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Mike Ashley, the combative founder of Sports Direct, last week agreed, at last, to appear in front of MPs to answer questions about workplace practices. This follows months of negative publicity for the company about the treatment of employees and casual workers at its warehouse facilities. Allegations of below-minimum wage payments and stringent security checks have been made.
A look at perceptions of Sports Direct amongst the UK general public in a Reputation Institute study strongly suggests that reputational damage to the company has already been done.
The RepTrak study measures a company’s ability to deliver on stakeholder expectations on a scale of 0-100, and groups companies’ reputations as Excellent (80+), Strong (70-79), Average (60-69), Weak (40-59) or Poor (Below 40).
Sports Direct’s overall reputation score is 53.0, placing it firmly in vulnerable territory. Unsurprisingly, the company rates worse still when it comes to the public’s perception of it as an appealing place to work, achieving a score of only 43.2 on this dimension. The public also rank the business poorly when it comes to governance and citizenship.
The impact of perceptions of workplace is important; this dimension contributes 13.4% influence over a company’s overall reputation, and poor perceptions have coincided with financial misery. Sports Direct was forced to issue a profit warning in January 2016, shares then plunged to a three-year low, and following an exposé by the Guardian in March 2016, poor-working conditions were highlighted. Subsequently, Sports Direct dropped out of the FTSE 100, and had £1.6 billion wiped off its value.
Reputation is inextricably linked to a business’s performance, and the companies with the best reputations consistently outperform the stock market by leveraging stakeholder support to operate more efficiently.
Social responsibility is a key factor in building a positive reputation, and when workplace is combined with governance and citizenship, we can create an overall Corporate and Social Responsibility (CSR) Index. Based on this measure, Sports Direct comes bottom of the 64 retailers measured in the study.
But perhaps the most profound difference that sets Sports Direct apart in the minds of the UK general public is authenticity. A whopping 25% completely disagree that the company appears genuine about what it says – more than five times higher than the average of all other retailers.
So perhaps when, and if, Mr Ashley appears in front of MPs, he should not only consider what he says, but how he communicates if he wants to take the first steps to resolve his company’s reputation problems.
Written by Edward Coke, director of consulting services at research firm Reputation Institute