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Hot topic: HR and the Sports Direct Scandals, part two

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After an expose of the appalling working conditions in its warehouses, Sports Direct's share price plunged

But what is to blame for a culture of endemic mistreatment – including paying below the minimum wage – consumers hunting for the cheapest products, or bad business practices? And what is HR's role in fixing it?

Chris Rowley, professor of human resource management at Cass Business School, says:

"With the exposé of Sports Direct’s draconian working conditions leaving its reputation in tatters, the destruction of more than £400 million of its value, and a profit warning, the firm should think carefully how to respond.

So what has it done? The wrong thing. First, the rebuttals and review of agency worker T&C are naïve. They are mealy-mouthed assertions. The review is a sop; it cannot possibly be objective given its overseeing by the founder. Someone needs to appoint an independent person with the freedom and facts to produce an evidence-based and unbiased review.

Second, management has tried to shirk responsibility and blame unforeseen events rather than crass decisions and policies.

The company’s predicament is due to decisions of its own making, both in operations and HRM. These are not only around poor web presence, product mix and shambolic stores, but also the reputation damage caused by dreadful employment practices.

The financial implications of its HR malpractices are obvious. What could its new HRM look like? Rather than being involved in a ‘drive to the bottom’ with exploitative conditions and no more than begrudging legal compliance, it could take the moral high ground and operate ethically to aim to become an employer of choice with practices of respect, trust and motivation.

They could include setting out career progression routes from the wilderness of zero-hour contracts and agency working to permanent employment and pay rates that set sector standards. The ‘Big Brother’ surveillance and monitoring, control (such as banning the wearing of 802 brands), and rigorous searches are counter-productive. Workers deserve better in the 21st century."

Read Simon Webley, research director at the Institute of Business Ethics' thoughts on this Hot Topic