Business, Media, Politics, Sport

Understanding the role of employees in managing corporate reputation – Sports Direct Case Study [Part 2]

‘Corporate reputations is all-encompassing term for what employees think of their employer, what customers think of their provider, what investors think of shareholding and so on’ (Varey 2002, p193).

Therefore, corporate reputation cannot be controlled because it is ‘held by its constituents’ (Fomburn, p9). The only influence an organisation can exert is on its culture and employees. 

2.1.1 Employee satisfaction

It is the cultural values that guide the business processes and motivate employees (Peters & Waterman, 1981). To influence culture, it is imperative to understand the culture of an organisation. According to Handy (1995) ‘Organisations are as different as nations and societies… They have different cultures… affected by events of the past and climate of the present’.

The attitude of the employee will ultimately have an impact on the external perspective of a brand – (Roper and Fill p35, 2012).

The values and attitudes that employees exhibit will create impacts both positively and negatively on production, performance and satisfaction. According to Peters & Waterman (1982), a positive internal culture can increase employee engagement, loyalty and a positive corporate reputation, especially if their cultural strength is strong (Deal & Kennedy, 1982).

2.1.2 Communication climate

Creating a cultural shift requires firms to understand their messaging and how its recipients will receive the information. Do employees embrace communications from the board regarding change, will they react angrily to strategic shifts and worry about new business aims? The way communications are perceived and acted upon is called Communication Climate. According to Gibb (1961), there are two types of climate, open and closed.

  • Open – A supportive climate where information and views are freely shared and valued
  • Closed – Defensive climate with little willingness to share and collaborate.

Open climates create more opportunities for businesses to innovate. According to Redding (1972), there are five dimensions of a good communication climate:

  • Supportiveness
  • Participation
  • Trust
  • Openness
  • High-performance goals

2.1.3 Conclusion

Considering the importance that the employee holds in shaping corporate reputation, the culture they operate in is crucial. Asking the questions of how satisfied employees are and receptive to communications will influence plans to improve or maintain satisfaction. A positive company culture with an open communication climate will be a productive and happier place to work for employees and fuel a positive corporate reputation.

2.2 Sports Direct

Please read Appendix 1 for information on Sports Direct and 1.3 & 1.3.1 for background on the organisation’s culture.

2.2.1 Employee satisfaction

2.2.1.1 Culture

To understand the Sports Direct employee satisfaction, there needs to be an understanding of what influences the present culture:

Organisation’s founder History
Mike Ashley (MA) displays characteristics of Thornberry’s activist integrator entrepreneurial orientation Utilised acquisition of brands to decrease supply chain costs maximising yield
Pros – Activist Integrator – driver of innovation and responsible for pushing the company in new directions Pros – Delivers high yields and increases shareholder value
Cons – Ardent desire to dictate direction, must have control Cons – Focus on working conditions and employee rights were under-invested in
Leadership and management style Organisational environment
Dictatorial/Autocratic (Tannenbaum and Schmit, 1973) Top down, authority-compliance (Blake and Mouton, 1985)
Pros – High degree of decision making control at board level Pros – Strong focus on organisation workforce and production
Cons – Low employee involvement Cons – Little consideration spared for workers

 

The business has a top-down culture with a power structure held within the board. The innovation comes directly from the entrepreneurial vision of the founder. There is little opportunity for the voices of the workforce to be heard within this structure. Without a voice, the ability to question the status quo and a ruthless need for cost cutting has ensured that the company has a poor employee satisfaction environment.

2.2.2 Communication climate

Considering the organisational structure and environment it is evident that the communication climate is closed. The firm operates in a secretive manner with little input from lower level employees. This is evident in the conditions that the workforce operate in (1.3.1). Fearing discussing working conditions and standing up for employee rights highlight the injustices that the company culture faces. The company performs poorly when considering Redding’s five dimensions of a communication climate.

2.2.3 Conclusion

If the external corporate reputation is impacted by employee attitudes then it is imperative that Sports Direct look to correct its fear culture. Without meaningful change and broken promises, employees will suffer along with the corporation’s reputation. Creating an open communication climate with opportunity for discussion between workers, managers, stakeholders and the board will help increase employee satisfaction, innovation, productivity and start healing SD’s tarnished reputation.

2.3 Recommendations for a new employee engagement strategy

2.3.1 Proposed changes

  • Restructuring of Mike Ashley’s role within the board by the next AGM in 2018
  • Creating a new Employee Wellness Committee (EWC) to be created at Senior Management/Board level coinciding with AGM 2018
  • Implementing PACT discussion framework within work teams through bi-annual management training workshops
  • Enabling EWC to be responsible for employee satisfaction conducting and monitoring annual Communication Attitude Audits, presented with recommendations to the board ahead of AGMs
  • ECW to create a new annual ‘expectancy theory’ appraisal process with HR

2.3.2 Corporate identity

The company’s identity is strongly linked to that of the founder Mike Ashley. His drive and vision have cultivated this market leading brand through ruthless efficiencies and acquisitions. To improve the corporate identity of SD, actions will be required at board level to influence the company culture. This is designed to allow the corporate identity to become ‘view of the collective’ (Vella & Melewar, 2008).

2.3.1 Mike Ashley

Mike Ashley’s vision and strategic plans propelled SD to its market position and must be maintained at board level. However, it is necessary to alter his role from Entrepreneurial Integrator to Explorer allowing him to continue innovating the business whilst decreasing his influence over working conditions.

2.3.2 Employee Wellness Committee

In place of MA’s operational decision making, the board should allow members to look after the wellbeing of the workforce and make operational decisions. The Employee Wellness Committee will be created to monitor corporate communication climate, employee wellbeing and satisfaction.

Benefits – Dedicated board members monitoring employee satisfaction and corporate reputation. Increased opportunity for positive employee branding

Potential issues – MA’s entrepreneurial style will make this challenging as he will be required to give up some control

2.3.3 Positioning

Fear of challenging the status quo is a problem which the leadership team’s style of Autocratic management face. The creation of the committee will position the changes as a move towards an open communication climate. A high representation of female staff within this committee will further validate that the board is willing to and will act upon progressive changes for the betterment of employees.

The committee will need to make quick decisions and showcase some positive policy changes such as creating the new employee annual review developed based on Vroom’s expectancy theory (1960s).

Benefits – Immediate and visible change in culture. Introducing Vroom’s expectancy theory will allow managers to effectively manage their employees’ satisfaction

 

2.3.4 Communication audit

The EWC will conduct a communication attitude survey focused on the communication climate within the company (Dennis, 2006). These findings will help shape priorities for communication and address Redding’s five dimensions. It will also recommend changes to the company’s feedback structure:

  Current communication climate Proposed communication strategy
Climate Closed Open
Messaging Autocratic – Little communication between management. Strict demands on employees to perform effectively under stressful conditions Utilising PACT (2.3.4.1) to create an inclusive discussion framework for projects, new product development and conflict resolution
Benefits & Issues Tight control over employee performance but offers little employee engagement and hampers employee satisfaction Increased employee engagement and value. Creates an open climate for discussion problems and new projects. Increased productivity

 

 

2.3.4.1 PACT

Cockton (2005) developed an approach to creating discussion around conflict resolution and development called PACT. This framework requires teams to discuss projects and situations through the following stages:

  • Preparation – identifying issues/projects
  • Approach – outlining ways to solve the issue/project plan
  • Consultation – discussion with relevant team members and workforce to create project buy-in and increase perceived value within the organisation
  • Treaty – Conclude the best plan of action considering all viewpoints and formed consensus

By involving staff within the decision-making process through consultation, it will increase SD employee’s engagement within the firm thus making them feel valued.

2.3.5 Planning

The planning phases required for the employee engagement strategy will also follow the PACT formula.

2.3.6 Financial and political implications

2.3.6.1 Financial

Benefits of the plan – An open communication climate and a positive working environment ‘attract more and better candidates for employment, pay less for supplies, gain essentially free press coverage that is worth as much if not more than advertising, accrue other benefits that actually contribute to profits’ Doorley & Garcia (op cit p47).

Costs and resources – Implementing the plan will require increased resource demands on Human Resources to help develop and shape the EWC and the annual reviews. Time demands will be placed on ECW to conduct, and analyse data from HR and audits.

2.3.6.2 Political

Brands with positive corporate reputations tend to be favoured in the media. The opportunity to decrease the political pressures on the firm through a positive employee engagement strategy will go towards mending the ills of past treatment of staff.

2.3.7 Evaluation

It is imperative that Sports Direct’s corporate image is transformed into an inclusive open climate where staff can enjoy their jobs, be motivated by rewards, praised for the performances and feel invested in.

A cultural shift at the board level is required to banish the fear culture of the past. In its place, a communication structure which offers staff opportunities to express their views, put forward innovative ideas and feel supported.

Without change, under-investment and poor treatment of staff will continue. The brand can ill-afford more political backlash from the public. Sports Direct must first look after its employees as the foundation of creating a better corporate reputation.

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