Sports Direct boss Mike Ashley – a lesson in poor reputation management
Sports Direct’s Mike Ashley – a lesson in poor reputation management
So one of the biggest headlines this week was about Sports Direct boss Mike Ashley and his reluctant appearance in front of the Select Committee to address allegations of disturbing work practices reminiscent of a ‘modern day workhouse’.
Ashley has been at the receiving end of an undercover investigation by the Guardian last year, which revealed that some workers at its warehouse in Derbyshire were paid below the minimum wage, with many on zero-hour contracts. The damning report also revealed a culture of fear, with a ‘six strikes and you’re out’ rule for employees.
Under increasing pressure, and amid a dramatic drop in share prices, Ashley explained himself to the Select Committee, who he’d previously referred to as ‘a joke’.
What followed is a key lesson in how not to manage a crisis, and the pitfalls of inadequate media training.
Straight-talking, but ill-informed
One of the most notable features of Ashley’s narrative was how straight-talking he was. Minus airs and graces, Ashley gave a forthright response to all the questions. From a reputation-management perspective, this could be seen as a refreshing change from the polished, well-rehearsed responses so often seen by politicians and other businessmen.
However, where Ashley fell foul was the seeming lack of knowledge of what is going on in his own business. Taking some of the allegations with genuine surprise, Ashley’s response was ‘what do you want me to say?’. By his own admission, he claimed that the business was ‘probably’ too big for him.
The fact that it took a newspaper sting followed by an appearance before the Select Committee for Ashley to realise this, provided little reassurance to the public and investors. In fact, share prices had risen only slightly to 348 pence following his appearance, well below it’s December position of 734 pence.
So could Ashley’s appearance before the Select Committee have been better handled? And what can other businesses learn from this?
When it comes to reputation management, there is one simple rule of thumb, a business can be forgiven for any crisis, if honest, deliberate and proactive improvement is made. After all, the past cannot be changed, but the future can.
Firstly, acknowledging the issue, gathering all the facts and being in control of the situation is key. Showing real empathy and promising tangible action to rectify or prevent future issues will help restore people’s confidence in a business.
And as for Ashley’s comment about ‘not being Father Christmas’, nobody is asking for presents and festive cheer. But addressing workers rights and rectifying internal issues would be a good step forward.
Ashley has promised a turnaround for Sports Direct within 90 days, but in the meanwhile, he will perhaps be remembered for a misused opportunity to being restoring the reputation of his brand.