Editor’s letter: What happens when leadership and culture fail?

Organisation leadership and culture can take a mythical role sometimes, but when it goes wrong the results can be an almighty implosion – and it is the employees left picking up the pieces.

 

If you want exhibit A of what it looks like when a major company’s culture and leadership structure fails, you could probably take Sports Direct as a good starting point.

Mike Ashley’s evidence before the MPs which form the Business, Innovation and Skills Select Committee was, on the surface at least, open, honest and apologetic.

It included some remarkable admissions by Ashley.

Perhaps the biggest and most telling of these was that the company had just become too big for him to handle – in essence, that he is not up to the job any more.

The sexual harassment, failing to pay the minimum wage and many other serious incidents are all shocking in their own right of course.

But having spoken to so many strong business and HR leaders, it seemed apparent to me that all these issues stemmed from a lack of direction at the top.

 

Red flags

As Ashley said about the organisation culture: “I think it sets itself. It grows itself, it becomes its own thing.”

That will probably raise red flags all across the leadership world, indeed as Dow corporate vice president of human resources and aviation Johanna Soderstrom said at the European HR Directors Summit last week: “Please don’t own culture, it’s for your leadership to own.”

Perhaps I am being a little naive, but Ashley seemed to have his heart in the right place, if not the head or structure for managing a massive company such as Sports Direct has become.

Unfortunately, the recruitment agencies, at least from their evidence session, did not give such a feeling of enthusiasm for their work.

Perhaps it was the aura of the occasion, but from every situation it appeared the recruitment consultancies were being reactive, not pro-active.

It was evident that what little employee surveying had gone on was in reaction to the horror stories coming out and had been designed to cast them in the best light, rather than provide a real insight into events at the Shirebrook warehouse.

For example, the suggestion that the face-to-face survey which garnered a 96% positive score just one week before the hearing was “anonymous” received loud laughter from the packed gallery.

 

Legal tightrope

And as the committee highlighted, the knowledge or understanding of employment law appeared sketchy at best.

Yes of course when organisations grow so fast and so big things will go wrong.

Whether the speed of growth was enabled by the unhappy employment practices is certainly one concern.

But I believe the biggest test of character is how those problems are dealt with.

In Sports Direct it appears those problems were never acknowledged, let alone dealt with. That is a rather damning revelation itself and hopefully one a potential new management team will be able to turn around.