The ultimate test of whether leaders can do the right thing
It is not necessarily the case that crises bring out the best in people. Rather, I’m observing that being locked down, or even shut down, by coronavirus amplifies pre-existing traits.
The active are now hyperactive. The anxious are now petrified. The philosophical are now super-stoical. The kindly are out volunteering. The self-interested are greedily stockpiling.
If this is true of people, why not of businesses? That Frasers Group — better known, until a tactical rebrand as UK athleisure and trainers retailer Sports Direct — should at the start of the crisis have exhibited its worst side is hardly a surprise. To be cynical, it was only living its values.
As the UK government ordered all but essential shops to close, the group first publicly lobbied to stay open, on the basis that a nation largely confined indoors would require fitness equipment. After a minister rebuked the group on the radio, Sports Direct reversed course but continued to earn opprobrium for increasing the price of the kit.
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Finally, on Friday, mercurial founder Mike Ashley, issued a half-apology “for much of what has been reported across various media outlets regarding my personal actions and those of the . . . business”. Frasers’ lobbying was “ill-judged and poorly timed”, he admitted, and its communication “to our employees and the public . . . was poor”.
Again, this should not have come as a shock. The reclusive Mr Ashley, for all his raw skill as a pile-em-high, sell-em-cheap retailer, has again and again proved himself to be the entrepreneur least suited to the public markets, with a tin ear for PR.
After he was forced to break cover in 2016 to convince the world that Sports Direct was not — as MPs had found — a “particularly bad example of a business that exploits its workers in order to maximise its profits”, he hosted a press trip to the group’s much-criticised warehouse. Emptying his pockets for new fast-track security checks, the multi-millionaire submitted for X-ray a tight wad of £50 notes.
Mr Ashley might have looked to another UK entrepreneur, Denise Coates, the billionaire founder and co-owner of privately held Bet365, for guidance. She won glowing headlines from local papers by offering to guarantee earnings for all the online gaming group’s staff for at least five months. (Mind you, having taken a record-breaking £323m payout from the online gaming group last year, she was well-advised to be as generous as possible in her response to Covid-19.)
Knowing what is precisely the right thing to do is hard at this time, as government support and guidelines for companies in trouble evolves by the day. It is true, as Klaus Schwab of the World Economic Forum wrote last week, that the pandemic could reveal “which companies truly embodied the stakeholder model, and which only paid lip service to it”. It is truer now than when I wrote it in January — seemingly decades ago — that business leaders need to think how they would respond to the equivalent of the first world war recruitment poster, showing a girl asking her father “Daddy, what did YOU do in the Great War?”
It is also true, though, that for many companies, survival will trump everything for a few months. The FT’s Moral Money is keeping track of corporate “saints and sinners” during the crisis. But what might have been considered responsible one week — keeping shops and warehouses open, for instance, to support customers, workers and suppliers — might be thought irresponsible the next.
Some companies and leaders can and will behave out of character during this crisis. They may pivot from sinner to saint by making direct contributions — switching production lines to sanitiser or ventilator manufacture, say — by being as flexible as they can in treatment of workers and suppliers, or by standing by their communities, as Ms Coates has done.
As it happens, Evans Cycles, which Frasers owns, is considered an essential retailer under UK guidelines. Frasers has also now offered its delivery lorries to help ship medical equipment and supplies. Striking an incongruously Churchillian tone, Mr Ashley said in his contrite letter on Friday, “there has been no dress rehearsal for what we as a nation are currently tackling”.
That is not strictly true for businesses, though. Despite the efforts of professional image-burnishers and bad-news-suppressors, reputation tends to spring organically from culture, which is set at the top. Reputation is founded on prior performance and culture is hard to change rapidly.
In difficult times, the public will be more forgiving of businesses that have behaved well in the past. To extend Mr Ashley’s metaphor, most companies are now having to make up the script as they go along, but bad actors tend to be worse at improvisation.