So now we know: Mike Ashley is, by his own admission, not Father Christmas and is not “going to make the world wonderful”. He is just a man, trying to make a few billion quid from the toil of the hundreds (and I use the term lightly) by his company Sports Direct.
Docking workers 15 minutes’ pay for being a minute late was “unfair” and “unreasonable” but “I can’t be held responsible for every single thing that goes on in Sports Direct”, he told MPs during a lengthy select committee hearing earlier this week.
The inquiry followed revelations in the Guardian that temporary workers at Sports Direct were being paid below the minimum wage (Ashley confirmed that HM Revenue and Customs is investigating this), in part due to lengthy security checks at the end of each shift, for which they are not paid. Perhaps Ashley should have carried out equally rigorous checks on how his staff are, or were (he’s promised to write to MPs within 90 days to say things have changed) being treated.
The employment policies in place at the sites in question were dodgier than the Newcastle United defence. Why? Because (unlike the football club he owns) the retailer had become a “victim of its own success”. The only victims in all this are the workers.
This issue goes to the heart of corporate social responsibility but the big question is whether this parliamentary bear-baiting, as some have put it, makes any difference. In a piece for the Guardian Aditya Chakrabortty pointed out that MPs only begin to act after the millions have been made (see also Starbucks et al in relation to tax avoidance).
Sports Direct isn’t the first to have its reputation ripped apart by MPs, but is this just an extension of the Punch and Judy theatrics at Westminster or a valuable exercise that will change the way businesses work?
Regulatory change takes time, but the reputational damage can set in much more quickly – especially in a world where social media has given consumers the power to create and kills brands armed only with a smartphone.
“Reputation drives business results,” says the Reputation Institute, and “Sports Direct’s overall reputation score is 53.0, placing it firmly in vulnerable territory”.
The spotlight on the company has clearly made investors twitchy. The fact that Ashley has “no oversight or knowledge of large parts of the company’s business...is extremely concerning for investors”, said Piers Hillier, the chief investment officer of Royal London Asset Management.
Investors are increasingly factoring environmental, social and governance elements into company valuations. Those in the low-wage sectors, such as retail, foodservice and hospitality, should take note. And act. Watching Ashley face the music (a man who’s normally as publicly visible as Santa) is a good place to start if you’re in any doubt.