offer back pay to those staff affected.
Zero-hour contracts put bosses under no obligation to provide a worker with a minimum number of hours and, therefore, put many workers in a precarious position whereby wages and career development are uncertain.
However, when MP Amanda Solloway asked Ashley why more than 80% of people in Sports Direct stores on zero hours contracts couldn’t be offered full-time contracts, the billionaire seemed dismissive on changing the firm’s percentage or policy.
Many of the zero-hour contracted staff were employed by independent recruitment agencies, and Ashley defended the use of these organisations as it was "physically impossible" to grow as fast as Sports Direct has without them.
ALLEGATIONS OF SEXUAL HARASSMENT
Sports Direct’s policies towards women have also come under the spotlight. The committee revealed an account from a female employee who had endured sexual harassment when told that she could get a new contract if they accompanied the respective manager for dinner.
Ashley described the managers as "sexual predators" who need to be "dealt with".
"It 100% should not be going on,” he said. “They're repugnant, they're disgusting.” But while he seemed to insinuate that such behaviour is a wider societal issue that occurs at other employers, he admitted that the policies and procedures to deal with such instances and to protect female employees at Sports Direct could be improved.
HAS SPORT DIRECT OUTGROWN ITS FOUNDER?
The biggest headline from the hearing, however, was Ashley admitting that the company he created may have outgrown him.
Established in 1982, Sports Direct has grown exponentially in the past decade to operate more than 670 UK stores and own sporting and fashion brands including Donnay, Slazenger, Firetrap, Dunlop (in most markets) and Everlast.
Committee chair Iain Wright said: “Do you think it [Sports Direct] may have outgrown your ability to manage it?”
“Possibly a long time ago, ” Ashley replied, “I can accept the criticism of some things you have said to me today leads me to believe it possibly has outgrown me.”
Known as a reclusive figure, Ashley has built a strong circle of executives around him who he has worked with for a long time. This close-knit group implements company strategies across the business.
However, Ashley could be forced to widen his network of trusted managers and pass on more day-to-day management duties, as he vowed to review the firm's corporate governance structure.
The tycoon said he "can't look after every single thing" that goes on at the company, but admitted: "I'm the guy who's responsible for its biggest successes and biggest failures, that's me."
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