Sports Direct’s decision to allow a worker representative to attend its board meetings is not enough to solve the retailer’s deep corporate governance failings, unions and business leaders have warned. The company founded and run by Mike Ashley began the process of appointing a staff representative on Tuesday after caving in to pressure from shareholders and MPs following a series of scandals over the way the company is run and how it treats its staff. However, Britain’s biggest union, Unite, dismissed the move as little more than a “PR exercise”. Meanwhile, in a letter to the Guardian, the Institute of Directors (IoD) business group said Sports Direct had become the media’s “poster-child for corporate governance failings” and more fundamental change than appointing a staff representative was needed to rein in Ashley’s dominance. “Let’s be clear: it will do little, if anything, to resolve the corporate governance problems at the company,” wrote Oliver Parry, head of corporate governance at the IoD. “For real, long-lasting change for the good of all investors, customers and employees, a radical overhaul of Sports Direct’s governance is necessary. “There needs to be more independent oversight of Ashley who, because of his shareholding, effectively controls the company. This is not a simple question of appointing a worker to the board. At present, the board has five independent directors, four of whom have been in situ for over five years. Time and time again, they have failed to rein in Ashley and I fail to see how a worker could do anything more. “Without fundamental and structural reform, a wholesale change in the behaviour of the largest sports retailer in the UK is very hard to imagine.” A parliamentary inquiry into working practices at the retailer - prompted by a Guardian investigation - concluded last year that Ashley had been running Sports Direct like a Victorian workhouse. The billionaire said in a letter to staff published on Tuesday: “I have always believed Sports Direct to be a business that was built by the great people who work here. I therefore believe it is important that your voice is heard at the highest level in order to continue to make a positive difference. “I look forward with immense pride to sitting alongside the UK’s first elected workers’ representative at future board meetings of Sports Direct International.” However, Steve Turner, the assistant general secretary at Unite, was not convinced it would amount to meaningful change. “Given Sports Direct’s past behaviour and its refusal to involve Unite, we remain deeply sceptical about the process and whether a single unsupported representative will have a meaningful voice on a board which has been severely criticised for poor corporate governance. “We remain to be convinced whether managers or supervisors directly employed by Sports Direct will actively voice the concerns of this sizeable part of the workforce should they be chosen as the worker representative. “If the worker is hand-picked by Sports Direct, without union support, training and confidence to speak up, then this risks being little more than a PR exercise rather than a serious attempt to right the wrongs of the past.” Nick Bubb, an independent retail analyst, was also sceptical about the difference the appointment will make given Ashley’s dominance: “Sports Direct blathers on about appointing the first workers’ representative to the board. As if that will stop Mike Ashley doing what he wants to anyway.” The Guardian’s investigation exposed how Sports Direct was failing to pay workers the minimum wage at its Shirebrook warehouse in Derbyshire after harsh financial deductions for clocking in slightly late and being forced to go through unpaid searches at the end of each shift. MPs on the Commons business, innovation and skills select committee were highly critical of the way Ashley had run the company, concluding that he had used “appalling working practices” and treated his “workers as commodities rather than as human beings”. Theresa May has promised a crackdown on boardroom excess at large privately owned businesses, last year unveiling proposals intended to hold corporate Britain to account. Candidates for the worker representative’s role who make it through an assessment process will be invited to stand in an election, in which 23,000 Sports Direct staff will be eligible to vote. The appointment will be made for a 12-month period, with a new representative to be elected every year. The first successful candidate will be chosen from the company’s retail division, followed by someone working in the warehouse or head office in the second year. The cycle will then be repeated. In a statement on Tuesday, Sports Direct said the representative would be “invited by the board to attend and speak at all scheduled meetings of the board on behalf of the people who work at Sports Direct”. This seemed to fall short of what Ashley had pledged in the past, when he said: “I would like to take somebody either from the retail, the warehouse, the office, and make them a fully board member - on the board - to make sure they totally have their say, they totally have a vote. I’m massively in favour of that. I’m totally in agreement with Theresa May.” A spokesman for Sports Direct said: “Having explored all options, we believe this is the best way to ensure the workers’ representative is free to champion the interests of all staff. We see this as a major step forward in bringing about positive change.”
Sports Direct’s pledge to have a worker representative attend board meetings has been criticised as inadequate by business leaders and unions. The company, which has experienced a number of scandals relating to its treatment and payment of workers, announced the move on Tuesday. However, the Unite union dismissed the decision as merely a “PR exercise,” whilst an open letter to the Guardian from the Institute of Directors (IoD) claimed that fundamental changes were required to rectify the company’s corporate governance problems. It is important to "rein in" the influence of the firm's founder, Mike Ashley, the letter added.