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Sports Direct to recruit workers' representative after scandals Sports Direct move to put workers on board branded 'PR exercise'
(about 7 hours later)
Sports Direct has kickstarted the process of appointing a worker representative to attend its board meetings after caving into shareholder demands to change the way the company is run. Sports Direct’s decision to allow a worker representative to attend its board meetings is not enough to solve the retailer’s deep corporate governance failings, unions and business leaders have warned.
The sports retailer founded and run by Mike Ashley has opened the application process for the first regular staff member sit in on meetings as it attempts to clean up its image after a series of scandals. The company founded and run by Mike Ashley began the process of appointing a staff representative on Tuesday after caving into pressure from shareholders and MPs following a series of scandals over the way the company is run and how it treats its staff.
Ashley said in a letter to staff: “I have always believed Sports Direct to be a business that was built by the great people who work here. I therefore believe it is important that your voice is heard at the highest level in order to continue to make a positive difference. However, Britain’s biggest union, Unite, dismissed the move as little more than a “PR exercise”.
Meanwhile, in a letter to the Guardian, the Institute of Directors business group said Sports Direct had become the media’s “poster-child for corporate governance failings” and more fundamental change than appointing a staff representative was needed to rein in Ashley’s dominance.
“Let’s be clear: it will do little, if anything, to resolve the corporate governance problems at the company,” wrote Oliver Parry, head of corporate governance at the IoD. “For real, long-lasting change for the good of all investors, customers and employees, a radical overhaul of Sports Direct’s governance is necessary.
“There needs to be more independent oversight of Ashley who, because of his shareholding, effectively controls the company. This is not a simple question of appointing a worker to the board. At present, the board has five independent directors, four of whom have been in situ for over five years. Time and time again, they have failed to rein in Ashley and I fail to see how a worker could do anything more.
“Without fundamental and structural reform, a wholesale change in the behaviour of the largest sports retailer in the UK is very hard to imagine.”
A parliamentary inquiry into working practices at the retailer - prompted by a Guardian investigation - concluded last year that Ashley had been running Sports Direct like a Victorian workhouse.
The billionaire said in a letter to staff published on Tuesday: “I have always believed Sports Direct to be a business that was built by the great people who work here. I therefore believe it is important that your voice is heard at the highest level in order to continue to make a positive difference.
“I look forward with immense pride to sitting alongside the UK’s first elected workers’ representative at future board meetings of Sports Direct International.”“I look forward with immense pride to sitting alongside the UK’s first elected workers’ representative at future board meetings of Sports Direct International.”
Nick Bubb, an independent retail analyst, was sceptical about the difference the appointment would make: “Sports Direct blathers on about appointing the first worker’s representative to the board. As if that will stop Mike Ashley doing what he wants to anyway.” However, Steve Turner, the assistant general secretary at Unite, was not convinced it would amount to meaningful change. “Given Sports Direct’s past behaviour and its refusal to involve Unite, we remain deeply sceptical about the process and whether a single unsupported representative will have a meaningful voice on a board which has been severely criticised for poor corporate governance.
Ashley and the company he founded have attracted widespread criticism from shareholders and MPs over its poor corporate governance and treatment of workers. “We remain to be convinced whether managers or supervisors directly employed by Sports Direct will actively voice the concerns of this sizeable part of the workforce should they be chosen as the worker representative.
A Guardian investigation in 2015 exposed how Sports Direct was failing to pay workers the minimum wage at its Shirebrook warehouse in Derbyshire, after harsh financial deductions for clocking in slightly late and being forced to go through unpaid searches at the end of each shift. “If the worker is hand-picked by Sports Direct, without union support, training and confidence to speak up, then this risks being little more than a PR exercise rather than a serious attempt to right the wrongs of the past.”
It prompted a parliamentary inquiry into the retailer’s treatment of workers, with MPs on the Commons business, innovation and skills select committee concluding that billionaire Ashley had been running Sports Direct like a Victorian workhouse. Nick Bubb, an independent retail analyst, is also sceptical about the difference the appointment will make given Ashley’s dominance: “Sports Direct blathers on about appointing the first workers’ representative to the board. As if that will stop Mike Ashley doing what he wants to anyway.”
Theresa May has also promised a crackdown on boardroom excess at large privately owned businesses, last year unveiling proposals intended to hold corporate Britain to account. The Guardian’s investigation exposed how Sports Direct was failing to pay workers the minimum wage at its Shirebrook warehouse in Derbyshire after harsh financial deductions for clocking in slightly late and being forced to go through unpaid searches at the end of each shift.
In an attempt to improve its image, Sports Direct bowed to pressure to make changes, including the appointment of a worker representative. Candidates who make it through an assessment process will be invited to stand in an election, in which 23,000 staff will be eligible to vote. MPs on the Commons business, innovation and skills select committee were highly critical of the way Ashley had run the company, concluding that Ashley had used “appalling working practices” and treated his “workers as commodities rather than as human beings”.
The appointment will be made for a 12-month period, with a new representative to be elected every year. Theresa May has promised a crackdown on boardroom excess at large privately owned businesses, last year unveiling proposals intended to hold corporate Britain to account.
The first successful candidate will be chosen from the company’s retail division, followed by someone working in the warehouse or head office in the second year. The cycle will then be repeated. Representative will not be made directors. Candidates for the worker representative’s role who make it through an assessment process will be invited to stand in an election, in which 23,000 Sports Direct staff will be eligible to vote. The appointment will be made for a 12-month period, with a new representative to be elected every year.
A spokesman for Sports Direct said: “Having explored all options we believe this is the best way to ensure the Workers’ Representative is free to champion the interests of all staff. We see this as a major step forward in bringing about positive change.” The first successful candidate will be chosen from the company’s retail division, followed by someone working in the warehouse or head office in the second year. The cycle will then be repeated.
In a statement on Tuesday, Sports Direct said the representative would be “invited by the board to attend and speak at all scheduled meetings of the board on behalf of the people who work at Sports Direct”.
This seemed to fall short of what Ashley had pledged in the past, when he said: “I would like to take somebody either from the retail, the warehouse, the office, and make them a fully board member - on the board - to make sure they totally have their say, they totally have a vote. I’m massively in favour of that. I’m totally in agreement with Theresa May.”
A spokesman for Sports Direct said: “Having explored all options, we believe this is the best way to ensure the workers’ representative is free to champion the interests of all staff. We see this as a major step forward in bringing about positive change.”