THE COMPANY CONSULTANCY REPORT
A section of the public first reported an alleged ill-treatment of employees by Sports Direct before December 2015, when the Guardian newspaper published an overall view of the complaints (Goodley., 2015). Criticisms intensified after thorough investigations from Sunday Newspaper confirmed the existence of exploitative standards within the organization, with claims that the sportswear company has, in the last 5 years, violated acceptable employee-management work agreements through some exploitative social, ethical, and environmental practices across its stores and warehouses. This study is therefore prepared by XXXX XXXXXX XXXXXXXX, a management consultant, upon request from the Board of Directors at Sports Direct.
1.1 Terms of Reference
The leadership of Sports Direct has adopted the following terms of reference:
- To conduct a review of all staff members and their functions
- To ascertain the allegations against Sports Direct using a comprehensive situational analysis
- To review the company’s business operations with focus on management practices
- To develop a strategic business proposal for organizational change with an easy-to-apply plan as well as resource requirements
- To identify possible benefits and consequences of not implementing the proposals.
1.2 Situational Analysis of the Problem
Mike Ashley established Sports Direct in 1982 and the British retailing group is UK’s biggest retailer of sports items, with over 670 stores spread across the continents. Other affiliated companies are USC and Lillywhites, Slazenger, Donnay, Everlast, Kangol and Lonsdale. The company declared £3,245.3 million as revenue in 2017, with its operating and net income valued at £160.1 million and £231.7 million respectively (Sembhy., 2015).
According to Sports Direct’s 2017 Annual Report, significant business transformation from the fiscal year made it a frontline competitor in sportswear industry. The company currently has over 730 retail stores across Europe and a total staff strength of 27,000 which highlights its productive capacities and business potentials as shown in the table below:
Table 1: The Breakdown of Staff of Sport Direct
|Direct employees or engaged staff of Sports Direct|
|Total number of Casual Retail Workers (also known by third parties as ‘zero hours contracts’) in stores||18,250|
|Total number of permanent full/part time staff working in retail outlets, main office and warehouse||5,037|
|Total number of warehouse workers on 336 contracts (another type of ‘zero hours contracts’)||4,059|
|Total number of warehouse employees who have permanent contracts||40|
Source: Sports Direct Annual Report (2016)
Sports Direct offers a wide product range for professionals and amateurs in different sports, including general sport items such as sneakers, vests, boots, socks, shorts, and tracksuits, among others provided by world class brands like Puma, Nike, and Adidas. According to the company’s annual report (2015 & 2016), http://www.sportsdirect.com went live in 2007, when its online trading business skyrocketed in earnings with an estimated 96 percent-growth recorded between 2009 (£15m) and 2015 (£384m). Prior to its listing on the London Stock Exchange in 2017, the company paid a total of £1 billion as tax to the British government.
However, Sports Direct suffered public image challenges when the media confirmed that an employee of the company delivered a baby in the washroom. The pregnant woman confirmed she was on a zero-hour contract and risked losing her job if the management knew of her health condition. Responding to inquiries from UK’s popular tabloid the Guardian, Sports Direct maintained that none of its workers was penalised for being ill but stressed that employees may face sanctions for neglecting the company’s regulations on “reasonable sickness absence” which complies with industry’s best practice. Yet, a former employee of Sports Direct alleged the existence of exploitative practices, describing the sportswear company as “the worst organization I ever worked for.”
Although the company was also described as “focused on getting more from staff and offering stipends in return,” findings show that its major issue stems from the fact that most employees operate on zero-hour contract and are therefore denied a chance in making decisions on their work shifts. This decision-making process depends solely on the manager-staff relationship without obligations on transparency. Whereas some workers have ample time to take care of their sick family members, others reportedly arrived late to pick up their sick children from schools for fear of losing their jobs. A BBC report confirmed over 76 Sports Direct-related cases in Shirebrook, where paramedics and ambulances have handled emergencies in the last 2 years (Bridge., 2013; Marston., 2016).
In addition, the exploitative work practices at Sports Direct include managers attempting to cut costs by requesting employees to complete their jobs ahead of time thus forcing workers to function without observing their break periods. Other aggrieved employees complained about carrying out several unpaid jobs such as sweeping and cleaning the premises after completing their normal tasks (Goodley & Butler., 2015).
Sports Direct operates with some controversial policies, for example, applying a mandatory rule which ensures that all workers adorn their official company uniforms to and from the office is a form of advertisement, and no employee received payment for this promotional activity. Furthermore, most staff of the company function as security personnel and cleaners, an aberration which highlights security lapses and unethical cost-cutting measures. In most cases, other staff members have had to stay back after work to clean the premises without pay (Goodley., 2016).
To conduct a thorough analysis of the current situation at Sports Direct, the Consultant adopts a mix of analytical models such as the Leader-Member Exchange Model, Fielder’s Contingency Model and SWOT Analysis.