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A European retailer lost nearly €2 billion from its value in three months following a journalistic investigation into its poor working conditions, sparked by whistleblowers’ reports.
The company was found to run a depot in which employees were named over a public address system when it was felt that they were not working quickly enough. In addition, taking toilet breaks deemed to be “too long” and talking too much to colleagues could lead to disciplinary action.
The report also revealed that the company was contravening retailing legislation and misleading customers over the price of items it had for sale.
This anonymised case study highlights the importance of internal reporting channels for allowing a company to manage issues before they become endemic and control the narrative.
The background
In the mid-2010s, a newspaper and TV production company in a European country were approached by whistleblowers who worked for the retail company at the warehouse situated at its headquarters.
The business had built its success on selling discount goods on a large scale, a model that had boosted its worth to around €4 billion and led to the organisation being listed on the country’s most prestigious stock exchange. However, the workers who spoke to the press reported harsh and unfair working conditions at the depot.
Among their complaints were:
- The policy of dismissing employees for committing six “offences” in six months, which included wearing branded clothing, taking too long in the toilet and taking time off work for sickness.
- Being singled out in front of all colleagues to be reprimanded on a public address system for not working quickly enough.
- Living under the fear that the company could terminate their employment immediately at any time.
- Walking 20 miles per day to fulfil orders.
- Carrying out searches where employees had to strip to their final layer and show guards the band of their underwear, to prove they weren’t stealing. These post-shift searches took 15 minutes and were unpaid.
- Time limits for performing tasks that were unachievable without the employee running around the facility.
- Pay effectively working out as lower than the country’s legal minimum wage.
- Reducing workers’ pay by 15 minutes even if they were just one minute late, but no additional pay for staying late.
In addition, whistleblowers reported that staff in the warehouse would mark brand-new stock as being discounted when it did not meet the legal requirements. These items had not been sold at the alleged original price for the amount of time required by the country’s laws in order to be able to advertise a sale price.
What happened?
The investigations by the media companies sent undercover reporters into the facility where they witnessed the conditions that the reporting persons had highlighted. This led to a documentary and newspaper coverage exposing the company and its practices.
As a result, the company’s share price dropped by more than 40%, wiping nearly €2 billion from the organisation’s value and demoting it from the elite tier of listed companies. The company came under scrutiny from both investors and the country’s government, which was detrimental to its reputation.
What should have happened?
The company should have implemented an internal reporting channel where employees could raise their concerns and have them investigated in an impartial manner. Although the working conditions appear to have been part of the company’s business model, receiving confidential reports might have helped the organisation’s management and board understand how these practices impacted employees.
This might have spurred a change in working conditions. Instead, the workers went to the media and the story reached across the whole country. Without having made any attempt to improve conditions, the company looked uncaring and untrustworthy. Having received reports internally, it could have instigated changes to mitigate the bad press.
How IntegrityLog helps
IntegrityLog is an intuitive online platform that allows whistleblowers to make reports of misconduct and other wrongdoing. It allows for confidential or anonymous reporting where investigating teams are able to interact with reporting persons to gain the evidence they need to look into the issue. This whistleblower software is easy to use for both reporting persons and investigators, with a clear dashboard to help maintain compliance with the timelines stipulated under whistleblowing laws across the EU.
Request a demo of IntegrityLog for your business today.
