From hero to zero: the next issues management test?

September 10, 2013 by Alex Johnson

The use of zero-hours contracts could be the next big issues management challenge for UK businesses after last year’s tax avoidance scandal.  It certainly bears some of the same hallmarks, with one company already ‘outed’ (in this case Sports Direct) and Hovis hitting the headlines when workers went on strike to protest about the issue.

It’s another issue which at first sight appears legal in nature, but also raises the hackles of those who feel morals should play a bigger role in business.

Sports Direct and Hovis are by no means unique  – research from the Chartered Institute of Personnel and Development reveals that up to a fifth of companies have staff on zero-hours contracts, with others likely to follow.

How individual businesses respond to the issue will have implications for their corporate reputation and important issues management lessons can be learned from the way companies handled the tax avoidance debate.

Here are three key areas to consider when planning for an issue of this kind:

Be prepared – time spent assessing potential communication issues (ideally through a reputational risk assessment) and preparing thoroughly for the high impact, high likelihood issues is an essential first step. Make sure you factor in the prevailing business and social context into this reputational risk assessment – what was acceptable five years ago may not be acceptable today. Build on this with scenario planning to predict how the key issues may play out and complete a stakeholder mapping exercise to understand who your friends and foes are, and their relative influence. Firms operating zero-hour contracts should have identified it as an issue with potential media interest way before it hit newsstands. This preparation allows time to prepare messaging and statements before the issue hits public consciousness

Be swift to respond – Google, Amazon et al were slow to respond externally to the emerging tax issue and it appears that some of those operating with zero-hours contracts are following suit. Little, late or no comment implies guilt or something to hide in many people’s eyes: in reality it may simply reflect a lack of planning. Either way, a well-considered response with persuasive messaging targeted at the most significant stakeholders can help to shape the debate and position an organisation to best effect, rather than being swept along by events. It’s the difference between the issue managing you, or you managing the issue.

Be authentic – businesses may decide to engage in a controversial policy or business approach and, if based upon proper consideration and risk assessment, then doing so is an entirely valid business strategy. But it brings with it the expectation that the company can justify the policy or business model to its stakeholders. An inability to do so implies that the policy was ill-conceived or that the business does not have the courage of its convictions. The contrasting responses of Starbucks and Google to criticisms of tax avoidance illustrate the point. Starbucks climbed down with its UK MD stating “I am announcing changes which will result in Starbucks paying higher corporation tax in the UK – above what is currently required by law.” In addition, it also made what many saw as a misjudged ‘donation’ to the UK tax coffers. Whilst one could commend the company for listening and changing course as a result, one could also view it as a business which was prepared to embrace a policy “under the radar”, but which capitulated as soon as the issue became public. Google on the other hand was bullish and unapologetic: “It’s called capitalism. We are proudly capitalistic.” said its chairman.

Whatever your own view on the morals of the issue I have more respect for the business that defended its original choice even if it meant taking more flack in the short term.

It’s a fine line when ethics are involved and no doubt we will see similar responses to zero-hours. Some may choose to change their business model and others will robustly defend this style of contract. Whatever path businesses take, preparation, speed and authenticity of response will be vital in the successful management of their reputation.

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