I watched the BBC lunchtime news today. Not something I usually do. But I was keen to see the appearance of Dominic Chappell - recent owner of BHS - being interviewed by a House of Commons Select Committee
Why? I have a vested interest. I started my business career at BHS in 1976 as a graduate management trainee, and spent six years there, working in several stores, moving up to Store Manager
I’m sad to see the demise and closure of BHS. Maybe it was due to happen; the business hadn’t progressed in the past 20 years, and it had become a bit of a high street dinosaur. However, my chief concern revolves around the serious mis-management of the business, under the ownership of Philip Green and more recently Dominic Chappell
Apart from the fact 11,000 employees will lose their jobs, the pension plan has been significantly underfunded. Without going into detail, it’s amazing that one former owner (Green) has recently bought his third luxury yacht, having paid his family massive dividends in excess of £580m since he bought the company in 2000
To date, there’s been no tangible offer from Green towards plugging a substantial part of the gap in the BHS pension fund. When he acquired the company in 2000, the pension fund had a surplus of £5m. The deficit in that fund now stands at £571m. The consequence is that BHS pensioners will have to suffer a 10% shortfall in their pension payments.
I should declare that I’m not amongst them, having moved my BHS pension into another fund many years ago. The principle however, of one man taking huge dividends from a business without seemingly any social conscience towards the care and protection of the pension funds for his employees past and present, in my book, absolutely stinks
Green sold BHS to Dominic Chappell’s enterprise (Retail Acquisitions) in 2015 - for £1. He chose to divest himself of a problem child to an individual without any apparent retail experience, and who had previously been made bankrupt - twice. The same Dominic Chappell who has since taken £17m out of BHS, including a recent £1.5m transfer. There have been substantial allegations that sums of money have been directly paid to Chappell, including the clearing of a mortgage on his father’s house
Incidentally, it’s unbelievable how Philip Green, who prides himself on being one of the UK’s most successful retailers, could possibly imagine how someone without any retail knowledge could do a better job rescuing the company he was about to sell for just a £1
During today’s enquiry, Chappell has been referred to as ‘a Premier League liar’, a ‘Sunday pub-league retailer’ and accused of having his hands caught in the till. And who levelled these comments? No less than the former directors of BHS!
What surely drives people such as Green and Chappell? In one word - Greed! And in another - arrogance.
There are examples all over the world manifesting the damage of greed and how weak and greedy humans succumb to it. Names such as Sepp Blatter and Robert Mugabe spring to mind. Politicians with their expense accounts. I could go on …..
But the other part of my concern is about the mis-management of large companies. There are some appalling recent examples. Such as Mike Ashley, who heads up one of the largest UK retail businesses. He was also summoned to appear before a parliamentary inquiry yesterday to answer criticisms that his company Sports Direct was mistreating its employees, and paying them less than the minimum wage.
He later admitted that some of the accusations put to him actually shocked him, and that the company has outgrown his ability to effectively manage it. Yet in another riposte, he argued he could do a better job for his employees than the Trade Union Unite. How arrogant! In summary, it’s taken a long awaited parliamentary enquiry to get him to commit to an independent review of working conditions in his business. And one more thing; this same Mike Ashley was also looking to acquire BHS from the administrators. If he has concerns about his ability to run his existing company, how on earth does he imagine he could take on an additional major retail business? The mind truly boggles!
Finally, I was interested to read at the weekend that hundreds of former employees of City Link won an employment tribunal against their former owner Better Capital, a private equity business. They will share a payout of more than £1m. City Link collapsed into administration on Christmas Eve 2014, and their employees found out on Christmas Day that they would lose their jobs. The Tribunal ruled that Better Capital made a “deliberate and calculated decision” not to inform staff properly about potential redundancies.
The law is that companies preparing to make 100 or more employees redundant must give 45 days notice. I’ve heard some appalling stories of employees receiving notification of redundancy, but to find out on Christmas Day is an incredible illustration of gross mis-management, failure of duty-of-care, and arrogance
To conclude, I remember as an Assistant Manager at BHS, when some directors visited the store where I was working. One of the directors mentioned how some store managers were nervous of the increasing influence exercised by the Trade Union USDAW, which represented the interests of shop employees. In an unexpected yet refreshing way, this director stated that in his view, it was perhaps a good thing that USDAW were there to represent the interests of shop staff, as they kept poor managers on their toes!
With the backdrop of some greedy, arrogant individuals mismanaging their companies, the recourse of having parliamentary enquiries and employment tribunals can surely only be a good thing